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1. Shriram Transport Finance Company:

For this NBFC company, Edelweiss in its latest report has retained the previous recommendation ‘Buy’ and also raised the price target to Rs. 1700. The last traded price for the Shriram Transport is Rs. 1344.55, this suggest an upside potential of over 26%.

Q1Fy22 performance: Results mostly in line with Edelweiss’ estimates

The NBFC company fared as per the estimates of the brokerage in terms of both revenue as well as PPOP. Nonetheless, PAT or profit after tax came in lower due to higher credit cost. Disbursements at the company were a positive and registered just 15% decline on a sequential basis because of the strong line up in the previous quarter, hence a better performance in comparison to peers.

Asset quality deteriorated though at a lower rate as was foreseen by the brokerage house. Collection efficiency of the NBFC major with focus mainly in vehicle financing also improved month on month and came in at 94%.

Double digit AUM growth, reduced credit cost, better disbursements some of the key triggers

The management has guided for a double digit AUM growth as well as lower credit cost in FY22 as against FY21. Also, it is mulling merger of the group companies’ to realize cost benefit and cross-sell synergies.

Valuation and outlook: The brokerage firm hails the view that Shriram Transport is well placed to capture the revival in the CV cycle due to (a) it being the largest player in the CV financing space, (b) lower-than-expected restructuring, and (c) better than-expected asset quality. “The stock is trading at a significant discount of approximately 50% to Cholamandalam, which could reduce given the company’s growth and asset quality trajectory. We Maintain ‘BUY’ rating with a target price of INR1,700, valuing it at 1.7x FY23E ABPS”, said Edelweiss.

2. Zydus Wellness:

Zydus Wellness’ started off its journey into the consumer wellness segment with the Sugar Free product it launched in the year 1988. And now the company has as many as 7 brands under its bouquet namely Sugarlite, Complan, Sugar Free, Glucon-D, Everyuth, Nycil and Nutralite.

After its Q1FY22 results, Edelweiss has maintained a ‘Buy’ on the scrip of Zydus Wellness for a target of Rs. 2673 per share. The stock last traded at a price of Rs. 2144.90, implying an upside of 24.62 percent from here.

Q1Fy22 results of Zydus Wellness:

The wellness company’s performance was steady for the period under review, the revenue went higher by 11% YoY with improvement in some of the brands including Complan, Sugar Free and Everyuth categories. Margin stood steady again despite an increase in milk as well as the price of palm oil. Also, to mitigate the impact of rising input costs, the company raised the prices by 2% during April -June quarter. Because of improving cost efficiency, EBIDTA also came in higher and operating margin also went up by a margin on a YoY basis. PAT or profit after tax improved significantly as the company went on reducing debt by a substantial amount to Rs. 450 crore from Rs. 1500 crore in the last year.

Valuation and outlook: “The brokerage maintains ‘BUY’ on Zydus Wellness and says in its report that “with the easing of lockdown restrictions, we expect ZWL to deliver stronger performance going forward, owing to its diversified portfolio, slew of new launches over the last two years and enhanced distribution reach. Given its lean balance sheet and negative working capital days, ZWL is trading at an attractive valuation of 37x/30x FY22/FY23E earnings. We reiterate ‘BUY’ rating on the stock and maintain target price of INR2,673/share”, said the brokerage firm.

Strong positives for the scrip of Zydus Wellness as viewed by the brokerage:

-Lean balance sheet with significant reduction in debt over the last one year

-Cost efficiencies

-Wide distribution network with over 5.5 lakh outlets, wider product portfolio

– Planning disintermediation i.e. mulling to directly service the market as other market players.

– Continuous replenishment model that will cut down on inventory.

GoodReturns.in

Disclaimer:

Stock market investments are risky and investments listed are taken from brokerage reports. These should not be construed as investment advice and one should always ascertain their risk profile and other measures before taking any stock market bet.

Indian Oil Corporation

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

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

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

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.

3 Stocks To Buy For Strong Returns, 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).

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

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.

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

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.

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

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.