Author: root

ICICI Bank Q1 net profit zooms 78% to ₹4,616 crore

Banking & Finance

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Private sector lender ICICI Bank reported a 78 per cent jump in its standalone net profit at ₹4,616 crore in the first quarter ended June 30, 2021, led by robust net interest income and lower provisions.

Its net profit was ₹2,599 crore in the first quarter of last fiscal.

However, the bank reported higher gross non-performing asset (NPA) additions at ₹7,231 crore against ₹1,160 crore in the year ago quarter.

About 94 per cent (or ₹6,773 crore) of the gross NPA additions was on account of retail and business banking. This includes additions of ₹961 crore from Kisan Credit Card portfolio and ₹1,130 crore from jewel loan portfolio. The balance 6 per cent (or ₹458 crore) was on account of corporate and SME portfolio.

The total income fell 6.5 per cent to ₹24,379 crore in the first quarter of the fiscal as against ₹26,067 crore a year ago.

Net interest income increased by 18 per cent year-on-year to ₹10,936 crore in the April to June 2021 quarter from ₹9,280 crore in the first quarter last fiscal.

The net interest margin improved to 3.89 per cent in the first quarter this fiscal compared to 3.69 per cent a year ago.

Other income down 35%

Other income, however, fell by 35 per cent yoy to ₹3,996 crore in the first quarter of the fiscal.

Of this, treasury income was ₹290 crore in the first quarter this fiscal compared to ₹3,763 crore a year ago. “The treasury gain in the first quarter of 2020-21 included gains of ₹3,036 crore from sale of shares of subsidiaries,” ICICI Bank said in a statement on Saturday.

The bank’s provisions fell 62 per cent to ₹2,852 crore in the first quarter of the fiscal as against ₹ 7,594 crore a year ago.

“Based on its current assessment of the portfolio, the bank wrote back Covid-19 provisions amounting to ₹1,050 crore made in earlier periods,” ICICI Bank said.

This reflects the confidence the bank has on the book it has built over the years, said Sandeep Batra, Executive Director, ICICI Bank.

NPAs rise

In absolute terms, gross NPAs rose to ₹43,148 crore as at June-end 2021 against ₹40,386 crore as at June-end 2020.

In the reporting quarter, recoveries and upgrades were higher at ₹3,627 crore (₹757 crore in the year ago quarter).

The gross NPA position as a percentage of gross advances improved to 5.15 per cent as at June-end 2021 against 5.46 per cent as at June-end 2020.

The net NPA position as a percentage of net advances position also improved to 1.16 per cent as at June-end 2021 against 1.23 per cent as at June-end 2020.

As of June 30, 2021, the bank had restructured loans amounting to ₹3,891.15 crore under the RBI’s Resolution Framework of which ₹924.74 crore was retail loans and ₹2,956.05 crore was corporate loans.

Batra said the embargo on MasterCard from acquiring new customers will have zero impact on the bank as it is dominantly working with Visa. It will offer new customers credit cards with Visa.

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3 add-on health insurance covers to consider

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A health insurance policy plays a significant role in providing financial stability for an individual and his/her family at the time of medical emergencies. Typically, a health policy offers to cover hospitalisation expenses along with pre- and post-hospitalisation expenses, day care treatments (treatment procedures that require hospitalisation for less than 24-hours), and accidental injuries, among others. While it is important to have sufficient coverage amount at all times, sometimes a base policy may still not be enough to cover other expenses. You can then consider going for one or two riders/optional covers, depending on the need. Keep in mind that these add-ons involve payment of additional premium. Here are a few riders worth considering.

Hospital cash benefit

While a health policy takes care of hospitalisation expenses, you may still end up paying for certain charges while are still hospitalised. These expenses are usually inadmissible at the time of filing a claim, and include the cost of hospital gowns, gauzes, adhesive bandages and maintenance and housekeeping charges and conveyance charges. This is where the hospital cash or daily cash benefit comes in handy. It means, if the policyholder gets hospitalised, your health insurer will pay you a lump sum amount for every day of hospitalisation up to a certain number of days up to a maximum limit (varies with insurers). For instance, in ICICI Lombard’s Complete Health Insurance plan, the hospital daily cash made available is ₹3,000 per day for up to a maximum of 10 days of consecutive hospitalisation (minimum 3 days) for sum insured (SI) of ₹15 lakh and above. The daily cash limit is ₹2,000 per day if the SI is less than ₹7 lakh.

