Brokerages have come out with updates on a couple of stocks including Coal India, InterGlobe Aviation, GAIL and Triveni Engineering. A robust domestic demand, enhanced vision of 1 billion tonne of production and improved e-auction premium are all set to drive a strong near-term performance for Coal India. Improving international mix, on the other hand, is seen positive for InterGlobe Aviation. Recently approved tariff hike, LNG prices cooling off to $12 per mmBtu, and improvement in gas supply are seen improving GAIL's performance going forward. Analysts find Triveni Engineering ‘s valuations attractive.
Coal India | Motilal Oswal Securities | Buy | Target Rs 275
Motilal Oswal said a robust domestic demand, enhanced vision of 1bt production, and improved e-auction premium are all set to drive a strong near-term performance for Coal India. Coal India is trading at 3.6 times FY24E EV/Ebitda and 1.8 times FY24E P/B, respectively. The March quarter is a seasonally stronger quarter with the onset of the summer season. The demand for power too increases, consequently driving the requirement for higher coal volumes by power plants.
Motilal Oswal maintained its e-auction premium estimate for FY23 at 231 per cent and reiterated its 'BUY' rating on the stock with a target price of Rs 275 (5 times EV/Ebitda). Coal India continues to be Motilal's top pick in the mining sector.
"Any hike in FSA will furtheradd to the financial performance of the company. Coal India has declared a second interim dividend of INR5.25, thereby, taking the total dividend for FY23E to Rs 20.25. We have estimated full-year FY23 DPS of Rs 27," Motilal Oswal said.
InterGlobe Aviation | Nuvama | Buy | Target Rs 2,501
Nuvama Institutional Equities recently attended InterGlobe Aviation's Investor Day. It noted that InterGlobe Aviation's fleet size is likely to double by 2030, with 500-plus aircrafts order in place. InterGlobe Aviation is targeting 30 per cent international ASK share in two years (23 per cent now). Yield may narrow in Q4FY23 on seasonally low demand, offset by softening ATF prices. InterGlobe Aviation has a fleet size target of 350 in FY24 (14 per cent YoY), 100 million PAX (up 17 per cent YoY). It also has target of adding 10–15 new destinations. Besides, the management has guided for 3-4 per cent escalation in ex-fuel cost annually. InterGlobe Aviation is also likely to add one more freighter in Q3FY24, taking the total to three.
"With international mix improving, we anticipate yields staying strong in the long-run. 40-45 XLRR fleet addition by 2027 will enhance Indigo's international competitive stance. Retain ‘BUY’ and a TP of Rs 2,501," Nuvama said.
Triveni Engineering | Sharekhan | Buy | Target Rs 340
Sharekhan has re-iterated a 'Buy' rating on Triveni Engineering & Industries with an unchanged target of Rs 340. Drivers are in place to deliver strong double digit earnings growth, it said, adding that the stock is attractively valued at 20.1 times FY23, 14.8 times FY24 and 11.2 times FY25E EPS. That, Sharekhan, said makes it a better pick in the sugar space.
Sharekhan said the company's distillery business’ capacity may expand to 1,110 KLPD by end of FY24 from 660KLPD currently. Ethanol production, on the other hand, is seen increasing to 32 crore litre in FY2025 from 18 crore litre in FY2023. Power transmission business revenues are expected to grow by 25-30 per cent. Besides,
Sharekhn sees consistent improvement in the margins on back of large initiatives created by the government in the domestic market and revival of industrial cycle. Triveni Engineering & Industries' sugar crop (fewer weather vagaries), doubling of distillery capacity and strong order booking in the engineering business will help PAT grow 35 per cent over FY2023-25E, Sharekhan said.
GAIL | Motilal Oswal Securities | Buy | Target Rs 147
Motilal Oswal Securities attended GAIL’s analyst meet in Delhi on March 22. It noted that owing to supply disruptions from GMTS and record high LNG prices, performance was adversely impacted across all segments in FY23. The company’s PATA plant was operating at just 50 per cent capacity and had to shut down briefly in October 2022. Recently approved tariff hike, LNG prices cooling off to $12 per mmBtu, and improvement in gas supply should improve performance going forward, it said.
The brokerage said the decline in LNG prices is a boon for GAIL. It expects GAIL's transmission volumes to rise to 117mmscmd in FY24 from 107mmscmd in FY23. The petrochemical plant is also running at optimum utilisation currently. GAIL, it said, is currently trading at 7.1 times FY25E EPS of Rs 14.60 and 4.1 times FY25E EV/Ebitda. The domestic brokerage values the company at 9 times adjusted FY25E EPS and has added the value of investments to arrive at a target of Rs 147.
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