Author: root

Buy the stock of Tata Consumer Products for 19% upside

Broking firm, ICICI Securities has said to buy the stock of Tata Consumer Products with an upside target of 19% on the stock. According to the broking firm, TCPL has 1500 distribution points in India, reaching 0.82 million outlets directly, with a target of 1.0 million outlets by September 2021. The company is also expanding its rural presence with 3x feet on the street, 2000 rural distributors, and 300 super stockists.

“TCPL’s share price has moved up 5.5x in the last five years (from Rs 140 in August 2016 to Rs 759 in August 2021).  We roll over FY24 numbers on expectations of continued growth momentum with health, ayurveda & natural consumption tailwinds  We continue to maintain BUY rating on the stock Target Price and Valuation: We value the stock at Rs 900 ascribing 55x FY24 earnings multiple,” the brokerage has said.

Buy Kalpataru Power: ICIC Securities

Brokerage firm, ICICI Securities also has a buy call on the stock of Kalpataru Power, with a 16 % upside target from the current levels.

According to the broking firm, for FY22E, management expects revenue growth of 10% to 15%, with order inflows of Rs 9000 crore (5000 crore in T&D and Rs 2000 crore each in railroads and oil and gas). For FY22E, margins are likely to remain in the double digits.

“We believe monetisation of non-core assets to improve balance sheet health and return ratios in the long run. We remain long term positive and retain our BUY rating on the stock. Target Price and Valuation: We value KPTL at Rs 550 on an SoTP basis,” the brokerage has said.

Buy Titan: ICICI Securities

The brokerage is also bullish on the stock. The brokerage says Titan has repeatedly demonstrated its capacity to acquire market share in a challenging industrial environment, owing to its solid balance sheet (30 percent+ RoCE and cash & investments of Rs 2000+ crore) and brand loyalty.

“Titan has been an exceptional performer in the discretionary space with stock price appreciating at ~34% CAGR in last five years. We continue to remain structurally positive and maintain BUY rating Target Price and Valuation: We value Titan at Rs 2110 i.e. 60x FY24E EPS.

Working capital management has been a top goal for the corporation, which has kept inventory under tight control and placed a greater emphasis on gold on lease replenishment. As a result, the company’s cash position has significantly improved.” the brokerage has said.

Buy Transport Corp; ICICI Securities

ICICI Securities has a buy call on Transport Corp., but believes the stock has a 17 percent upside from present levels. TCI had great results, outperforming expectations on all fronts. Revenues increased by 86 percent year on year to Rs 611 crore, with freight, SCM, and shipping revenue increasing by 82 percent, 106 percent, and 68 percent, respectively.

“TCI has been continually improving its margin profile by efficiently handling its fleet utilisation and other cost control measures, which has led to a sharp run-up in the stock. •We remain positive on the stock and maintain our BUY recommendation Target Price and Valuation: We value the stock at | 520 (SOTP).

TCI captures higher wallet share of its customers by providing diversified range of services via a single window. The variety of services also helps TCI to ride over volatile periods,” the brokerage has said.

Disclaimer

The above stocks are based on the report ICICI Securities. Investing in stocks is risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as are at record peaks. Please consult a professional advisor.

PSU banks stocks that are available at discount

From the above table, it can be seen that the stock of Indian Bank is the cheapest in terms of valuations and hence is a solid pick. The shares of Indian Bank are available at a price to earnings multiple of just 3.5 times and are available at a discount of 66% to long-term averages as per the Motilal Oswal Bulls & Bears, handbook on valuations in India.

Why you should buy select PSU bank stocks?

According to the handbook, PSU Banks are trading at a P/B of 1.1 times, near their historical average of 1 times. “Some public sector banks reported lower slippage trends v/s select Private Banks. The corporate cycle is also clearly turning, and we expect public sector banks to benefit from it,” says the Motilal Oswal Bulls & Bears, handbook on valuations in India

The brokerage has also noted that the earnings outlook is improving, led by a reduction in credit cost estimates, as most public sector banks have strengthened their provision coverage over the last couple of years.

“Select public sector banks have also undergone a capital raise to prepare themselves for growth opportunities. Also, the current capital position of most public sector banks has improved,” the Motilal Oswal Bulls & Bears, handbook has said.

SBI and Indian Bank are stocks to buy from the PSU banking space

Within public sector banks, State Bank of India appears well-positioned to report a strong up tick in earnings, led by a normalization in credit costs and improvement in the business momentum in both the Retail and Corporate segment.

“Among PSUs, we estimate State Bank of India to reach a decade-high RoE of 15% by FY23E. SBI remains the top share to pick,” the brokerage has said.

Emkay Global and Motilal Oswal have upside of almost 31% to 34% on the stock on SBI. Last month the brokerage firm Emkay Global raised the target price on Indian Bank to a whopping Rs 225 from the current market price of Rs 135.

The 2 stocks of Indian Bank and SBI would remain the top stocks to buy, because of what analysts are betting and the discount to long term averages on these stocks.

“Overall, most public sector banks are trading at reasonable valuations, with an improving earnings outlook,” Motilal Oswal has said in its bulls and bears handbook.

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. Investors should take precaution because the markets are near record highs.