Most insurers including Tata AIG, ICICI Lombard, HDFC Ergo Health, Max Bupa, Bajaj Allianz, Star Health and Digit, offer hospital cash benefit as an optional cover for additional premium, while some insurers offer this as an in-built cover.

Tata AIG’s Medicare, for instance pays 0.25 per cent of SI up to a maximum of ₹2,000 per day of hospitalisation for shared room accommodation.

Critical illness

A critical illness (CI) cover is offered as a rider or as an optional cover by many health insurers. Under this, the insurer will make a lumpsum payment at the time of diagnosis, after which this cover terminates. Remember that, there is no restriction on the usage of the amount received. Primary breadwinners of their families, who don’t want to take chances on their health can consider this rider. Do note that the insurer will make payment only for certain diseases mentioned in the policy document and the payment varies across insurers and diseases. For instance, HDFC Ergo’s Optima Secure plan offers critical illness cover with SI of ₹10 lakh to ₹2 crore CI. Similarly, 100 per cent of the SI opted is paid out in case of Manipal Cigna’s ProHealth plan. Both policies also offer expert opinion if the insured requires it for the CI.

OPD benefit

Another rider cover to consider is OPD (outpatient department) where it covers expenses such as doctor’s consultation fees, pharmacy bills, dental treatment expenses and non-allopathic treatment. Most of the health policies offer OPD in-built in the policy but there are a few that offer this as an optional or add-on cover. Policies including ICICI Lombard’s Complete Health Insurance plan and Max Bupa’s Go Active offer in-built OPD cover while policies such as Activ Health from Aditya Birla Health and Care’s Care Freedom offer it as optional cover. Ideally those who go to the pharmacy or consult doctors often can go for an OPD cover.

But, if your plan already has OPD in-built there are other optional covers to consider. One is a maternity cover, offered by many insurers, which can be considered if a couple plans to have a baby.

Alternatively, reduction in waiting period cover can be opted. This comes in handy for those who are already suffering from pre-existing conditions such as asthma or diabetics. Generally, the pre-existing disease waiting period ranges from 2-4 years across insurers. With this rider cover, upon payment of additional premium, your waiting period of say, four years, will come down to say 1-2 years. You can also use the cover to reduce the maternity waiting period (usually 4 years), if the insurer offers it.

Hospital cash can pay for inadmissible medical expenses

Critical illness cover offers lumpsum payment

OPD benefit is useful to pay for doctor’s consultation fees, non-allopathic treatment

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Pick up in disbursements, fall in provisions & more, BFSI News, ET BFSI

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NEW DELHI: ICICI Bank‘s 78 per cent profit growth YoY largely met Street expectations. The 18 per cent growth in net interest income was higher than 14-16 per cent growth anticipated by an ETMarkets.com poll. Provisions fell 63 per cent against expectations of an up to 70 per cent drop. Net interest margin (NIM) rose to 3.89 per cent while asset quality, as suggested by gross non-performing assets (NPAs), deteriorated marginally. Here are the key takeaways from the quarterly results:

Profit in line, NII beats expectations
ICICI Bank’s 78 per cent rise in June quarter was largely in line with an ETMarkets.com poll estimate of 77 per cent growth.

The bottonline growth was lower than 260.47 per cent growth in profit the bank reported in March quarter, but higher than 36 per cent profit growth it reported in the year-ago quarter.

NII growth for the quarter at 15-16 per cent beat expectations. Analysts at an ET NOW poll had expected NII growth at 14 per cent.

Disbursements pick up
ICICI Bank said retail disbursements have picked up in June and July after moderating in April and May due to Covid containment measures in place across various parts of the country.

The disbursement levels, it said, recovered to March levels in June, driven by spending in categories like consumer durables, utilities, education, and insurance. Credits received in the overdraft accounts of business banking and SME customers also picked up in June and July after declining in April and May, it said.

