Only a fraction listed Indian companies have 10 analysts or more tracking them. Moreover, one out of three of these highly tracked stocks are trading at a discount of as much as 38% from their lowest target prices. Top names on the list have attracted analysts with their strong business prospects, but there are growth concerns pushing the stocks lower in a troubled market.
As per research by NDTV Profit, out of the 5,608 companies listed on Indian stock exchanges, only 309 stocks are being actively tracked by more than 10 analysts. However, 101 of these companies are currently trading below the lowest target prices assigned to them.
Stocks At Most Discount To Their Lowest Targets
Out of the 101 stocks currently trading below their lowest target prices, 20 companies closed on Tuesday over 15% lower than the lowest target price.
The top five stocks with highest differences are Sunteck Realty Ltd., Sonata Software Ltd., Dhanuka Agritech Ltd., REC Ltd., and Mold-Tek Packaging Ltd. These stocks are currently trading at discount of over 25% from their lowest target price.
Stock trading at a 15% to 20% discount from their lowest target price also include TeamLease Services Ltd., Prince Pipes and Fittings Ltd., Greenply Industries Ltd., Krishna Institute of Medical Sciences, Adani Ports and Special Economic Zones Ltd., Jyothy Labs Ltd., 360 One WAM Ltd., Power Finance Corp., Prestige Estates Projects Ltd. and Hindustan Aeronautics Ltd.
This poses two questions: do analysts need to revise their target prices, or are potential movements on the cards.
In this light, here's why analysts are bullish on these stocks, and where key concerns lie as they trade with substantial difference to their lowest target prices.
Also Read: Shriram Finance And Crompton— Jefferies Sees Attractive Valuation For Entry; Prefers Metals Over IT
Sunteck Realty
Why Analyst Are Bullish: The company is seeing steady progress across projects as well as sustained portfolio expansion. The firm is also now debt free and turned net cash positive in December quarter.
Key Concerns: The company has high exposure to a single market — Mumbai Metropolitan Region. The company is also exposed to regulatory, partnership and macro risks.
Sonata Software
Why Analyst Are Bullish: The company has a strong order book backlog and a multi-year AI deal. Management also expects growth traction across healthcare, banking and finance spaces to continue.
Key Concerns: The company's management has guided for a revenue fall in March quarter. Further, issues with tech, media and telecom clients are expected to cause near term pressure on business.
Dhanuka Agritech
Why Analyst Are Bullish: The company's asset light business model is fueled by strong launch pipeline. It has also managed to report healthy volume growth in a tough environment.
Key Concerns: Management has lowered revenue and Ebitda guidance for the current fiscal. The company is also seeing issues with scaling up their technical plant.
REC
Why Analyst Are Bullish: The power financier has seen steady growth in its assets under management as well as profitability. The company has is also seeing lower credit risks and stronger return on equity.
Key Concerns: Increase in the competition as well as soft power demand is weighing on investor sentiment.
Mold-Tek Packaging
Why Analyst Are Bullish: Analysts expect the firm's volumes to be aided by timely capacity addition as well as its entry into high-value products.
Key Concerns: The company has seen elevated costs and lower volumes in the past. The firm's paints segment is stills struggling, while management has also cut its growth guidance.
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