BHEL, Hyundai, and Other Key Stocks Capturing Brokers’ Attention This May
Equirus has significantly downgraded Protean eGovernance’s stock rating from “add” to “sell,” slashing its target price from Rs 1,730 to Rs 900. This drastic change follows the company’s announcement that it will no longer pursue the government’s PAN 2.0 project, which aimed to revamp PAN/TAN services with a budget of Rs 1,440 crore. Analysts are concerned about the implications of this decision, as PAN services account for approximately 50% of Protean’s revenue. They predict a potential 75-100% decline in this revenue stream over the next few years, posing a serious threat to the company’s financial health.
Impact of PAN 2.0 Project Withdrawal
The withdrawal from the PAN 2.0 project is a significant setback for Protean eGovernance. Analysts have noted that the company’s revenue from PAN services has historically been a reliable source of free cash flow, which has funded various new initiatives. With this revenue stream now under threat, the company’s future growth prospects appear uncertain. The government’s plans for the PAN 2.0 project included a comprehensive overhaul of the existing PAN/TAN services, which would have provided a substantial boost to Protean’s operations. However, the company’s exit from this project raises questions about its ability to sustain its current revenue levels.
In addition to the loss of the PAN 2.0 project, Protean faces other challenges, including an upcoming revision of pricing for the National Pension System (NPS) in FY27 and stagnant volumes in the ONDC retail sector. These factors could further exacerbate the company’s financial difficulties, leading to a prolonged period of revenue decline.
Market Reactions to Other Companies
In related market news, Jefferies has maintained a “hold” rating on Divis Laboratories, setting a target price of Rs 6,200. The company’s quarterly results for January to March met analysts’ expectations, and it is currently engaged in multiple projects across various stages of development. However, the firm has chosen not to pursue the generic Semaglutide opportunity due to near-term patent challenges and high valuations.
Meanwhile, Kotak Institutional Equities has issued a “sell” rating for Bharat Heavy Electricals Limited (BHEL), with a target price of Rs 115. Analysts highlighted that BHEL missed its EBITDA estimates by 8%, even after accounting for prior provisions. They expressed concern over weak execution in the power segment, which is critical for the company’s performance.
Hyundai Motors India and HAL Updates
On a more positive note, CLSA has given Hyundai Motors India an “outperform” rating, with a target price of Rs 2,155. The company’s EBITDA margin reached 14.1%, exceeding expectations by 200 basis points. This improvement is attributed to a combination of price hikes, reduced discounts, a favorable product mix, and government subsidies.
Conversely, Morgan Stanley has downgraded Hindustan Aeronautics Limited (HAL) to “equal weight,” setting a target price of Rs 5,092. While analysts noted strong margins and a positive outlook for new orders, concerns about muted execution guidance led to this downgrade. The balance of risk and reward in HAL’s stock prompted the reassessment of its rating.
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