Provisions fall, NPA rises marginally
ICICI Bank said it has changed its policy on non-performing loans during the June quarter to make it more conservative. Provisions for the quarter fell 63 per cent to Rs 2,852 crore from Rs 7,594 crore against expectations of up to 70 per cent fall. This could be due to the bank’s policy change, which the bank said resulted in higher provision on non-performing advances amounting to Rs 1,127 crore for aligning provisions on outstanding loans to the revised policy.

Gross non-performing assets, meanwhile, rose to 5.15 per cent against 4.96 per cent in the March quarter and 5.46 per cent in the year-ago quarter.

Recoveries and upgrades of NPAs, excluding write-offs and sale, stood at Rs 3,627 crore. The bank wrote off Rs 1,589 crore worth gross NPAs in June quarter. Excluding NPAs, the total fund-based outstanding to all borrowers under resolution as per the various extant regulations was Rs 4,864 crore or 0.7 per cent of the total loan portfolio.

Uncertainty still looms
In the absence of regulatory dispensations like moratorium on loan repayments and standstill on asset classification, the impact on the quality of the loan portfolio would likely be sharper and earlier during FY22, the bank said.

“The impact, including with respect to credit quality and provisions, of the Covid-19 pandemic on the bank and the group, is uncertain and will depend on the trajectory of the pandemic, progress and effectiveness of the vaccination programme, the effectiveness of current and future steps taken by the government and central bank to mitigate the economic impact,” it said.

Retail loan growth up 20%, SME 43%
Retail loan portfolio comprised 61.4 per cent of the total loan portfolio as of June 30. Including non-fund outstanding, retail accounted for 50.4 per cent of the total portfolio as on June 30.

For the quarter, the credit growth for the retail segment stood at 20 per cent. The business banking portfolio climbed 53 per cent YoY and was 5.4 per cent of total loans on June 30. The SME business, comprising borrowers with a turnover of less than Rs 250 crore, advanced 43 per cent year-on-year and accounted for 4 per cent of total loans as on June 30.

“Growth in the domestic corporate portfolio was about 11 per cent year-on-year, driven by disbursements to higher-rated corporates and public sector undertakings across various sectors. The growth in performing domestic corporate portfolio, excluding the builder portfolio, was 15 per cent year-on-year on June 30, 2021,” it said. Overall, the credit growth was up 20 per cent, while deposit growth rose 16 per cent.

Subsidiaries reported mixed growth
Subsidiaries reported mixed growth. ICICI Securities, on a consolidated basis, saw 61 per cent YoY jump in profit at Rs 311 crore from Rs 193 crore YoY. ICICI Prudential Asset Management Company clocked 48 per cent year-on-year jump in profit at Rs 380 crore compared Rs 257 crore YoY. The profit after tax at ICICI Lombard General Insurance Company fell to Rs 152 crore from Rs 398 crore. Overall, ICICI Bank’s consolidated profit after tax came in at Rs 4,747 crore compared with Rs 4,886 in the March quarter and Rs 3,118 crore in the year-ago quarter.



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SBI opens branch in President’s Estate, BFSI News, ET BFSI

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New Delhi, Jul 24: The country’s largest lender State Bank of India (SBI) on Saturday opened a branch at President’s Estate. The branch was inaugurated by President Ram Nath Kovind along with First Lady Savita Kovind, in the presence of Finance Minister Nirmala Sitharaman, SBI said in a statement.

The branch will provide all types of banking services including safe deposit lockers to the residents of President’s Estate, it said.

Secretary to the President K D Tripathi, SBI Chairman Dinesh Khara and other senior officials of the bank were also present at the inauguration ceremony, it said.

This branch at President’s Estate is a jewel in the crown for SBI and will offer a convenient and seamless banking experience to all the customers, said Khara.

SBI has the largest network of more than 22,000 branches and 60,000 ATMs serving around 45 crore customers through its 2.5 lakh employees. DP MR



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Coindesk, BFSI News, ET BFSI

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Goldman Sachs Group Inc’s prime brokerage division is clearing and settling cryptocurrency exchange-traded products (ETPs) for some of its European hedge fund clients, Coindesk reported on Friday, citing people familiar with the matter.

