Month: August 2021

As markets soared, PSBs raised a record Rs 58,700 via debt, equity, BFSI News, ET BFSI

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Make hay while the sun shines. As the stock market soared during the pandemic, public sector banks raised a record Rs 58,700 crore from markets in FY2020-21 through a mix of debt and equity to enhance the capital base.

Series of successful QIP reflect the confidence of both domestic and global investors in PSBs and their potential.

The fundraise

This included Rs 4,500 crore raised by Mumbai-based Bank of Baroda from qualified institutional placement (QIP). Punjab National Bank mobilised Rs 3,788 crore through share sale on a private placement basis during the financial year ended March 31, 2021.

At the same time, Bengaluru-based Canara Bank raised Rs 2,000 crore from QIP, as per data collated from regulatory filings.

In addition, 12 PSBs raised funds from Tier I and Tier II bonds taking the total fund mobilisation to Rs 58,697 crore, highest amount garnered in any financial year.

Government reforms

Various reforms undertaken by the government including recognition, resolution and recapitalisation resulted in progressive decline in non-performing assets (NPAs) and subsequent rise in profit.

NPAs of PSBs had declined to Rs 7,39,541 crore as on March 31, 2019, Rs 6,78,317 crore on March 31, 2020 and further to Rs 6,16,616 crore as on March 31, 2021 (provisional data). Provision Coverage Ratio (PCR) at the same time increased sequentially to a high of 84 per cent.

As a result, PSBs in aggregate recorded a profit of Rs 31,816 crore, highest in five years, despite 7.3 per cent contraction in economy in 2020-21 due to COVID-19 pandemic.

The primary reason for PSBs to post such a Rs 57,832-crore turnaround from a loss of Rs 26,015 crore in 2019-20 to a combined profit of Rs 31,816 crore was the end of their legacy bad loan problem.

At the same time, comprehensive steps were taken to control and to effect recovery in NPAs, which enabled PSBs to recover Rs 5,01,479 crore over the last six financial years.

Credit growth

Overall credit growth of Scheduled Commercial Banks (SCBs) has remained positive for 2020-21 despite a contraction in GDP (-7.3 per cent) due to the COVID-19 pandemic.

As per the RBI data, gross Loans and Advances of SCBs increased from Rs 109.19 lakh crore as of March 31, 2020, to Rs 113.99 lakh crore as of March 31, 2021.

Further, as per RBI data of loans to agriculture and allied activities, micro, small and medium enterprises, housing and vehicles have witnessed a year-on-year growth of 12.3 per cent, 8.5 per cent, 9.1 per cent and 9.5 per cent respectively during the year.



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3 Stocks That Motilal Oswal Is Recommending As A Buy For Gains Up To 53%

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Indian Oil Corporation

Current market price Rs 105
Target price Rs 157

Motilal Oswal sees a whopping 53% gains on the stock of Oil Marketing Company, Indian Oil Corporation. Indian Oil reported a beat on our estimates, led by higher-than-estimated reported GRM marketing margins and marketing sales volumes, the brokerage has said.

“With the total phasing out of the COVID lockdowns and closure of refinery complexes (est 3mnbopd over the next 2–3 years), the refining margin would return to its long-term average (of USD5–6/bbl).

Consolidated debt declined further to Rs 857 billion in 1QFY22 (down 16% v/s end FY21). We maintain Buy, with combined FCF yield and dividend of 21-25% over FY22–24E. It trades at 6.1x consolidated FY23E EPS and 0.7 times FY23E price to book value the firm has said.”

According to the firm, Indian Oil has traded at a huge discount in the recent past decade owing to its capex cycle and CPSE-led liquidity. “We value it at 1.1x Sep’23 PBV, to arrive at price target of Rs 157 and maintain a Buy,” the firm has said.

Buy Sun Pharma

Buy Sun Pharma

Current market price Rs 775.65
Target price Rs 900

According to Motilal Oswal Sun Pharma’s earnings were well above its expectation, led by over 25% growth in all segments, except API. Steady traction in the Specialty portfolio, recovery in the core portfolio of Branded Generics, new launches in US Generics, and partial benefit of COVID-related products led to strong growth in 1QFY22 earnings. The brokerage has now decided to raise its owsn FY22E/FY23E earnings estimate by 5%/6% to factor in: a) continued ramp-up in Ilumya-led Specialty portfolio, b) addition of products in the Specialty portfolio, and c) strong COVID-related offtake, revival in core therapies, and healthy pace of launches in Domestic Formulation.

