Headline gauges BSE Sensex and NSE Nifty 50 closed in the red on Friday amid a volatile session. The gains in the iT shares were offset by the losses in oil & gas and financial shares. Broder markets gave up initial gains during the day.
Here are two shares that brokerages have recommended for an upside of up to 65%.
TVS Motor Company
TVS Motor Company’s shares continued to gain for the second day on Friday, however, they closed in the red at ₹ 957.00 apiece. The D-Street rewarded the two-wheeler maker’s expanding market share, but investors turned cautious on the stock on Friday noon as the market edged lower.
“TVS’s E2W registrations rose to 4.1K units in July, surpassing Ola Electric in the month and taking it to the 4th position in electric 2Ws. The first half of Aug has been even better for TVS with 3.2K registrations, making it the 3rd player in E2Ws with 14 per cent market share,” said Jefferies.
It has maintained a buy rating on the stock with a target price of ₹ 1450 apiece, indicating an upside of 51.52%.
The brokerage said that after a long period of subdued margins, TVS is narrowing the gap with peers and increasing its earnings before interest, taxes, depreciation, and amortisation (EBITDA) share in the industry.
The company’s average EBITDA was at ₹2300 in FY 10-17 and was 71% below the peer average. However, it has risen to ₹ 6,400 in the last four quarters, just 35% below its peer average.
Further, it highlighted that TVS has gained market share across multiple segments over FY17-22 — from 15 per cent to 21 per cent in scooters; from 11 per cent to 18 per cent in 125cc+ motorcycles; from 16 per cent to 25 per cent in 2-wheeler exports and from 21 per cent to 33 per cent in 3-wheeler exports, due to its attractive product propositions.
Jefferies expects the company’s earnings to more than double over FY 22-24, due to a revival in Indian two-wheeler demand from an abnormal trough and further margin expansion amid easing commodity prices.
TVS Motor Company is an Indian multinational motorcycle manufacturer that manufactures a wide range of two-wheelers and three-wheelers.
Techno Electric & Engineering Company Limited (TEECL)
The company is engaged in providing Engineering, Procurement and Construction (EPC), asset ownership and operations and maintenance services in the power infrastructure industry.
ICICI Securities has maintained a buy call on the shares with a target price of ₹ 471 apiece, given a healthy execution outlook and stable margin. The shares closed at ₹ 286.00 apiece on Friday. This indicates an upside of 64.69%.
TEECL’s revenue in the June quarter of FY23 declined 8.7% YoY to Rs1.7bn impacted by lower execution in the EPC segment. Its gross margin. expanded 130bps YoY to
41% on account of lower RM purchases due to the closure of most projects. However, due to operating deleverage, the EBITDA margin contracted 150bps YoY to 27.6%.
The brokerage said that the company booked orders worth ₹ 19 bn against ₹ 2.5 bn in Q1FY22 and its current order book stands at ₹ 32.1 bn. The management has maintained its order inflow guidance of ₹ 30 bn across FGD, T&D, smart metering and data centres.
ICICI Securities believes that TEECL’s foray in the data centre business will be positive in the long run on the increased thrust of the government as it has been granted ‘infrastructure status’. Additionally, it drives a strong impetus from its presence in the T&D segment, as we expect ordering momentum to gather pace from the Green Energy Corridor in the next 24 months.
Written by Simran Bafna
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