The services are currently being offered to a limited number of clients and the bank is considering rolling them out for a broader customer base, the report said.

Goldman Sachs declined to comment on the matter.

The U.S. lender in March restarted its cryptocurrency desk amid growing interest by institutions in bitcoin, and said it was looking at ways to cater to a surge in demand to own and invest in the most popular cryptocurrency.

Goldman Sachs is one of several mainstream financial firms that has dived into the crypto space, despite wild price swings and widening regulatory crackdown on the digital assets.

Rival banks Morgan Stanley and JPMorgan Chase & Co have also started giving clients access to crypto funds, according to media reports.



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Value Stocks Now Lucrative: Nifty 50 Value 20 Index Performed Better Than Nifty Stocks

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Investment

oi-Roshni Agarwal

|

Stock market veterans have been advocating value investing which works on choosing stocks basis some of the parameters such as low price to earnings ratio, low price to book value, low prices to cash flow etc. In fact in the last one year, Nifty 50 Value 20 index has gained and provided higher returns than the Nifty index.

Value Stocks Now Lucrative: Nifty 50 Value 20 Index Performed Better Than Nifty

Value Stocks Now Lucrative: Nifty 50 Value 20 Index Performed Better Than Nifty Stocks

Nifty 50 Value 20 index and its performance

The Nifty 50 Value 20 index reflects the behavior as well as performance of a diversified group of value companies that are part of the Nifty 50 index. Perhaps it is a mix of the 20 highly liquid companies that forms the part of the NSE. These are typically blue chip companies.

Index Returns (%) QTD YTD 1 Year 5 Years Since Inception
Price Return 8.17 17.89 61.70 17.19 18.17
Total Return 8.85 19.37 65.51 19.57 20.46

Index’ existence

The index calculation was first done in January 2009. At the time of rebalancing of shares/ change in index constituents/ change in investable weight factors (IWFs), the weightage of the index constituent (wherever applicable) is capped at 15%. Weightage of such stock may increase beyond 15% between the rebalancing periods. NIFTY50 Value 20 Index can be used for a variety of purposes such as benchmarking fund portfolios, issuance of index funds, ETFs and structured products.

Company’s Name Weight(%)
Top constituents by weightage
Infosys Ltd. 15.13
Tata Consultancy Services Ltd. 14.91
Hindustan Unilever Ltd. 10.50
Larsen & Toubro Ltd. 8.62
ITC Ltd. 8.43
HCL Technologies Ltd. 5.08
Wipro Ltd. 3.84
Sun Pharmaceutical Industries Ltd. 3.47
Tech Mahindra Ltd. 3.23
JSW Steel Ltd. 3.15

Nifty 500 Value 50 index

Likewise there is another index Nifty 500 Value 50 Index which trades at a P/E of 9.3 with a dividend yield of 2.9% as against Nifty 50 that trades at a P/E of 28.3 with a dividend yield of 1.3 per cent.

Typically this index includes 50 companies from its parent Nifty 500 index that are selected based on their value scores. The value score for each company is determined based on Earnings to Price ratio (E/P), Book Value to Price ratio (B/P), Sales to Price ratio (S/P) and Dividend Yield.

Index Returns (%) QTD YTD 1 Year 5 Years Since Inception
Price Return 17.82 41.76 90.35 8.23 11.11
Total Return 18.20 43.72 94.61 11.13 14.11

Top stocks that form the part of Nifty 500 Value 50 index by weightage

Company’s Name Weight(%)
Top constituents by weightage
NTPC Ltd. 5.02
Tata Steel Ltd. 5.01
Tata Motors Ltd. 5.00
Bharat Petroleum Corporation Ltd. 4.98
Grasim Industries Ltd. 4.98
Hindalco Industries Ltd. 4.95
Coal India Ltd. 4.93
Oil & Natural Gas Corporation Ltd. 4.87
Indian Oil Corporation Ltd. 4.85
Tata Chemicals Ltd. 4.30

Why are value stocks becoming attractive?