“We value Sun Pharma stock at 25x 12-months forward earnings to arrive at our price target of Rs 900,” the brokerage has said.

Buy Shriram Transport Finance

Buy Shriram Transport Finance

Current market price Rs 1385
Target price Rs 1,600

Motilal Oswal also has a buy on the stock of Shriram Trannsport Finance, with an upside of 15% on the stock.

According to the brokerage, while demand was weak over the last two years, strong signs of a demand revival was seen in 2HFY21. We expect this to continue into FY22 as well. “Over the last three years, the company has diversified into newer sources of borrowing, such as retail NCDs and ECBs. The share of ECBs in total borrowings has increased meaningfully to 21% (from 13% six quarters back). It was also able to tap the debt markets in the last four quarters. While demand was weak over the last two years, strong sign of a demand revival was seen in 2HFY21 and we expect this to continue in FY22 as well. We now model an assets under management CAGR of 12% for over Shriram Transport Finance FY21- FY24E.

Disclaimer

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Please consult a professional advisor before taking any decision.



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3 Stocks To Buy For Strong Returns, Says ICICI Securities

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3 Stocks To Buy For Strong Returns, Says ICICI Securities

Stocks Current Market Price Target Price Upside Potential
Marico Rs 548 Rs 630 15%
Shoppers Stop Rs 273.50 Rs 310 17%
Oberoi Realty Rs 705.50 Rs 830 23%

Buy Marico, Says ICICI Securities

Buy Marico, Says ICICI Securities

Marico is a prominent FMCG company with products in the hair oil, edible oil, meals, and personal care categories.

In its most recent research, broking firm ICICI Securities advised investors to buy Marico stock.

According to the broking firm, Marico reported strong sales increase in the first quarter of FY22. Sales increased by 31.2 percent year over year due to robust volume recovery and price increase. However, the resulting PAT was Rs 365 crore (down 5.3 percent YoY).

Current Market Price Rs 545.30
Target Price Rs 630
Upside Potential 15%

Marico

Marico

According to ICICI Securities, Marico’s goal is to create 450-500 crore in sales with its digital-first brand by FY24. E-commerce channels have grown by 61 percent and currently account for 9% of all domestic sales. In both urban and rural areas, the general trade channel rose by 17%.

“Marico’s share price has given 84% return in the last five years. We roll over FY24 numbers with expectations of a full recovery in all segments and stabilisation of commodity prices. We continue to maintain our BUY rating on the stock Target Price and Valuation: We value the stock at Rs 630 on ascribing 50x FY24 earnings multiple”, ICICI Research has said.

“The company is leveraging its existing brands & tailwind in healthy foods habits to grow the category. We believe newer subcategories within foods, digital-only brands would be driving the growth for the company in the future. We remain positive on the company. We value the stock 50x FY24 earnings with the target price of Rs 630/share & BUY recommendation,” the brokerage has said.

Buy Shoppers Stop, Says ICICI Securities

Buy Shoppers Stop, Says ICICI Securities

Shoppers Stop (SSL) is one of India’s largest department stores, and it has undergone a number of structural changes with the goal of increasing its share of private label brands and expanding its beauty portfolio, as well as accelerating growth through digital channels and providing a better shopping experience through “personal shoppers.”

Broking firm, ICICI Securities has suggested buying the stock of Shoppers Stop with an upside target of almost 17% from the current levels.

Current Market Price Rs 273
Target Price Rs 310
Upside Potential 17%

Shoppers Stop

Shoppers Stop

According to the brokerage, Covid induced lockdowns significantly disrupted the quarter but headline numbers beat consensus estimates. Revenue de-grew 70% QoQ to Rs 201.1 crore. The company achieved operational cost savings worth Rs 140 crore.

“The stock price has underperformed the broader indices over the last five years on account of weak SSSG, muted store addition pace and lower share of private label brands. With the new management team in place, we expect SSL to revive its revenue trajectory and margin profile. Reasonable valuations prompt us to be positive on the stock and maintain BUY Target Price and Valuation: We value SSL at Rs 310 i.e. 8x FY23E EV/EBITDA,” the broking firm has said.

Buy Oberoi Realty, Says ICICI Securities

Buy Oberoi Realty, Says ICICI Securities

The brokerage has set a target of Rs 830 on the stock of Oberoi Realty, as against the current market price of Rs 672.

According to ICICI Securities, ORL reported weak Q1FY22 results as expected. The company recorded a sales volume of 0.9 lakh square feet out of Q1FY21’s basis, but down 91 percent QoQ) owing to the second wave’s impact. The sales value was up 5.9 times year over year but dropped 91 percent quarter over quarter.

