APL Apollo, UPL, Religare among 9 stocks that saw brokerage initiations with up to 101% potential upside

Select stocks including APL Apollo Tubes, Sudarshan Chemicals, Yatharth Hospital, Stylam Industries, UPL, Gravit India, JK Tyre, Godawari Power and Religare Enterprises have seen fresh interest from the various domestic brokerage firms, who have recently initiated their coverage on these companies.

The host of brokerages including Phillip Capital, LKP Securities, Choice Broking, HDFC Securities, Arihant Capital, Antique Stock Broking, Emkay Global, Equirus Securities, Ventura Securities have launched their maiden reports on these stocks. Majority of these stocks have 'buy' ratings on them with an upside potential of up to 101 per cent. Here's why these analysts are positive on them:

Ventura Securities on Religare Enterprises
Rating: Buy | Target Price: Rs 471 | Upside Potential: 101%
Religare Enterprises (REL) has undertaken a major debt restructuring exercise along with revamping the board in FY19. REL undertook a one-time settlement of Rs 2,198 crore in Mar 2023 with 16 of the 17 lenders of its SME lending subsidiary Religare Finvest as total clearance of latter’s dues and exited the Corrective Action Plan imposed by RBI, said Ventura Securities.

"Burmans Family has acquired a substantial stake and made an open offer to acquire another 26 per cent at an offer price. This will ensure a strong promoter group will be at the helm of affairs along with a proven management. This augurs very well for the future growth story and could be a trigger for the 'rerating' of the stock," it added with a buy rating a target price of Rs 471 apiece.

Equirus Securities on Godawari Power & Ispat
Rating: Long | Target Price: Rs 1,000 | Upside Potential: 66%
As an integrated iron ore producer, Godawari Power & Ispat earnings are sensitive to global iron ore prices. India’s 1HFY24 crude steel output surge boosted domestic iron ore demand, aligning with the country’s 300mtpa crude steel capacity target. For GODPI, we project pellet production growth at a 12% CAGR over FY23-FY26E, said Equirus Securities.

"Its mining lease is valid till 2057, ensuring its status as a cost-effective iron ore producer beyond 2030E, despite upcoming auctions for captive mines in 2030E. We initiate coverage with a 'long' rating and a March 2025 target price of Rs 1,000 set at 6 times 1-year
forward EV/EBITDA, higher than the CY24E average of global peers," Equirus said.

Emkay Global on JK Tyre & Industries
Rating: Long | Target Price: Rs 415 | Upside Potential: 54%
We initiate coverage on JK Tyre with a 'buy' as we believe the stock price can potentially double over 3 years. Amid tyre industry’s structural improvements, it has been outperforming peers over past 12 quarters via structural transformation in competitive position, operating efficiencies, and financial discipline, said Emkay Global in its report.

Antique Stock Broking on Gravita India
Rating: Buy | Target Price: Rs 1,250 | Upside Potential: 39%
Gravita India is a leading global recycler of non-ferrous secondary metals such as lead, aluminum, and other products like plastics. Gravita has been one of the beneficiaries of the increased supply of scrap coming to organized recyclers that have an existing multinational procurement network, import license in India, OEM approvals in place, and capable of developing specialized products, said Antique.

"In order to cater to the improved availability of scrap domestically and to take advantage of the cheap scrap available overseas, Gravita has planned an Rs 650 crore capex over FY23–26 to increase its capacity from 234 kmtpa to 553 kmtpa by FY26. With a hedging mechanism, we believe Gravita can deliver a 10 per cent sustainable margin," it added with a buy and target of Rs 1,250.

Arihant Capital Markets on UPL
Rating: Buy | Target Price: Rs 844 | Upside Potential: 36%
Channel inventories have almost peaked out in China for the key chemicals and demand has picked up in Q2FY24. UPL has implemented backward integration in its key molecules, which contributes 60 per cent of its sales, enabling it to maintain cost competitiveness, said Arihant Capital Markets in its maiden coverage on the stock.

"Q2FY24 appears to be shaping up more positively than Q1FY24. In the North America and Brazil markets, high channel inventory will be seen normalizing due to healthy farm gate demand in these regions. Overall, we believe the company is expected to perform much better in H2FY24 led by uptrend in Pricing and better demand," it added with a buy rating and a target price of Rs 844.

HDFC Securities on Stylam Industries
Rating: Buy | Target Price: Rs 2,300 | Upside Potential: 31%
We initiate coverage on Stylam Industries with a 'buy' rating and a target price of Rs 2,300. We like the company for its industry-leading growth and EBITDA margins, healthy balance sheet, and return ratio profile, said HDFC Securities in its maiden report on the stock.

"We believe it still has room to expand its geographical reach and penetration in existing domestic and export markets, offering strong revenue growth visibility. It is focusing on brownfield expansion and laminate debottlenecking to achieve its strong growth objective. In the acrylic segment, we expect rapid growth, albeit on a low base," it added.

Choice Broking on Yatharth Hospital & Trauma Care Services
Rating: Outperform | Target Price: Rs 593 | Upside Potential: 28%
Yatharth Hospital and Trauma Care Services, incorporated in 2008, is a super speciality hospital with 1,405 beds across 4 facilities in Noida, Greater Noida, Noida Extension, and Jhansi. It is introducing new specialities with high-margins that will change the product mix, expanding into other regions will de-risk from regional competition and increased hospital maturity with improved ARPOB, said Choice.

"We initiate coverage on it led by a leading super-speciality hospital in the Delhi-NCR, diversification into new specialities where the margin is higher than the current margin, expanding into other regions through inorganic growth, and focus on increasing the share of international patients and improving ARPOB. We expect Revenue, EBITDA and PAT to grow at a CAGR of 20 per cent, 23.2 per cent and 26.6 per cent during FY23-26E," it added with an 'outperform' rating with a target price of Rs 523.

LKP Securities on Sudarshan Chemical Industries
Rating: Buy | Target Price: Rs 605 | Upside Potential: 27%
Sudarshan Chemicals is one of the largest pigment manufacturers with a 35 per cent market share in its home market and third-largest player globally. Recent headwinds in the overall pigment industry will be transient and shifting of global players away from pigment businesses, China +1 and sustained demand recovery will be some of the key tailwinds for the overall pigment industry, said LKP.

"We believe that challenges like consolidation in the pigment industry, high inflation in developed economies, weak geopolitical scenario, sharp volatility in commodity prices and supply chain disruptions are expected to hit mid-sized and small pigment players resulting in benefit to it. We Initiate with a buy with a target price of Rs 605 valuing it at 30.2 times its FY25E earnings," it added.

Phillip Capital on APL Apollo Tubes
Rating: Buy | Target Price: Rs 1,950 | Upside Potential: 21%
APL Apollo is a leading branded steel products manufacturer in India and the country’s largest producer of structural steel tubes. It has 11 manufacturing facilities with a capacity to manufacture 3.6mn tpa of structural tubes. APL has an extensive distribution network of warehouses and branch offices in 29 cities in the country, catering domestic and 20 international markets, said Phillip Capital.

"The company’s multi-product offerings include over 1,100 varieties of pre-galvanized tubes, structural steel tubes, galvanized tubes, MS black pipes, and hollow sections. APL has quite a diversified product portfolio in branded steel products, with more than 2,000 SKUs. With capacity in place and a PAN-India network, APL is set to continue its robust volume growth for the next 2-3 years," it said with a buy rating and a target price of Rs 1,950.

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