Value stocks are currently available at cheaper than their growth counterparts and are perhaps deemed to have predicable business model, earnings which tend to generate moderate earnings over time. Sometimes the companies showing a downward trend in price may be providing value and understanding its future price potential. If we look at the top constituents of the Nifty 500 Value 50 index they typically comprise prominent public sector companies such as IOC, BPCL, Coal India, ONGC, NTPC etc.

Not only the Nifty index, the Nifty 500 Value index has also pipped the quality index Nifty200 Quality 30 index with respect to absolute returns.

So, you as an investor can definitely be considering value stocks such as BPCL i.e. divestment bound and for such value stocks that during last some years were not that appealing they can now give good enough returns to investors over the course of 2-3 years in terms of percentage growth.

Other value stocks that may give reasonable upside to investors are the PSB stock of SBI and HPCL among others.

How to find value stocks India/ underpriced stocks?

Low Price/Earnings (P/E) ratio: It is typically computed as stock’s current price and earnings per share for a 12-month period. So, undervalued stocks are typically with lower P/E and

Low price/earnings growth (PEG) ratio: Better metric than P/E, it is a valuation parameter that helps to know the relative trade-off between the price of a stock, the earnings generated per share (EPS) and the company’s expected growth.

PEG ratio: P/E ratio/ Earnings growth rate, and in a case if this value is less than 1 preference can be given more to past performance than future prospects of the stock.

Low price to book ratio:

The company’s low price to book value is an important valuation metric i.e. known by the determining the company’s current market value in comparison to its book value. Current market value is based on the pricing of the company’s outstanding shares while the book value is what is left if the company is liquidated. The company with low price to book value also implies a under valued stock.

Another important characteristic of value stocks is that they do not show high fluctuations in both market highs as well as lows. Also, importantly high dividend yield is another integral factor which determines the value stock.

GoodReturns.in



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AU Small Finance Bank may convert to a universal bank

Banking & Finance

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Jaipur-headquartered AU Small Finance Bank may transition to a universal bank, going by its Chairman Raj Vikash Verma’s letter to shareholders.

If this happens, it will be the second transition for the lender. Before it converted into an SFB in 2017, AU was a non-banking finance company — Au Financiers (India) Ltd.

Verma observed that the bank is looking far and beyond the current status of the bank in the SFB space.

“We are propelling the bank’s journey to the next important milestone in the bigger banking space, with an aspiration to serve all sectors and segments of the economy under the larger agenda of national development and growth,” he said.

SFB

SFBs are niche banks. Their scope of activities is restricted to undertaking basic banking activities of acceptance of deposits and lending to unserved and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities.

A universal bank’s scope of activities is much wider, spanning retail banking (retail, agriculture and micro, small and medium enterprises), wholesale (corporate) banking and infrastructure/project financing.

As per the Report of the Reserve Bank of India’s “Internal Working Group (IWG) to Review Extant Ownership Guidelines and Corporate Structure for Indian Private Sector Banks”, if an SFB aspires to transit into a universal bank, such transition will not be automatic.

Transition

The transition would be subject to fulfilling minimum paid-up capital/net worth requirement as applicable to universal banks; its satisfactory track record of performance as an SFB and the outcome of the Reserve Bank’s due diligence exercise.

The initial minimum paid-up voting equity capital for starting a universal bank is ₹500 crore, according to RBI’s guidelines for ‘on tap’ licensing of universal banks in the private sector.

The IWG has recommended that the initial paid-up voting equity share capital/net worth required to set up a new universal bank be increased to ₹1,000 crore.

As of March-end 2021, AU SFB had gross advances and deposits aggregating ₹35,356 crore and ₹35,979 crore, respectively.

The Bank’s loan portfolio mainly comprises vehicle loans, secured business loans (SBL) to MSMEs and housing loans.

AU SFB currently has a presence across 15 States and two Union Territories through 552 bank branches, 177 Business Correspondent Banking Outlets, 15 Business Correspondents and 343 ATMs.

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Gold Prices Continue To Dip: Should You Buy?