Current Market Price Rs 698.35
Target Price Rs 830
Upside Potential 23%

Oberoi Realty

Oberoi Realty

“ORL’s share price has grown 2.2x over the past five years. We maintain our BUY rating on the company Target Price and Valuation: We value ORL at Rs 830/share,” the brokerage has said.

“While Q1FY22 was a washout, we expect sales momentum in FY22 to be as robust as FY21, driven by new launches in Thane and subsequent phases of Borivali/Goregaon. Thus, we maintain BUY with a revised target price of Rs 830/share,” the brokerage added.

Disclaimer

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are near record highs.



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RBI’s new rules on interchange fee, 24/7 bulk clearing facility functional, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India‘s new directions on raising interchange fee and making available the facility of bulk clearing round the clock have become effective from Sunday onwards.

The RBI in June raised the interchange fee for financial transactions from Rs 15 to Rs 17, while for non-financial transactions the increase was done from Rs 5 to Rs 6. These new rates have become applicable from August 1, 2021, as per the RBI’s direction.

An interchange fee is a fee charged by banks to the merchant who processes a credit card or debit card payment.

Besides, the National Automated Clearing House (NACH) has been made available on all days of the week, effective August 1, 2021.

NACH, a bulk payment system operated by the National Payments Corporation of India (NPCI) facilitates one-to-many credit transfers such as payment of dividend, interest, salary and pension.

It also facilitates the collection of payments pertaining to electricity, gas, telephone, water, periodic instalments towards loans, investments in mutual funds and insurance premiums.

During the bi-monthly monetary policy review in June, RBI governor Shaktikanta Das had announced that in order to further enhance the convenience of customers, the NACH will be available on all days of the week.

The facility was available only when banks were open, usually between Monday to Friday. Auto-debit instructions given by the bank account holder were not processed on days the bank were closed like Sundays, bank holidays and even gazetted holidays. Further, since most companies use NACH for salary credits these also did not happen on bank holidays.

Meanwhile, ICICI Bank has revised charges for cash withdrawals from ATMs, cheque books and other financial transactions from August 1. The revised charges will be applicable for domestic savings account holders including salary accounts.



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Bitcoin rallies past $40,000 level to highest since mid-May, BFSI News, ET BFSI

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The largest cryptocurrency gained Sunday for an 11th day in the past 12 and traded up to $42,606, its highest since May 18. Market watchers have pointed to $40,000 as an important inflection point. It was up about 0.5% at $41,739 as of 6:13 a.m. New York time on Sunday.

“A run like this certainly suggests some flow backing,” said Jonathan Cheesman, head of over-the-counter and institutional sales at crypto derivatives exchange FTX, in a note Saturday. “Of course, it now needs to stabilize here — and above the high from May 20 would be further confirmation.” Bitcoin traded as high as $42,541 on May 20.

Bitcoin, which for weeks trended downward from its mid-April record near $65,000, has now spent more than a week building back as supportive comments from Elon Musk and Cathie Wood helped bump it out of a declining trend. Digital-asset-related job postings by Amazon.com Inc. and resulting speculation helped as well.

Edward Moya, senior market analyst for North America at Oanda Corp., a offered a note of caution about the recent run.

“Retail interest is strong, while institutional interest is somewhat lagging and needing fresh endorsements,” he said in a note on Friday. “Bitcoin volatility might remain elevated over the weekend and traders should not be surprised if a spike occurs toward the $42,000 level during some illiquid times.”

Still, the cryptocurrency has risen over the past week back above its 50- and 100-day moving averages, with the 200-day at about $44,700 in sight.

“It won’t be surprising to see Bitcoin expand the $30,000 to $42,000 trading range on the upside and attempt $45,000,” Pankaj Balani, chief executive officer of crypto derivatives exchange Delta Exchange, said in a note July 27.

“However, breaking above $50,000 will take some doing for Bitcoin. Only a conclusive break above $50,000 would attract fresh flows and signal a change in the broader direction for the market.”



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Banks’ use of FD-OD fix irks RBI, BFSI News, ET BFSI

Banking & Finance

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Banks are cutting new deals with corporates to dodge a recent Reserve Bank of India (RBI) rule. The tactic is not going down well with the regulator, which has got wind of it.

