Author: root

Q2FY22 performance of JB Chemicals & Pharmaceuticals Ltd

According to the brokerage “JB Chemicals & Pharmaceuticals’ (JBCPL) Q2FY22 performance was better than estimates driven by strong growth in India business. EBITDA margin was lower than estimates owing to ESOPs charge. Consolidated revenue grew 33.7% YoY to Rs5.9bn and EBITDA margin dropped 340bps to 21.4%. Adjusted PAT grew 32.4% YoY to Rs978mn.”

“Full quarter benefit of 50% price increase in Ranitidine would start from Q3FY22 and would support margins. We remain positive considering ~45% of total revenues and ~60% of EBITDA contribution is from domestic formulations with strong growth visibility. The management’s strategy is towards improving productivity in India business, portfolio expansion and cost optimisation” the brokerage claims.

Buy JB Chemicals & Pharmaceuticals with a target price of Rs2,046/share

The brokerage has said that “We expect 15.3% revenue and 15.9% PAT CAGR over FY21-FY23E led by a strong 18.9% CAGR in India business with stable EBITDA margins at ~25-27%. We estimate a healthy free cashflow generation of more than Rs6bn over the next two years. RoE, RoCE and RoIC would remain strong at 22.4%, 21.6% and 33.1% respectively in FY23E.”

ICICI Securities has clarified in its research report that “We expect JBCPL to register earnings CAGR of 15.9% over FY21-FY23E driven by revenue CAGR of 15.3% and stable EBITDA margin at 25-27%. The company has enough capacity for future growth and going ahead, it is expected to continue generating strong operating and free cashflow, which would raise return ratios (RoE, RoCE and RoIC) further. The stock now trades at 26.7xFY22E and 21.9xFY23E earnings and EV/EBITDA of 20.2xFY22E and 15.9xFY23E. Maintain BUY with a target price of Rs2,046/share based on 27xFY23E EPS.”

Disclaimer

This stock is picked from the brokerage report of ICICI Securities. Investing in equities 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.

Q2FY22 results of Bharat Forge

According to ICICI Direct, the company’s “Standalone revenues came in at Rs 1,607 crore (up 17.1% QoQ), amid 6.7% tonnage growth to 57,094 MT. The growth was led by India operations where revenues grew 40.3% to Rs 620 crore (CV up 30.5%, PV up 35%, industrial up 62.8%). Export revenues rose 4.2% QoQ to Rs 954 crore (CV up 5.3%, PV down 32.9%, industrials up 22%).”

The brokerage has stated that the company’s “Standalone EBITDA for the quarter was at Rs 485 crore, with consequent margins at 30.2% (up 168 bps QoQ). Margin performance was positively impacted by operating leverage, with gross margin contraction at 170 bps vs. our expectation of ~30 bps.”

ICICI Direct has reported in its research report that the company’s “standalone PAT was at Rs 311.7 crore, up 87.1% QoQ, aided by lower effective tax rate for the quarter at 22.2%. At the consolidated level, the company reported a share of loss from subsidiaries/associates at Rs 10.7 crore vs. loss of Rs 9.1 crore in Q1FY22.”

Key triggers for future price performance of Bharat Forge according to ICICI Direct

• Expected cyclical rebound in India CV, US Class 8 truck revival, healthy outlook for PV segment across geographies and pick-up in drilling activity amid higher oil prices lead to robust 32% FY21-23E net sales CAGR.
• Defence, e-mobility, aluminium growth to de-risk away from CV, oil & gas.
• Operating leverage, mix improvement to expand margins to 21.8% (FY23E).

Buy Bharat Forge with a target price of Rs 950

According to the brokerage “BFL’s share price has grown at ~12% CAGR over the past five years (from ~Rs 450 in November 2016), outperforming Nifty Auto index.”

“We retain BUY rating on BFL, tracking strong demand across user segments. We value the company at a revised target price of Rs 950 i.e. 36x P/E on FY23E EPS of Rs 26.4/share (earlier target price Rs 1,000)” said ICICI Direct in its research report.

Disclaimer

This stock is picked from the brokerage report of ICICI Direct. Investing in equities 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.

