The brokerage firm Jefferies has selected three stocks with a ‘Buy’ rating. While it retained a rating on two stocks, it has initiated coverage on Afcons Infrastructure. The triggers include higher order flow growth, sales growth, operating margins, etc. Read the full article below-
Initiates coverage on Afcons Infrastructure with ‘Buy’
Jefferies has initiated coverage on Afcons Infrastructure with a ‘Buy’ rating on the back of strong order flow growth. It is confident in the management’s commentary regarding the order flow of Rs 30,000 crore for FY25. This is an increase of more than 3 times YoY. “FY25E order flow should be at a record high of Rs218 bn, vs previous FY22 peak of Rs169 bn as FY24 orders spilt into FY25E given elections. Post FY27E order flow growth should normalise at 16-18% CAGR,” said Jefferies. Plus, the company’s EBITDA for the reporting quarter came higher than estimates by 15%.
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The brokerage house has maintained its ‘Buy’ call on ABB India as it saw that the EBITDA of 13% came higher than expectations in the last quarter of CY24, which was led by gross margin expansion of 354 basis points YoY. The margins were also supported by pricing power and revenue mix. However, Jefferies cut the target price by 21% to Rs 7,130 from Rs 9,050. “We lowered our CY24-26E revenue CAGR to 22% from 25% and lower gross margins YoY which is leading to a more than 15% cut in estimates. We believe between better ordering on power and gross margin surprise, this could reverse,” said the brokerage firm.
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The brokerage firm has maintained its ‘Buy’ call and target price of Rs 1,168.50 on Macrotech Developers. It sees the stock price trading at a fair valuation after the recent correction, falling into the Buy segment. The company’s Palava land valuations provide upside and higher growth visibility. “We maintain our FY25/26 pre-sales estimates at 20% cagr implying Rs 17,500/Rs 21,000 crore,” said Jefferies. Also, the company’s consistent pre-sales growth, strong operating cash flow, low gearing, and expansion in new geographies ensure a sustainable 20% growth/20% RoE trajectory.
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