Loosely called the ‘FD-OD’ deal, it’s a simple arrangement where a company parks some funds as fixed deposits (FD) and the bank gives an overdraft (OD) to the client. The innocuous transaction is being used as a ploy to overcome the rule prohibiting a bank from having a current account of a company to which it has given little or no loans. According to the regulation, abank with less than 10% of total approved facilities — comprising loans, non-fund businesses such as guarantees and overdrafts —to a company cannot have its current accounts, which are sought after by lenders as zero-interest deposits lower cost of funds.

RBI had directed all banks to give up such current accounts by July 30. The regulator, according to media reports, had even frozen accounts after some banks failed to meet the deadline.

In the past few weeks, though, here’s what many companies and banks have done. Say, total facilities by the banking industry to a company is Rs 1,000 crore, while the bank that holds the company’s current accounts has only Rs 10 crore loan exposure to the entity. According to the RBI directive, it has to then surrender the current account. Now, to bypass this rule, the FD-OD arrangement is entered into. To maintain the current account with the same bank, the company makes an FD of Rs 105 crore with the bank, which, in turn, extends a ‘secured OD’ of Rs 100 crore. Since the bank’s exposure to the company (by virtue of the OD) is now 10% of the total facilities approved by the banking industry, the current accounts are retained by it without taking any extra risk.

“RBI has come to know of these back-to-back deals,” said a senior banker. “Senior supervisory managers (of RBI) assigned to various banks are enquiring with banks to check whether the regulation is being followed in letter and spirit. Deputy governor MK Jain is serious about the directive, even though it boils down to micromanagement by the central bank. Even if an RBI official thinks differently, he has to follow the instructions.” (Jain’s responsibilities include supervision and HR, among other things).

“Technically, banks are not breaking any rules. So, on what grounds would RBI stop ODs?” said the banker.

The regulation stems from RBI’s belief that errant corporate borrowers will find it tougher to divert funds if their current and collection accounts lie with lending banks. However, industry sources say that current accounts are often kept with non-lending banks due to genuine business reasons. Not all lending banks, say industry sources, have good cash-management practices that corporates require for vendor payments, escrow accounts, collection from sales etc.

TEMPORARY SOLUTION

Bankers, however, know that the FD-OD deal can only be a temporary solution, as companies may pull out FDs if there is a sudden fund crunch.



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PM Modi to launch e-RUPI on August 2. Here’s all about the cashless digital payment solution, BFSI News, ET BFSI

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Prime Minister Narendra Modi will launch e-RUPI, a person and purpose specific digital payment solution on Monday via video conferencing. The event will take place at 4.30 pm. e-RUPI is a cashless and contactless instrument for digital payment.

What is e-RUPI
e-RUPI is a QR code or SMS string-based e-Voucher, which is delivered to the mobile of the beneficiaries. The users of this seamless one-time payment mechanism will be able to redeem the voucher without a card, digital payments app or internet banking access, at the service provider.

e-RUPI connects the sponsors of the services with the beneficiaries and service providers in a digital manner without any physical interface. It also ensures that the payment to the service provider is made only after the transaction is completed. Being pre-paid in nature, it assures timely payment to the service provider without involvement of any intermediary.

The instrument has been developed by the National Payments Corporation of India on its UPI platform, in collaboration with the Department of Financial Services, Ministry of Health & Family Welfare and National Health Authority.

Can also be used for other government schemes
It can also be used for delivering services under schemes meant for providing drugs and nutritional support under Mother and Child welfare schemes, TB eradication programmes, drugs and diagnostics under schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana besides fertilizer subsidies.

A PMO release said that the Prime Minister has always championed digital initiatives. Over the years, several programmes have been launched to ensure that the benefits reach their intended beneficiaries in a targeted and leak-proof manner, with limited touchpoints between the government and the beneficiary. The concept of electronic voucher takes forward this vision of good governance, the release said.

Another tool for good governance
Over the years, several programmes have been launched to ensure that the benefits reach its intended beneficiaries in a targeted and leak-proof manner, with limited touch points between the government and the beneficiary. The concept of electronic voucher takes forward this vision of Good Governance.

Mobile telephony & India
While the DBT scheme relies on the troika of Jan Dhan accounts, Aadhaar numbers — although Aadhaar is not mandatory — and mobile phones, the e-RUPI system will not require users’ bank account details. The only requirement is for the beneficiary’s mobile phone number. The DBT scheme notes that it relies on 100 crore mobile connections to reach aid to beneficiaries.



