Month: July 2021

Buy Tata Elxi Stock for price target of Rs 5,000

Sharekhan has a buy on the stock of Tata Elxi with a price target of Rs 5,000, as against the current market price of Rs 4,100.

Sharekhan believes that growth is likely to remain strong for Tata Elxi in the coming years, as it focuses on high growth sectors (media and healthcare) and emerging technology areas (connected, autonomous, OTT, digital health, and medical devices, etc.), where the client allocates a higher budget.

The firm also believes that revenue for Tata Elxi is set to grow at twice the industry average, margin profile is superior and company has differentiated technological capabilities

“At the current market price, the stock is trading at 53x/44x/37x its FY2022E/FY2023E/FY2024E earnings, which though expensive is justified against anticipated 2x revenue growth as compared to industry’s average growth rate, superior margin, and solid execution. We maintain our Buy rating on Tata Elxi Ltd with a revised a target price of Rs. 5,000, given a strong balance sheet, consistent dividend payout, improving cash generation and its status as a preferred partner for clients,” the brokerage has said.

Shares in Tata Elxi last closed at Rs 4,100 on the NSE.

Buy HDFC Bank

HDFC Bank did not report a great set of quarterly numbers and the stock has been falling ever since the bank reported its numbers. The stock has seen sharp fall on Monday and Tuesday. Nonetheless, broking firm Sharekhan has set a price target of Rs 1800 on the stock as against the current market price of Rs 1,433,

According to the brokerage, the bank’s consistency is buoyed by its robust underwriting capability, risk measurement standards and focused on high quality corporates, which support the valuations.

“We find the management’s focus for stable NIMs, and a structurally improving cost-income ratio encouraging, while the high provisioning buffer should support asset quality and profitability. We have fine-tuned our estimates and the target multiple for the bank considering the dynamic environment. We retain a Buy rating on the stock with a unchanged price target of Rs. 1,810,” Sharekhan has said in its report.

L&T Infotech

The broking firm has also recommended the stock of L&T Infotech after its latest results. Sharekhan believes that there would be strong hiring, timely wage revisions, investments in sales and capabilities and strategies around on cloud & data would aid sustainable growth in coming years.

“We expect revenue to clock 17% CAGR over FY2021-24 “We expect L&T Infotech to deliver USD revenue/earnings CAGR of 16.7%/17.4% over FY2021-FY2023E. At the current market price, the stock is trading at 34x/29x/25x its FY2022E/FY2023E/FY2024E earnings, which, although expensive, is justified given possibilities of its strong revenue growth momentum with stable margins and a robust business model. Hence, we maintain our Buy rating on the stock of L&T Infotech with an unchanged price target of Rs. 4,800,” the broking firm has said.

Disclaimer

The above three stocks are picked from the brokerage report of Sharekhan. Neither the author, nor Greynium Information nor the brokerage would be responsible for any losses incurred based on a decision after reading the article. We at goodreturns.in have been constantly emphasizing the need to reduce over exuberance in stocks and invest with caution. So, please do be careful.

1. Reliance Infrastructure:

This is an Anil Dhirubai Ambani Group company, the company is primarily engaged in infra development and its core sectors include energy, infrastructure, E&C and defence. The company’s turnover as per the company website is Rs. 18,852 crore.

The company bagged ‘Best Metro of India 2016’ Award for having developed a marvel in Mumbai Metro one.

Stock price journey of Reliance Infra:

The company stock as in 2018 registered an all time high of Rs. 2641 and the last traded stock price of Reliance Infra is Rs. 76.85 per share, while its 52-week high and low are Rs. 109 and Rs. 19.2, respectively. The stock is part of the S&P BSe Small cap stock and is categorized in the ‘T’ category.

What weighed on Reliance Infrastructure stock?

For the last quarter of FY19, the company posted a huge loss of over Rs. 3000 crore and since then the stock has come crashing down. Now even as the group’s companies’ are under NCLT resolution there is a belief that recovery shall be much higher than what is owed to creditors and this is creating fresh interest for the stock.

Financials

As of now, regarding the company’s financials, its debt to equity is well below 1 i.e. a big positive, also the debtors turnover ratio is the highest at 4.6 times.

2. PC Jeweller:

It is the finest jewellery discovery platform offering a widest collection of curated designs to fit every occasion. The company takes pride in its policies that provide easy returns, free shipping, BIS Hallmark, 100% certified jewellery, life-time exchange, best and transparent prices and unique designs all under one roof.

Stock price journey

The jewellery company made its Indian stock market debut in the year 2012 and its price was fixed at Rs. 135 per share. The stock in the year 2018 made an all time high price of Rs. 600 and was last at July 20, 2021 quoted at a price of Rs. 26.40.

There were 2 concerns seen at the company then which led to a drag in its share price first there was a speculation made that the company’s promoters might have hidden information on its business association with Vakrangee. Also, one of the promoter in the company gifted his stake in the company to family members via off market transactions.

Latest financials and other metrics

For the June ended quarter the number of FIIs/FPIs in both number and % terms have increased their holding in the scrip, indicating positive momentum. The firm for the quarter ended March of FY21 posted positive financial results and for the complete financial year 2021, Profit figure came in at Rs. 60.84 crore. Another has been positive growth in PBT less OI of 186%.

3. Yes Bank:

Yes Bank was among the leading private sector bank in the country in existence since the year 2004. The commercial bank is into offering a host of services including investment banking, merchant banking & Brokerage businesses through YES SECURITIES and its Mutual Fund business through YES Asset Management (India) Limited, both wholly owned subsidiaries of the Bank.

What played havoc for Yes Bank scrip?

In mid 2019, Yes Bank scrip saw a lot of downgrades and even Moody’s placed private lender’s foreign currency issuer rating of Ba1 under review for downgrade. And from an all time high reached in Yes Bank’s scrip of Rs. 404 in 2018 again, the stock came tumbling down to Rs. 12.95 per share as of last trade.

Primarily the Moody’s note indicated that the liquidity pressure on the domestic finance firms is expected to impact the credit profile of YES Bank since it has substantial exposure to the weaker firms in the sector.

But later the crisis-ridden lender was rescued by RBI’s action plan and SBI led the bank’s recovery with a number of other banks taking the charge. Even after the recovery plan in place, the bank’s scrip didn’t saw much revival and it is substantially down from its all time high.

Yes Bank’s 52-week high and 52-week low price has been Rs. 20.75 and Rs. 11.1, respectively.

Financials still weak for the lender

– Net profit is -Rs. 3787.75 crore has fallen at 244%.

– NII is the lowest at Rs.968 crore

– Credit deposit ratio is also lowest at 102%

Conclusion:

So, as we have seen these scrips crashing down heavily from their all time highs, investors need to time to time evaluate their portfolio and get out of such stocks and hence this is where portfolio rebalancing comes to play.

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