PTC Ind, RIL among 5 Indian stocks in Goldman Sachs' APAC conviction list

Reliance Industries (RIL), Havells India, Titan Company, NASDAQ-listed MakeMyTrip and PTC Industries have found their way into Goldman Sachs’ ‘conviction list’ for the Asia Pacific (APAC) region. The research and broking house expects an upside ranging from 14 per cent to 54 per cent in these stocks over the next 12 months.

 

“We add Hon Hai, Samsung F&M, Guming, and PTC Industries to the APAC conviction list, while removing Anta, Asics, Ryohin Keikaku, Zai Lab, and Fujitsu,” wrote analysts at Goldman Sachs in a recent report.

 

While Titan remains a good play on affluent India and formalization in the jewellery sector, Goldman Sachs believes growth for Havells India is likely to re-accelerate and margins are set to expand in the months ahead.

 

For MakeMyTrip, Goldman Sachs analysts said, catalysts are in place for growth recovery, while accelerating EBITDA growth is likely to narrow NAV discount for RIL.

 

Betting big on defence

 

Among sectors, their biggest ‘conviction’ as regards India is on the defence sector, where Goldman Sachs believes PTC Industries is scores over its peers. Solar Industries, too, remains on Goldman Sachs’ radar given the company’s unique moat in high energetic materials.

 

For the defence sector, Goldman Sachs has focused on three key themes. First is an increase in the domestic defence total addressable market (TAM) by more than six-fold versus fiscal 2024-25 (FY25), to around Rs 10 trillion over the next 20 years. 

 

Second is the scope for indigenisation at the bottom of the technology pyramid; i.e., in areas such as components and processed materials where local players have been under-represented; and lastly higher defense exports given that the Indian government has targeted Rs 50,000 crore by FY29 against Rs 23,600 crore in FY25.

 

“Our analysts’ player framework in the domestic defense market is based on the parameters of order size, gestation period of orders, EBITDA margins, customer concentration, Business USP and dependence on others in the value chain. With the most upside, our analysts highlight Solar Industries (36 per cent upside) and PTC Industries – both private sector players – as key buys,” Goldman Sachs report said.

 

In the aerospace grade processed materials’ industry where supply, not demand, is the key concern, Amit Dixit, an analyst tracking the company at Goldman Sachs, believes that the combined advantages of PTC’s capabilities, contracts, and capacity (3Cs) are poised to position it uniquely within the Titanium (Ti) and Superalloys (SA) sectors.

 

Among his covered companies, Dixit he forecasts PTC Industries to record the highest earnings growth, a 123 per cent CAGR through to FY28. Furthermore, he estimates an EBITDA margin of over 40 per cent by FY29E, on the back of capacity ramp-up in castings, the best in the industry.

 

This steep earnings trajectory, he believes, will be led by PTC Industries' ramp-up in aerospace grade Ti and super-capacities. By end-FY26E, Dixit expects the company to have completed the commissioning of the largest single-site (recycled) Ti capacity in the world.

 

Due to the limited trading history of the PTCIL stock, Dixit of Goldman Sachs has discounted PTC Industries' FY31 EPS by its cost of equity (11.5 per cent) to FY27 and applied a target multiple of 27x P/E. His 12-month target implies a P/E of 158.3x and 52.9x on FY27 and FY28 earnings per share (EPS), respectively.