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BIS Innovation Hub, Monetary Authority of Singapore propose enhancing global real-time retail payments network connectivity, BFSI News, ET BFSI

Banking & Finance

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The Bank for International Settlements Innovation Hub Singapore Centre and the Monetary Authority of Singapore (MAS) has published a proposed blueprint for enhancing global payments network connectivity via multilateral linkages of countries’ national retail payment systems.

Titled Project Nexus, this blueprint outlines how countries can fully integrate their retail payment systems onto a single cross-border network, allowing customers to make cross-border transfers instantly and securely via their mobile phones or internet devices.

“Project Nexus is trying to achieve the equivalent of internet protocols for payments systems. That means creating a model through which any country can join by adopting certain technical and governance requirements,” said Benoît Cœuré, Head of the BIS Innovation Hub.

The main elements

The Nexus blueprint comprises Nexus Gateways, which would be developed and implemented by the operators of participating countries’ national payment systems, will serve to coordinate compliance, foreign exchange conversion, message translation and the sequencing of payments among all participants. These gateways will be predicated on a common set of technical standards, functionalities and operational guidelines set out within the proposal.

Another element of the blueprint is overarching Nexus Scheme that sets out the governance framework and rulebook for participating retail payment systems, banks and payment service providers to coordinate and effect cross-border payments through the network.

Sopnendu Mohanty, Chief FinTech Officer, MAS, said “To achieve significant cost-reduction in cross-border payment transfers, enhancements must be made on two fronts: direct connectivity between domestic faster payment systems, and frictionless foreign exchange on shared common wholesale settlement infrastructures. The BIS Innovation Hub Singapore Centre is working on both. The Nexus project maps out a much-needed set of standards to achieve seamless cross-border payment systems connectivity.”

How it will work

Under the Nexus blueprint, participating countries will only need to adopt the Nexus protocols once to gain access to the broader cross-border payments network. This removes the need for countries to negotiate payment linkages with each jurisdiction on a bilateral basis.

The Nexus blueprint was developed through extensive consultation with multiple central banks and financial institutions across the globe. It builds on the pioneering bilateral linkage between Singapore’s PayNow and Thailand’s PromptPay launched in April 2021, and benefits from the experience of the National Payments Corporation of India’s (NPCI) development and operation of the Unified Payments Interface (UPI) system. The blueprint can be built upon through continued research and engagement with regulators, payment operators, banks, and other industry participants collaborating towards a technical proof-of-concept.

“Country-to-country and regional payment connections already exist,” notes Andrew McCormack, Head of the BISIH Singapore Centre. “But they require significant coordination efforts, which increase exponentially with more participants. Three countries require three bilateral links but 20 countries would require 190 bilateral links.”

“This blueprint will bring like-minded regulators and instant payments operators along with global bodies like the G20 and the Committee on Payments and Market Infrastructures (CPMI) together to make real-time cross-border payments a reality in the next two to four years”, noted Arif Khan, Chief Digital Officer, NPCI.



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From Indian FinTech to Wall St, companies roll out red carpet for young talent, BFSI News, ET BFSI

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As the pay gap between tech firms narrows, wall Street banks are going the extra mile to retain junior workers.

As young workers quit or face burnout, companies are trying to turn the tide with raises, bonuses, vacations and even free Pelotons.

Investment bank Houlihan Lokey Inc, is offering a five-night stay at a Caribbean retreat where a room night costs $1,000, as a reward after a year of record profits.

It’s also never been more lucrative for aspirants to work outside the gilded world of finance with tech firms creating enormous wealth on the stock market.

A presentation prepared by 13 first-year analysts at Goldman Sachs Group Inc. earlier this year drove a reckoning across Wall Street after it shone a spotlight on the working conditions for junior bankers — some of them were toiling hundred hours a week while their physical and mental health suffered. Goldman responded by easing up on weekend hours and pledging to increase staff in its most-active businesses.

The new six-figure salaries for first-year analysts at Citigroup Inc., JPMorgan Chase & Co. and others are close to double the estimated national average wage. BlackRock Inc., the world’s largest asset manager, joined the war for workers by announcing an 8% blanket raise for employees.

BharatPe offers

In India, BharatPe has offered all new tech team joinees an option to choose between “Bike Package” or “Gadget Package”, according to reports. The Bike package has 5 bikes as options – BMW G310R, Jawa Perak, KTM Duke 390, KTM RC 390 and Royal Enfield Himalayan. The gadget package includes – Apple iPad Pro (with Pencil), Bose Headphone, Harman Kardon Speaker, Samsung Galaxy Watch, WFH desk and chair, and Firefox Typhoon 27.5 D bicycle.

