HDFC Securities suggests buying these 6 stocks and sees potential gains of up to 53%


Stocks to Buy – CMP, Target Price, Upside Potential

Company CMP (in Rs) Target price (in Rs) Upside potential (in %)
MCX 1311.25 1900 45
Team rental 2979.5 4070 37
Indemart 4336.8 5500 27
Tanla Platforms 820.8 1020 25
Edge of information 3763.05 5000 33
AGS transactions 80.85 123 53
1. Multi-Commodity Exchange of India Limited (MCX)

1. Multi-Commodity Exchange of India Limited (MCX)

MCX is a commodity derivatives exchange that facilitates the online trading of commodity derivatives transactions, providing a platform for price discovery and risk management. The Exchange operates within the regulatory framework of SEBI.

According to the brokerage, MCX ADTV options continue to climb (+60% QoQ) while ADTV futures are down -5.2% QoQ. ADTV options stood at INR 314 billion, up around 5.2x year-on-year. The decline in futures volume was led by crude (-22% QoQ). Effective ADTV (futures + options) is up 44% YoY, reaching INR 366 billion in Q2FY23. MCX revenue is expected to increase by 11.6% QoQ and the margin will increase to 48.4% (+310 bps QoQ).

“We prefer MCX in the trading space, helped by continued traction in options volume, healthy new product pipeline (gold indexes and mini-options), endorsement of REIT participation and the expected cost savings due to the change of technology provider Extending the support schedule by the existing technology provider will ensure a smooth transition Maintain PURCHASE, with a TP of INR 1,900, based on 35x June-24E base EPS,” the brokerage said.

2.Teamlease Services Limited

2.Teamlease Services Limited

TeamLease Services is one of India’s leading HR companies providing a range of solutions to over 3,500 employers for their hiring, productivity and scale challenges.

According to HDFC Securities, Teamlease should have a good quarter, driven by volume growth of around 5%. We anticipate a net addition of approximately 9,000 general staff associates and approximately 4,000 NETAP interns. Revenue is expected to grow 5.3% quarter-over-quarter and EBITDA margin will increase 50 bps quarter-over-quarter to 1.8% due to the recovery in Recruitment Services and HR Services margin. The upturn in economic activity and the festive season have led to an increase in demand for temporary/flexi staff. However, some signs of weakness were visible in IT hiring, which impacted the growth in specialist staffing.

“Overall, we expect organic volume growth of approximately 15-20% in the general staffing business. A fixed margin in the general staffing business will keep the staffing margin in check, while the expansion of margin will come with a shift in revenue mix and increased automation We estimate +23/32% Revenue/TPS CAGR on FY22-24E Maintain BUY, with a TP of INR 4,070 , based on 35x EPS Jun-24E,” the brokerage said.

3. Indiamart Intermesh Limited

3. Indiamart Intermesh Limited

IndiaMART is India’s largest online B2B marketplace, connecting buyers with suppliers. With 60% market share of the online B2B classifieds space in India, the channel is focused on providing a platform for small and medium-sized enterprises (SMEs), large corporations as well as individuals. .

According to the brokerage, IndiaMart will see a surge in vendors, thanks to greater investment in sales and the partner network. We expect to add 9.5,000 paid vendors, which is in line with the target range of 8 – 10,000/quarter. Churn is also expected to decline for the monthly installment as silver and platinum annual customers continue to remain sticky.

“We expect revenue to grow 6.7% QoQ, driven by the addition of vendors and an increase in ARPU (+1.2% QoQ). EBITDA margin will increase sequentially by 105 bps to 29.6%, driven by operating leverage. Operating margin is expected to improve gradually and the exit rate for FY23E will be healthy (~32%),” the brokerage said.

He added: “We have slightly modified our margin estimates, resulting in a reduction of approximately 2% in estimates. Collections will remain strong (INR 2,600mn, +16.4% YoY), paving the way for healthy growth. for FY24E We expect Revenue/EPS CAGR of +21/30% on FY23-25E Maintain BUY with a DCF based target price of INR 5,500, implying an EV/EBITDA of 33x Jun-24E. »

4. Tanla Limited Platforms

4. Tanla Limited Platforms

Tanla Platforms Limited develops and markets computer software. The company offers Internet of Things, voice, messaging and other cloud communication solutions. The company serves customers worldwide.

According to the brokerage, Tanla Platforms should report a slight recovery in the enterprise segment while platform activity remains solid. The Enterprise business will grow 2.8% from the previous quarter, but will register a decline on a year-over-year basis due to the continued decline of a primary account. Total revenue is expected to increase 3.4% QoQ and EBITDA margin is expected to increase slightly by 48bps to 16.8%. Gross margin will increase for the enterprise segment and improve slightly to 17%, while the platform segment will operate in a similar range of 90%. Management expects the EBITDA margin to reach ~18-19% over the next two quarters, driven by the expansion of the GM business. The impact of the ILD price increase will be visible at H2FY23E. “We are reducing our gross margin estimate for businesses due to increased competition, resulting in an 8/6% reduction in FY23/24E EPS. We maintain our BUY rating on Tanla, with a TP of INR 1,020 based on 22x Jun-24E EPS,” the brokerage said.

5. Info Edge (India) Limited

5. Info Edge (India) Limited

Info Edge has a deep understanding of the Indian consumer internet domain. With years of experience in the field, strong cash flow generation and a diverse business portfolio, it is one of the very few profitable pure-play internet companies in the country. The company owns Naukri.com, jeevansaathi.com, 99acres.com, shiksha.com and various other domains.

According to the brokerage, Naukri’s growth will normalize to 2.8% QoQ, after posting six quarters of strong growth (>10%). The other 99acres/Shiksha segments will show approximately 4% QoQ growth. Hiring in the IT sector is starting to be high, but hiring activity in other sectors like BFSI, travel, automotive, etc., will remain strong. Autonomous revenue is expected to increase by 2.8% QoQ and EBITDA will decrease by 23 bps QoQ to 31.9%. Advertising spend will remain higher for 99acres and Jeevansathi; Naukri’s margin will remain in the 58-59% range.
“We expect a CAGR of 27/22/-8% in revenue at Naukri/99acres/Jeevansathi and an EBITDA CAGR of 41% in FY22-24E. We have a BUY rating on Info Edge and a TP based on SoTP of INR 5,000. attributed 45x EV/EBITDA to Naukri and 5/3/5x P/S to 99acres/Jeevansathi/investments (ex-Zomato and PB),” the brokerage said.

6. AGS Transact Technologies Limited

6. AGS Transact Technologies Limited

AGS Transact Technologies Limited offers payment processing solutions. The Company provides services such as transaction switching, ATM outsourcing, cash management and digital payment solutions such as transaction processing services and mobile wallets.

According to the brokerage, AGS is expected to report a strong quarter with 10.9% quarter-on-quarter growth, driven by a resumption of ATM transactions, growth in cash management and point-of-sale activities and an increase service revenue in the banking automation segment. EBITDA margin will be 26.7% (vs. 27% in Q1FY23) and EBITDA INR 1.24bn (+9.6% QoQ). The company will post a PAT of INR 0.22 billion and interest expense for the quarter will be INR 0.37 billion.

“We expect +10/16/14% revenue CAGR in ATM/Digital Payments/Banking Automation businesses and EBITDA CAGR of 14% over FY22-24E. We have a BUY rating on AGS, with a TP of INR 123, based on 12x EPS from September 24,” the brokerage said.

Disclaimer

Disclaimer

The stocks were selected from the brokerage report of HDFC Securities. Greynium Information Technologies, the author and the respective brokerage are not responsible for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before making any investment decision.

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