Personal Finance

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Investment

oi-Roshni Agarwal

|

Gold prices in India are retreating lower mirroring trend in the international markets. After gold prices in the international markets bounced back to $1800 per ounce there were expectations that gold prices may bounce back going ahead.

Gold Prices Continue To Dip: Should You Buy?

Gold Prices Continue To Dip: Should You Buy?

On the MCX, gold prices for August contract are last trading down by Rs. 108 at Rs. 47,526 per 10 gm. In the retail market too, gold prices in the National market are trading down by a tad at Rs. 47,860 per 10 gm. In the previous day’s trade gold in the NCR region were priced higher against the international trend.

Usually, in the retail market gold price are higher than in the futures market owing to taxes and other charges.

Factors that may support gold run going ahead

– Uncertainty with respect to coronavirus cases:
In some of the economies including Europe, the US and South East Asia there is seen a rise in delta variant infection
– Inflationary concerns

Owing to widespread stimulus measures taken by economies world over there has been inflationary threat. Though economies including the US have iterated that inflation effects shall be transient in nature, we may see gold gaining sheen as it is a hedge against inflation.

Should you buy into yellow metal at current pricing?

It is being viewed by analyst that until the gold prices are above Rs. 46,500 one can buy gold at dips in a staggered manner to diversify as well as safeguard their portfolio.

Price forecast for gold

Analysts at international level said that gold may see some downward slide before running up further. In India, analysts suggest gold prices to hit Rs. 52,500 per 10 gm by Diwali. Sugandha Sachdeva of Religare Broking said, that in the international market gold price is currently trading in the range of $1,758 per ounce to $1,850 and maintained that $1,758 per ounce is a strong support for the gold price and it is expected to remain intact till these triggers exist.

GoodReturns.in

Story first published: Saturday, July 24, 2021, 13:42 [IST]



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Buy These 3 Stocks Says Broking Firm Motilal Oswal

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Mahindra CIE

Motilal Oswal is also betting on the stock of Mahindra CIE and believes it has had a strong all round performance, led by management initiatives. The company is a multi-technology automotive components supplier. It is a subsidiary of the CIE Automotive group of Spain; an industrial group specialised in supplying components and subassemblies for the automotive market, which has presence across the globe and is listed on the stock exchanges in Madrid and Bilbao.

The management recently highlighted it is optimistic about a recovery in India and Europe during 2HCY21, with the semiconductor shortage expected to ease from Sep’21. It has approved a new wholly-owned subsidiary – CIE Hosur – to set up a greenfield plant at Hosur to support its Bill Forge unit and lower corporate tax.

“Mahindra CIE growth story is on track, driven by its organic initiatives (new products/customers). This, coupled with cost-cutting initiatives in both India and the EU, would drive margin expansion. The stock trades at valuations of 15.5x/13.7x CY21E/CY22E consolidated EPS. We maintain our Buy rating with a target price of Rs 295 per share (15x Sep’23E consolidated EPS),” the brokerage has said.

Shares of Mahindra CIE last closed at Rs 244 on the NSE.

HUL: Buy with a 19% upside

HUL: Buy with a 19% upside

Motilal Oswal sees an upside of 19% on the stock of FMCG major Hindustan Unilever. The brokerage says that rural demand has remained resilient, despite a higher incidence of COVID19 cases v/s last year.

“With mobility improving, demand for FMCG products will improve, especially for those which are discretionary in nature, leading to higher operating margin going forward. Rural demand has remained resilient, despite a higher incidence of COVID19 cases v/s last year.

The expectation of a good monsoon also augurs well for demand going forward, with no material downtrading being witnessed. We maintain our buy rating on the stock of Hindustan Unilever, with a price target of Rs 2,840 per share,” the brokerage has said. The shares of HUL were last trading at Rs 2,359 on the NSE.

Buy Ultratech Cement shares for gains of 18%

Buy Ultratech Cement shares for gains of 18%

Motilal Oswal has suggested to buy the shares of Ultratech Cement with a higher price target of 18% from the current market price. According to the broking firm, better realization and lower cost inflation have driven 9% beat on EBITDA margins this quarter.

