Domestic brokerage MOFSL has come out with research notes on three companies namely 360 ONE WAM Ltd, Union Bank of India Ltd, APL Apollo Tubes Ltd. It has 'Buy' ratings on all the three stocks with price targets that suggest 15-24 per cent potential upsides.
MOFSL attended analyst meets hosted by the top management teams of Union Bank and 360 One WAM. In the case of Union Bank, the PSU's management emphasised the bank's efforts in delivering profitable growth while continually making investments in business and enhancing its technological capabilities. It guided for FY25 advances growth of 11 per cent and net interest income (NIM) of 2.8-3 per cent.
MOFSL said Union Bank has been reporting a healthy performance, with earnings driven by healthy revenue and controlled provisions. Fresh slippages have been under control, which, coupled with healthy recoveries and upgrades, has resulted in an improvement in asset quality ratios, it said.
"A lower credit cost and controlled restructuring provide a better outlook on asset quality. Loan growth is expected to trend at 11 per cent, aided by healthy growth in RAM segment. Margins are also expected to remain in the guided range of 2.8-3 per cent despite the rate cut, supported by higher MCLR-linked loans. We estimate loans to grow at 10 per cent over FY25-27E, with RoA/RoE at 1.1 per cent/15.5 per cent by FY26E," MOFSL said. This brokerage suggested 'Buy' on the stock with a target price of Rs 135.
In the case of 360 ONE WAM, the management suggested that the B&K acquisition is a strategic fit for 360ONE as it will provide equity advisory to existing clients. The corporate advisory of B&K will benefit from the product portfolio of 360ONE. Besides, the corporate relationships of 360ONE will help to scale up the IB business. The deal is likely to be EPS-accretive by 3-5 per cent, the management noted.
"The company expects a revenue CAGR of 15-25 per cent in B&K business over the next 3-5 years, driven by incremental business from existing customers and new customer additions, with its inherent need for a strong equity advisory franchise. With the recent market corrections, the company expects to gain market share given its strong product portfolio and customers sitting on 10-20 per cent cash for deployment in equity markets," MOFSL said.
The brokerage has retained 'Buy' rating on the stock with a one-year target of Rs 1,250, premised on 34 times FY27E EPS.
In the case of APL Apollo Tubes, MOFSL said the Indian structural tubes industry has been in a turbulent phase due to a sharp drop in realisation, slowing demand, and capacity expansions. APL Apollo Tubes, being the market leader, delivered healthy volume growth in 9MFY25, though at the expense of margins, MOFSL noted. The brokerage, however, expects the scenario to change for the better going ahead. It said HRC prices have stabilised at lower levels, driving affordability, as the spread between primary and secondary steel has also narrowed. The demand environment is also expected to improve, led by better capex spends across traditional and new-age sectors.
"With elections (both general and state) now behind, we expect a gradual pickup (from 4QFY25) in demand, led by increase in government spending (still at lower levels). Traditional sectors, such as highways and railways, are expected to witness a pickup in demand. New sectors (such as solar) are expected to contribute to the demand recovery," MOFSL said.
The brokerage values the stock at Rs 1,830 apiece.