Ventura Securities: Diwali stock picks

Ventura Securities: Diwali stock picks

 

Mumbai, 24^th October 2024: Ventura Securities has initiated coverage with BUY rating for five stocks namely, Angel One Limited, Tejas Networks Limited, Hindustan Zinc Limited, Tips Industries Ltd, and Fino Payments Bank.

The report highlights the stocks with the upside potential of 32% to 121%, mentioning the sectors like banking, entertainment, public sectors, financial services, with significant potential. Ventura Securities expects the overall trend to remain positive in Samvat 2081 and maintains a long-term bullish stance on Indian equities, citing the country's supportive domestic environment.

Diwali Picks 2024

Stock	Target price (INR)	Upside potential (%)
Angel One Ltd.	3,935	36.2%
Tejas Networks Ltd. (TNL)	1,850	45.1%
Hindustan Zinc Ltd	680	32%
Tips Music Ltd.	1,010	33.6%
Fino Payments Bank Ltd.	856	121%

 

Angel One (Buy) - Target Price: INR 3,935 in 24 months
Given the leading position of Angel One in stockbroking & allied service provider, strong revenue growth outlook driven by ongoing penetration and scope for profit margin expansion, we remain positive on the stock. We initiate coverage with a BUY rating and a price target of INR 3,935 (17X FY27 P/E), representing an upside of 36.2% in the next 24 months. The company has shown tremendous growth in its client base, expanding 17.2x since FY19, and holds a 14.7% share of the Demat market.

 

Tejas Networks Limited (TNL) - Target Price: INR 1,850 in 24 months
Over FY24-27, we expect TNL's revenue/ EBITDA/ net earnings to grow at a CAGR of 62.5%/ 91.8%/156% to INR 10,603 cr/ INR 1,877cr/ INR 1,056 cr respectively, while EBITDA and net margins are expected to improve by 694bps to 17.7% and 741bps to 10%. As a result, return ratios – RoE and RoIC – are expected to improve by 1635bps to 18.3% and 1395bps to 15.9% respectively by FY27E. Given strong revenue growth, profit margin expansion, strong orderbook, expansion into international markets, we remain positive on the company. We initiate coverage with a BUY rating and a price target of INR 1850 (30X FY27 P/E), representing an upside of 45.1% over the next 18-24 month

 

Hindustan Zinc limited - Target Price: INR 514 in 24 months
Over FY23-27E, Hindustan Zinc Limited's revenue is expected to grow from INR 34,098 crore to INR 39,818.8 crore, while EBITDA is projected to rise to INR 23,086.9 crore, with margins improving significantly to 58%. PAT is forecasted to reach INR 13,976.4 crore, achieving a PAT margin of 35.1%. Adjusted EPS is expected to increase to INR 33.1, with the Book Value Per Share (BVPS) growing to INR 51.7. Return ratios like RoE and RoCE are anticipated to remain strong at 52.3% and 52.4%, respectively, by FY27E. With its dominant market position, industry-leading cost structure. we recommend a BUY rating for Hindustan Zinc Limited. We estimate HZL's revenue, EBITDA, and PAT to grow over the next few years, driven by increasing demand for zinc and silver, operational efficiencies, and expansion of its production capacities. We set a target price of INR 680 per share (22X FY 27 PE), reflecting an upside potential of 32% over the next 24 months.

 

Tips Music Ltd. - Target Price: INR 756 in 24 months
Ventura expect revenues to grow at a CAGR of 26.8% INR 493 cr, EBITDA is expected to grow at CAGR 31.1% to INR 357 cr with 72.5% margins (+690bps) by FY27, while net earnings are expected to grow from INR 127 cr in FY24 to INR 287 cr (CAGR of 31.2%) with 58.2% margins (+559 bps) We initiate coverage with a BUY for a price objective of INR 1,010(40x FY27P/E), representing an upside of 33.6% over the next 24 months.

 

Fino Payments Bank Limited - Target Price: INR 387 in 24 months
Over the period FY24-FY27E, we estimate net revenues/operating profit/net earnings to grow at a CAGR of 28%/38%/34% to INR 3,093 cr/INR 571 cr/INR 205 cr respectively. Since the merchants themselves operate as branches and earn commission on every transaction, no significant manpower/capex cost is incurred. Also, in preparation for SFB operations, the bank will incur a minimal headcount increase/capex as the transition to SFB is already factored into the technological architecture. We expect significant operating leverage to pan-out post FY27E. We initiate with a BUY for a price target of INR 856 over the next 24-30 months representing an upside of 121% of CMP of INR 387.

 

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