“For key infrastructure projects, Ultratech Cement is well-suited to tap into expected growth in both retail and institutional (non-trade) cement demand in India. While it is ramping up its underutilized acquired capacities, it also has a strong pipeline of expansion projects that offers strong growth visibility

Market share gains should continue, aided by the ongoing 20mtpa expansion program, which should drive a 13% volume CAGR over FY21/24E. We raise our EPS for FY22E/FY23E by 6%/6%, factoring in a better realization outlook. We estimate a 26% EPS CAGR over FY21-23E,” the broking firm has said.

Disclaimer

Disclaimer

Investing in stocks is risky and investors need to be cautious. Neither Greynium Information Technologies Pvt Ltd nor the author, nor the brokerage would be responsible for any losses incurred based on decisions made from the article. Investors are also advised caution as the markets are now at a record high. Please consult a professional advisor and avoid investing lumpsum amounts.



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4 Stocks That Broking Firms Are Bullish And Have A “Buy” Rating

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CEAT

Broking firm, Motilal Oswal has a “buy” rating on the stock of tyre major, CEAT. The firm believes that cyclical recovery in both OEMs and replacements would enable the faster absorption of new capacities and drive the benefit of operating leverage.

“Coupled with the gradual pass-through of cost inflation, this would support margins over the medium term. Valuations at 11.3x FY23E consolidated EPS do not capture the ramp-up in new capacities in an improving demand environment, which would lead to margin recovery. Maintain Buy, with target price of Rs 1,775 (13x Sep’23 consol EPS),” the broking firm has said.

Shares of CEAT were last trading at Rs 1,372 on the NSE.

Bajaj Auto

Bajaj Auto

Emkay Global has a buy call on the stock of Bajaj Auto. The firm expects strong momentum in exports to continue, while domestic volumes should recover swiftly ahead. The focus on EVs has increased with the incorporation of a separate subsidiary for manufacturing 2Ws, 3Ws and 4Ws. “We expect a strong volume upturn with a 12% CAGR over FY21-24E, led by growth of 12% in 2Ws and 20% in 3Ws. We trim FY22-24 EPS estimates by 4-5%, mainly on lower margin assumptions,” the brokerage has said.

Emkay global has reaffirmed a Buy with SOTP-based target price of Rs 4,420 (Rs 4,340 earlier), based on 18x P/E on Sep’23E (earlier Mar’23E). The target multiple implies a core P/E of 18x and cash/share of Rs722. “KTM is valued at Rs140 per share based on a 12x P/E and a 20% holding company discount. Key downside risks are lower-than-expected demand in key geographies, increase in competitive intensity and adverse currency/commodity prices,” the firm has said.

Bajaj Auto shares were last trading at Rs 3,846.

Mphasis

Mphasis

Broking firm, Motilal Oswal has a buy call on the stock of IT company Mphasis. The stellar growth in the Direct channel (+9.8% QoQ CC; +32.5% YoY CC) was encouraging, the broking firm has said.

“However, the strong momentum was partially offset by an 18.1% QoQ/48.7% YoY decline in the DXC business,” Motilal Oswal has said. We would revisit our estimates post the earnings call. We await further clarity on the near-term outlook, DXC channel, and margin. We maintain our Buy rating,” the broking firm has said.

Polycab

Polycab

Brokerage firm, Emkay Global has a buy call on the stock of Polycab and has recommended buying the stock for a Rs 2060 upside target from current levels. “We remain constructive on Polycab, considering its consistent focus on strengthening balance sheet, as well as potential for margin improvement with the full benefits from ‘Project Udaan’ kicking in,” the brokerage has said.

“Weak Q1 print leads us to cut FY22E earnings by 7%, but we maintain FY23 and FY24 estimates. Revenue growth and margin recovery will be the key monitorables, going forward. Maintain Buy on the stock of Polycab, with a target price of Rs 2,060,” Emkay Global Financials has said.

Disclaimer

Disclaimer

Investing in stocks is risky and investors need to be cautious. Neither Greynium Information Technologies Pvt Ltd nor the author, nor the brokerages would be responsible for any losses incurred based on decisions made from the article.



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