Author: root

Buy Birla Corporation for a target of Rs 1,740 on the stock

Birla Corporation is primarily engaged in the manufacturing of cement as its core business activity. It has significant presence in the jute goods industry as well.

The company plans to increase capacity by 30% over the next 12 months, which should support volume growth. Around 55% of its capacity is in Central India (a preferred market), which bodes well for the margin outlook.

Birla Corporation: Attractive on the valuations front

Birla Corporation first quarter results for FY 2022 was in line, with EBITDA growing by 47% YoY to Rs 3.4 billion, led by 39% growth in volume and EBITDA per tonne at Rs 1,026 (+6% YoY).

The ongoing 3.9 metric tonnes per annum greenfield expansion at Mukutban (to be commissioned in 4QFY22) provides strong volume growth visibility in FY23. While blended realization rose 3% year on year, to Rs 5,221 per tonne due to higher jute revenue, cement realization was flat year on year at Rs 4,943 per tonne (+2% QoQ).

“We expect a 14% earnings before interest, taxes, depreciation, and amortization Compounded Annual Growth Rate in FY21-23E, led by 14% volume Compounded Annual Growth Rate, as it expands capacity by 30% over the next 12 months. Valuation is also attractive at 7.4x FY23E EV/EBITDA. We reiterate our Buy rating,” the brokerage firm has said.

Buy NOCIL Stock for 20% upside

According to Motilal Oswal, NOCIL reported higher-than-estimated realization (pricing action taken in Apr’21 to offset the increase in input cost), while volumes came in below estimates (as operating activity at the customer was interrupted for 2-3 weeks by the second COVID wave). This translated to in-line revenue, although margins expanded.

“The management has guided that with no further supply surplus in the market, NOCIL should be able to pass on the cost going forward as well, Factoring in the beat on realization and margins, we revise our respective variables, resulting in an upward revision in EPS by 31% and 14% for FY22E/FY23E, ” the brokerage has said.

“As a result, we forecast a revenue/EPS CAGR of 28% and 47% over FY21-24E. Valuing the company at 22x Sep’23 EPS, we arrive at price target of Rs 340. Reiterate Buy,” it further added.

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, Motilal Oswal are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are at record highs, with the Nifty crossing the 16,000 points mark.

Midcap stocks that are cheap when compared to long-term averages

According to the “Bulls & Bears India Valuation Handbook” by Motilal Oswal Financial Services, there are many midcap stocks that are available at a discount to long-term averages, which automatically means that they are cheap.

Now, just because these midcap stocks are available at a discount, does not mean they become great investment bets. For example, investors maybe unwilling to buy the shares, because of issues surrounding growth, promoter related issues, or some issues that are a hangover on the stock. Therefore, it is not advisable to simply jump into stocks looking at the valuations and discount and go ahead and buy.

Here below we tell you whether you should buy these stocks.

Should you buy the stocks of SAIL, SUN TV, Zee and BOB?

Now, let’s take the case of SAIL. The stock has already had a solid run and is trading near 52-week highs. Metal prices have rallied and hence quarterly numbers of metal companies have been robust. Should the global economy slow, metal prices could fall and so would metal stocks.

Now as far as Zee Entertainment is concerned, the covid situation over the last 18 months or so has hit performance badly. Apart from this there have been issues in the past pertaining to the promoters pledged share to pay off debts in other group companies. SUN TV too has been hit by stiff competition and churning out solid growth rates looks difficult.

Bank of Baroda is a good midcap stock to buy

According to Motilal Oswal, earnings outlook is improving for government owned banks, led by a reduction in credit cost estimates, as most public sector banks have strengthened their provision coverage over the last couple of years.

Bank of Baroda is one stock that many analysts are optimistic on. Many analysts have set a higher price target on the stock. HDFC Securities said that the stock of Bank of Baroda inexpensive and valuation gives a comfort for long-term investment in a report recently.

“It is a play on the gradual recovery in the Indian economy. Any progress on the rollout of the proposed bad bank would be positive for large PSU banks like Bank of Baroda,” Motilal Oswal has said.

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, Motilal Oswal are not liable for any losses caused as a result of decisions based on the article. Investors should take care because the markets are at record highs, with the Nifty crossing the 16,000 points mark.

Buy Cipla With Upside Potential Of 32.23% For A Target Period of 12 Months

The brokerage firm ICICI Securities holds a bullish view on the stock of global pharma major Cipla. The firm has set a price target of Rs. 1205 on the scrip, implying an upside of 32.23% from the current market price of Rs. 911.30 in a short term of 12 months.

The company reported spectacular Q1FY22 results with sales inching higher by 26.6% YoY to Rs. 5504 crore. EBITDA also registered growth during the same period and was at Rs. 1345.9 crore, up 28% YoY with margins at 24%.

The brokerage firm in its report said, “We maintain BUY as we continue to focus on its core strength of following a calibrated approach of focusing more on branded products and core therapies across the world”. “We value Cipla at Rs. 1205 i.e. 28x P/E on FY23E EPS + Rs. 41 NPV for gRevlimid.

As per ICICI Securities, some of the triggers that will aid Cipla’s stock price upmove include the firm’s strategy of focusing on 4 verticals namely One-India, South Africa & EMs, US generics & specialty and lung leadership. Furthermore, the company is putting its focus on front end model for the US especially, and is gradually making a shift from loss-making HIV and other tenders to more profitable respiratory and other opportunities in the US and EU.

Alternate stock idea: Besides Cipla, in healthcare coverage ICICI Securities is bullish on Sun Pharma. “Higher contribution from specialty and strong domestic franchise is likely to change the product mix towards more remunerative businesses by FY23”.

Buy Tata Communications With Upside Potential Of 16.37% Over A 12-Month Period

The brokerage firm ICICI Securities has placed a ‘Buy’ call on the stock of global digital ecosystem enabler Tata Communications with a target price of Rs. 1725, implying an upside of 16.37% from the scrip’s last traded price of Rs. 1482.35.

ICICI Securities is of the view that the telecommunications company’s growth shall be aided by platforms such as a) cloud, edge, security, b) next generation connectivity, c) NetFoundry d) MOVE, IoT, wherein each have robust market size growth potential of 15-25% CAGR in next four to five years. “We expect approximately 8% revenue CAGR in FY21-23E in the overall data segment, driven by likely acceleration in growth from H2FY22 onwards. Strong cash flows generation to aid deleveraging”, added the brokerage.

Alternate Stock Idea: In the telecom vertical, apart from Tata Communications, ICICI Securities likes the scrip of Bharti Airtel and recommends buying it for a target price of Rs. 720 as against the current price of Rs. 607.9, which means an upside potential of over 18%. “A play on favourable industry structure – a good enough kicker for eventual hike in tariff as well as superior digital play in the medium to long term”, said the brokerage report.

Disclaimer:

Stock market investment is risky and one should be even more careful when markets are near record high. Investments listed out in the story are taken from brokerage report and are just for informational purpose. These should not be construed as investment advice.

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