The company will also host its entire Tech Team in Dubai for the ICC Men’s T20 World Cup from October 17- November 14, 2021.

Demanding workers

It’s not just in finance that workers are becoming more demanding — a similar scenario playing out nationwide. Businesses from McDonald’s Corp. to country clubs in Nashville, Tennessee, have raised wages and offered hiring bonuses to lure new workers. From March to May, the rate of U.S. workers voluntarily quitting their jobs rose to its highest level in at least two decades. In Washington, lawmakers are sparring over raising the minimum wage to $15 an hour.

Last month dozens of the US’s top law firms raised first-year wages to $202,500, give or take a couple of thousand. They’re also offering multiple annual bonuses and extra time off as they fight to retain talent and their workers face burnout.

Wall Street banks

JPMorgan is also encouraging more personal time for employees to be offline and will enforce many policies already in place to protect weekends and provide extra flexibility for junior bankers.

Goldman Sachs Group Inc’s chief last month responded to complaints from junior bankers by saying the management is going to work harder to give them Saturdays off and to shift bankers from other divisions to the busiest teams in the investment bank. read more

JPMorgan also plans to conduct a quarterly review to evaluate how junior bankers are spending their time and will hold senior management accountable in their performance reviews and year-end compensation.

Additionally, every group head is required to call two to three junior bankers daily and ask “what’s working and what’s not?”



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Buy These 2 Stocks For Good Gains, Says Broking Firm Sharekhan

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Buy Nestle India: Sharekhan

Broking firm Sharekhan has said to buy the stock of FMCG major Nestle in its latest report. According to the broking firm, Nestle India’s Q2CY2021 performance was mixed with revenues growing 14%, while operating profit margins was flat at 24.4% (lagging its own as well as the street’s expectation of 25%).

Current market price Rs 17,726
Target price Rs 20,435

Expectations of financials in years to come by Sharekhan

Calendar year 2021 Calendar year 2022
EPS Rs 260.6 Rs 303.8
Price to earnings 69.1 59.3
Price to book 73.5 65.8
RONW % 114.1 117.1

Target price of Rs 20,345 on Nestle India

Target price of Rs 20,345 on Nestle India

According to Sharekhan, the domestic business of Nestle India maintained double-digit growth momentum at 13.7%, across all key categories seeing an improvement in sales.

“We expect Nestle India to take prudent price hikes and focus on efficiencies to mitigate the impact of input cost inflation in the quarters ahead. The company has invested Rs. 1000 crore of the planned investment of Rs. 2600 crore (including the capital expenditure) for improving growth prospects,” Sharekhan has said.

“The company will transfer Rs. 837.4 crore banked in its general reserve to retain earnings with effect from January 1, 2022 that can be utilised for higher payouts to shareholders in CY2022. Stock trades at 59.3/50.7x its CY2022/23E earnings. We maintain a Buy with a revised price target of Rs. 20,435,” the brokerage has said.

Shares of Nestle were last seen trading at Rs 17,725 on the NSE.

Buy Dalmia Bharat stock, says Sharekhan

Buy Dalmia Bharat stock, says Sharekhan

Another stock that Sharekhan has a buy on is the stock of Dalmia Bharat. The brokerage sees a decent upside in the stock of this cement player.

Current market price Rs 2,138
Target price Rs 2,410

Expectations of financials of Dalmia Bharat (Sharekhan estimates)

FY 2021 FY 2022
EPS Rs 53.6 Rs 48.1
Price to earnings 40.0 44.7
Price to book 73.5 65.8
RONW % 114.1 117.1

Price target of Rs 2,410 on the stock

Price target of Rs 2,410 on the stock

According to Sharekhan, Dalmia Bharat has addressed its medium and long term growth plans through its decadal capital allocation plan which would ensure more predictable, sustainable and profitable growth path going ahead.

“The plan also addresses key issues such as transparency, corporate governance, treasury allocation and divestment of non-core assets which are key positive takeaways. The company would be focusing on achieving 14-15% RoCE over next few years and maintain balance sheet quality. We have marginally lowered our estimates for FY2022-FY2023 factoring lower Operating Profits Margin.

Dalmia Bharat stock is currently trading at an EV/EBITDA of 13x/11x its FY2023E/FY2024E earnings, which we believe leaves room for further upside considering its strong earnings growth trajectory over the next three years. Hence, we retain Buy with a revised price target of Rs 2,410,” the brokerage has said.

Disclaimer

Disclaimer

Investing in stocks poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Please consult a professional advisor before taking any decision.



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