Godrej Agrovet
The firm has said to “buy” the stock with a 16% upside from the current levels for a target price of Rs 758. The company is a diversified agri player, including significant presence in animal feed. Motilal Oswal sees many positives in buying the stock of Godrej Agrovet.
“Palm oil prices are expected to correct with increasing production from Indonesia and Malaysia. As per FAO, palm oil production globally is expected to increase 3% to 75.45mmt, driven by the expectation of a 6%/3% production jump to 45mmt/19.6mmt in Indonesia/Malaysia.
The Crop Protection business is expected to do well, largely owing to expected product launches in the standalone business (over the next 1-2 years), better performance from Astec Lifesciences owing to its expertise in Triazole chemistry, and the commencement of a new herbicide plant. We expect a 25% revenue CAGR over FY21-23,” the brokerage firm has said.
Godrej Agrovet: 16% returns likely
According to Motilal Oswal, the animal Feed segment is seeing lower demand from Hotels, Restaurants, and Catering (HORECA) due to the second wave and is still operating at lower capacity utilization v/s pre-COVID levels. This has impacted demand for milk, chicken, and eggs. While recovery in the segment has been marginally postponed, it is expected to deliver a better performance v/s FY21 on a low base.
“We expect a 39% revenue CAGR over FY21-23. We value the stock on an SoTP basis to arrive at target price of Rs 758. Maintain Buy,” the brokerage has said.
Shares of Godrej Agrovet were last seen trading at Rs 652, against the target price of Rs 758.
HDFC Bank
Motilal Oswal also has a buy on the stock of HDFC Bank and sees a 20% upside from current levels.
“HDFC Bank continues to deliver better growth trends v/s its peers, led by healthy trends in Wholesale advances. Also, Retail deposit trends remain healthy, while a sharp sequential drop in Wholesale deposits affected deposit growth in 1QFY22. In the near term, lifting of RBI restrictions and new stress formation due to the second COVID wave would be a key monitorable. We maintain our Buy rating with a target price of Rs 1,800 per share (3.5 times FY23E ABV),” the brokerage has said.
The shares of HDFC Bank were last seen trading at Rs 1512 against the current market price of Rs 1,800.
Godrej Consumer Products
Motilal Oswal Institutional Equities sees a 16% upside on the stock of Godrej Consumer Products and has suggested to buy the stock.
The firm sees Sitapati’s appointment as another important piece of the puzzle that unlocks the path to strong earnings growth for GCPL. The other factors attributed to buy the stock includes better capital allocation efforts in recent years, appointment of a new head in the erstwhile significantly underperforming GAUM (largely Africa) business, with good initial results in the first year of his tenure in FY21, and potential tailwind in Soaps and Personal Wash products, led by more frequent usage post COVID-19, and a sharp increase in penetration levels in the Hand Wash category.
“Valuing Godrej Consumer Products at 46 times Jun’23E EPS, we arrive at our price target of Rs 1,070, a 16% upside to its current market price. We maintain our Buy rating,” Motilal Oswal Institutional Equities has said in a report.
Shares of Godrej Consumer products were last trading at Rs 938 on the NSE.
Disclaimer
All of the above stocks are picked from the report of Motilal Oswal Institutional Equities. Investing in stocks are risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as markets have run-up significantly.