Benefits and annuity options

Option I: Life Annuity with 100% purchase price return and Option II: Joint Life Last Survivor Annuity with 100% purchase price return on death of the last survivor are the two annuity options available under this plan. According to LIC, once annuity choice is preferred, it cannot be changed. The following are the benefits available under the two annuity options:

Benefits under Option 1: According to the preferred mode of an annuity payment, annuity payments shall be issued in arrears throughout the lifespan of the annuitant. The annuity payment terminates, and the purchase price is paid to the nominee(s)/legal heirs in full, in case of death of the annuitant.

Benefits under Option 2: As long as the annuitant and/or spouse are alive, the annuity sum will be paid in arrears according to the chosen annuity payment mode. The annuity payments will end immediately upon the death of the last survivor, and the nominee(s)/legal heirs will receive 100 percent of the purchase price.

Mode of annuity payment

Annual, half-yearly, quarterly, and monthly annuities are offered. The annuity will be paid in arrears, which means it will be paid after 1 year, 6 months, 3 months, and 1 month from the date of policy inception, based on whether the annuity is paid annually, half-yearly, quarterly, or monthly. The Minimum Purchase Price is determined by the minimum annuity the option selected, and the annuitant’s age. The maximum purchasing price is limitless. Option II, the Joint Life Annuity, is exclusively available to spouses. In the case of joint life annuity choices, the age of the spouse is also subject to the minimum entry age.

Incentives

The following is the incentive for a higher purchase price via an increase in the annuity rate:

For policies purchased online, a 2% rebate in the form of an increase in the annuity will be offered.

Surrender value

At any time after six months from the date of initiation, if the annuitant, spouse, or any of the annuitant’s children is hospitalized due to suffering from any of the specified critical illnesses, the policy can also be surrendered by submitting the required documents. If the surrender is approved, the annuitant will receive 95% of the purchase price, with a deduction of any outstanding loan amount and any loan interest. All other benefits will cease upon payment of the surrender value, and the policy will be terminated. Any adjustments to the surrender value calculation procedure may be implemented only with IRDAI’s prior permission.

Loan facility

The loan is available at any time after six months from the policy’s inception date. Under the joint-life annuity option, the loan can be acquired by the annuitant. And at the death of the annuitant, the loan can be obtained by the spouse. The maximum loan amount that can be provided under the policy should not surpass 50% of the yearly annuity amount payable under the scheme. The interest on the loan will be deducted from the annuity balance payable under the policy. The interest on the loan will accumulate at the same rate as the annuity payments under the policy, and it will be payable on the annuity’s payable deadline. Any outstanding loan will be recovered from the policy’s claim payouts.

The annuitant, on the other hand, has the option of repaying the loan principal at any point throughout the term of the annuity payouts. For all loans starting between May 1 and April 30, the yearly effective rate will be similar to the 10-year G-Sec rate p.a. + 200 basis points. The 10-year G-Sec rate will be determined on April 1st of the applicable fiscal year. The determined interest rate will apply for the entire period of the loan. The relevant interest rate for the loan authorized for the 12-month period starting 1 May 2021, and ending 30 April 2022, is 8.44 percent per year, valid for the entire duration of the approved or sanctioned loan.

State Bank of India: Buy says Emkay Global

First quarter FY22 operating performance beat estimates on healthy fees/treasury gains, but high provisions led to a 5% miss on net profits at Rs 65 billion (estimates Rs 68.4 billion). “Asset quality performance was mixed, with gross non performing assets up 34 basis points qoq to 5.3% (led by retail/SME), restructured pool rising moderately to 0.8% of loans (pipeline at 0.1%) and SMA pool flat quarter-on-quarter at 0.5%,” Emkay Global has said.

Emkay Global sees solid returns from SBI stock

State Bank of India has already seen decent non performing assets clawback of Rs 48 billion in July with a pickup in collections, while restructuring should reduce SME NPAs. This, along with the transfer of non performing assets to NARCL (Rs 200 billion/0.8% of loans) and resolutions via NCLT, should meaningfully bring down Non Performing Assets.

“We trimmed earnings estimates for FY22-23 by 5/3%, but expect the bank to deliver 13-15% Return on Equity over FY22-24E (seen before AQR),” the brokerage has said.

Retain Buy and overweight stance with a target price of Rs 600 on the stock of State Bank of India, valuing core bank at 1.4 times Sep’23E ABV and subs/investments at Rs185, leading to a 32% upside. SBI is the second best pick after ICICI, and we believe that better-than-expected growth/asset quality movement could provide further upsides to earnings/valuations,” the brokerage has said.

Kalpataru Power & Transmission

According to Emkay Global, Kalpataru Power & Transmission sales grew 9% with EBITDAM similar to that of last year (10.4%).

“Order inflows for Kalpataru Power & Transmission (SA) in year-to-date FY22 stood at Rs 8.65 billion (down from Rs 18.7 billion in Q1FY21), largely from inflows in the T&D and Railways segments. The order book now stands at Rs 133.9 billion, excluding L1 orders of Rs 25.5 billion,” the brokerage has said.

The management has maintained its full-year margin guidance of 10% plus. Order inflows were at a staggering Rs 46.6 billion, leading to an all-time record high order book of Rs160 billion.

“We maintain Buy with a revised target price of Rs 560 (Rs 525 earlier), as we roll forward to Sept’23E, based on SoTP. We retain our earlier estimates. JMC is valued at Rs 60 per share based on a 30% discount to the current market price,” Emkay Global has said.

Disclaimer

The above stocks are based on the report of Emkay Global. Investing in stocks is risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise some caution as the Nifty has now crossed a record peak of 16,200 points. Please consult a professional advisor.