Up to 60% upside! Tanla Platforms, Paytm, L&T, SRF among top stocks to buy post Q1 results

Analysts on Dalal Street retained their bullish view on a couple of stocks that recently announced their financial results for the June quarter (Q1FY24). Data available with Ace Equity shows that as many as 20 Nifty50 companies have posted their results so far. Sentiment is positive in the equity market overall, buoyed by sustained inflows from foreign institutional investors and financial results that matched analyst estimates. In the ongoing financial year, the 50-share Nifty index has gained 13 per cent to 19,680 till July 25. Here’s what market watchers suggest buying post-Q1 results:

Tata Steel

ICICI Securities is positive on the metal major with a target price of Rs 135, indicating an upside of over 13 per cent against the current market price of Rs 119. The brokerage in a report said that Tata Steel’s Q1FY24 EBITDA of Rs 5,170 crore (down 65 per cent YoY) met consensus estimates on the back of higher realisation in domestic operations. “Standalone EBITDA at Rs 14,528 was ahead of estimates owing to existing contracts and better export realisations. Taking cognisance of management guidance on price/cost, we have trimmed our FY24E EBITDA by 6 per cent but raised FY25E EBITDA by 8 per cent, resulting in a revised target price of Rs 135 (earlier Rs 125),” ICICI Securities said in a report.

Larsen & Toubro

Brokerage Prabhudas Lilladher has set a target price of Rs 2,955 for engineering and construction major Larsen & Toubro (L&T). Shares of the company traded 4 per cent up at Rs 2,668 in the morning trade on July 26. “L&T reported a healthy set of quarterly performance with consolidated revenue growth of 34 per cent YoY, while margins contracted 86 basis points YoY, due to business mix and legacy project reaching completion. Margins are likely to improve from H2FY24, with legacy orders likely to be completed by Q2/Q3FY24 and new projects reaching margin recognition threshold,” Prabhudas Lilladher said.

SRF

Shares of the company may rally nearly 30 per cent to Rs 2,800, according to Nirmal Bang Securities. The scrip traded almost flat at Rs 2,159 at around 11.50 am (IST) on July 26. “SRF’s Q1FY24 EBITDA came around 14 per cent below our estimate, mainly on account of weakness in Ref gas business, which got impacted both on volume and pricing fronts due to dumping by China in key regions and a weak summer in India. The management sounded confident of sequential improvement in 2HFY24,” the brokerage said.

Tanla Platforms

Brokerage YES Securities has set a target price of Rs 1,539 for the Tanla Platform. Shares of the company traded at Rs 1,264, up 0.97 per cent in the morning trade on July 26.

“Tanla Platform reported inline financial performance for the quarter. The sequential revenue growth and EBITDA margin were as per expectation. It reported sequential revenue growth of 9.3 per cent QoQ, led by a 9.5 per cent QoQ increase in the revenue of Enterprise business and a 7.9 per cent QoQ increase in the revenue of Platform business. Trubloq processed 82 billion messages in the quarter with more than 60 per cent volume market share. There was a sequential increase in EBITDA margin (up 7 bps QoQ) led by improvement in the gross margin of Platform business,” YES Securities said.

One 97 Communications (Paytm)

Dolat Capital Markets is positive on Paytm with a target price of 1,250, showing an upside of 60 per cent against the current market price of Rs 782. The brokerage in a report on July 22 said, “Accounting Q1 performance, we re-align our growth estimates to reflect slight moderation in lending business as the company focuses on quality of the book, while scale-up is expected to continue in merchant and consumer business, and hence slightly up revenue estimates by 0.9 per cent and 1.2 per cent for FY24 and FY25, respectively.”

“We have scaled up adjusted EBIDTA margin estimate by 46 basis points and 40 basis points for FY24 and FY25 to capture increased efficiencies through operating leverage (indirect costs) and better business mix. Given management guidance on achieving positive free cash flow (FCF) by the end of FY24, expect the loss to lower in FY24 materially (we expect it to turn PAT positive by Q4) and report profit in FY25 annualised basis,” Dolat Capital said.

 

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