Leading brokerage firms have released a fresh set of buy recommendations for prominent Indian companies, highlighting strategic acquisitions and ambitious growth targets. The calls from BoFA Securities, Nuvama, and Nomura put the spotlight on Varun Beverages, Century Plyboards, and Samvardhana Motherson International, respectively.
Varun Beverages' Strategic South African Acquisition
BoFA Securities has reaffirmed its buy rating on Varun Beverages (VBL) with a target price of Rs 550. The analysts' optimism follows VBL's acquisition of Twizza, the fourth-largest player in the South African market. This strategic move provides Varun Beverages with three backward-integrated manufacturing facilities, significantly boosting its production capacity.
The deal is seen as complementary to VBL's existing manufacturing footprint and is expected to strengthen its market position. Financially, the acquisition is considered attractively valued. It is projected to add approximately 6% to VBL's overall volume, 4% to its revenue, and 2% to its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation). Analysts have pointed out that the company's execution and delivery performance in the upcoming summer season will be crucial.
Century Plyboards' Confident Growth Trajectory
Nuvama has assigned a buy rating to Century Plyboards (India) with a target price of Rs 1,028. The brokerage cites the company management's confidence in achieving a revenue target of Rs 12,000 crore by the financial year 2031 (FY31). This goal implies a robust compounded annual growth rate (CAGR) of 18%.
To reach this target, the company expects to generate Rs 700-750 crore in revenue from its current gross block. However, it will require a further capital investment of Rs 2,000-2,500 crore by FY29. On the operational front, Century Plyboards reported strong execution in its plywood segment. The company anticipates a turnaround in Medium-Density Fibreboard (MDF) margins from the second half of FY27 onwards, while the laminates business is already showing progress. Additionally, its particle board division is expected to achieve EBITDA breakeven by the third quarter of FY26 (Q3FY26).
Motherson's Foray into Photovoltaic Wiring
Nomura has maintained a buy call on Samvardhana Motherson International with a target price of Rs 125. The positive outlook is driven by the company's decision to acquire the automotive wiring harness business of Nexans. This acquisition marks Motherson's strategic entry into the global photovoltaic (solar) wiring harness segment.
Analysts believe the transaction is attractively valued and is expected to be accretive to the company's cash earnings per share (EPS). The potential impact could be significant, with estimates suggesting an EPS accretion of around 2% in the very first year post-acquisition.
Other Notable Brokerage Actions
In other significant analyst actions, Morgan Stanley initiated coverage on fintech firm Pine Labs with an 'equal-weight' rating and a target price of Rs 260. The brokerage acknowledged Pine Labs as a leader in its segments, benefiting from a first-mover advantage and a strong partner network. They project a 19% revenue CAGR for FY25-FY28 and expect a shift to an asset-light model to drive EBIT margin to 20% by FY28, a substantial increase from 3% in FY25.
Meanwhile, Investec initiated coverage on Canara HSBC Life Insurance with a buy rating and a target of Rs 225. Analysts view the stock as a mispriced opportunity, offering a relatively low-risk way to invest in India's structural life insurance growth story. The firm is seen to have visible drivers for margin expansion and scaling through its distribution network. Its current valuations are perceived to imply only modest growth in the Value of New Business (VNB).
(Disclaimer: The recommendations, views, and opinions expressed by the various brokerages are their own and do not represent the views of this publication. Investors are advised to consult certified experts before making any investment decisions.)