Buy Hindalco with upside potential of 28%

ICICI Securities rates Hindalco stock as a ‘Buy,’ with a potential upside of 28 percent in one year with a target price of Rs 600.

Q2FY22 Results:

Hindalco reported a stellar performance in Q2FY22.

• Hindalco’s wholly owned foreign subsidiary Novelis reported sales volume of 968 KT (up 5% YoY) in Q2FY22, which was generally in line with our expectation of 974 KT.
• Hindalco’s India business reported a topline of Rs17393 crore for Q2FY22. Hindalco’s India business had an EBITDA of Rs 3602 crore. Hindalco’s India business’s subsequent PAT was Rs 1815 crore.
• Hindalco reported consolidated topline of Rs 47665 crore for Q2FY22, up 53% YoY and 15% QoQ, while consolidated EBITDA was Rs 8048 crore, up 56% YoY and 19% QoQ.

Target Price and Valuation

‘Hindalco’s share price has given a return of 125% over last 12 months. We maintain our BUY rating on the stock Target Price and Valuation: We value Hindalco at Rs 600, based on SoTP valuation, the brokerage has said.

Key triggers for future price-performance:

• Novelis has kept its EBITDA/tonne projection of US$500/tonne unchanged.
• We estimate Hindalco’s consolidated topline to increase at a CAGR of 19.6 percent between FY21 and FY23E, while consolidated EBITDA and consolidated PAT will grow at a CAGR of 23.6 percent and 53.1 percent, respectively.

Gujarat Pipavav

ICICI Securities rates Gujarat Pipavav stock as a ‘Buy,’ with a potential upside of 18 percent in one year with a target price of Rs 130.

Q2FY22 Results:

• Container volume declines are offset by bulk volume gains.
• Net revenues increased by 7% year on year to $ 195 crore.
• EBITDA increased by 6% year on year to | 109 crore, with margins of 56% (up from 56.3 percent in Q2FY21).

Target and valuation

“We expect the normalisation of global container trade (in the medium term) and extension of agreement (in the medium term) to be key triggers for a re-rating of the stock. We remain positive on the stock and maintain our BUY recommendation Target Price and Valuation: We value the stock at Rs 130 i.e. 19x P/E on FY23E EPS,” the brokerage has said.

Key triggers for future price-performance:

• Despite a tariff increase (5-6%), GPPL container realisation remains at a significant discount to Mundra (15%), which the company aims to lower (via frequent small hikes).
• DFC commissioning is slated to begin in September (increased market share and scheduled train operating).
• Exim volumes are likely to increase as a result of the addition of two new service lines.
• In FY23E, the company will be debt-free, with return ratios reaching 16 percent or higher.

Disclaimer

The above stocks are picked from the brokerage report of ICICI Securities. Investing in equities 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.

Target Price

The Current Market Price (CMP) of Metropolis Healthcare is Rs. 3070. The brokerage firm has estimated a Target Price for the stock at Rs. 3622.6. Hence the stock is expected to give an 18% return, in a Target Period of 12 months.

Stock Outlook
Current Market Price (CMP)	Rs. 3070
Target Price	Rs. 3622.6
1 year return	18.00%

Company performance

Metropolis reports a muted performance for Q2FY22 and earnings marginally missed estimates. The revenues at Rs. 303 crore increased by 5% YoY, while PAT at Rs. 58.4 crore dropped by YoY 3.5%. The Non-Covid revenues of the company have increased strongly by 38% YoY to Rs. 260 crore. The total no of tests done during the quarter was up 29% YoY to 0.62 crore. The penetration of B2C in the focus cities has increased to 60% from 58% as of FY21, and Metropolis aims to take this to 65%.

Comments by Sharekhan

Sharekhan thinks that although Metropolis Healthcare had a Muted Q2; but the company is carving a strong growth path. The brokerage firm comments, “The management’s relentless focus on the business-to-consumer (B2C) segment, backed by its wide portfolio of tests, expanding laboratory and patient service center network.” The brokerage firm remained the buy status on the stock.

About the company

Metropolis Healthcare (Metropolis), a leading diagnostics player in India, also has a presence in other countries of South Asia, Africa, and the Middle East. Metropolis offers a comprehensive range of 4,000+ clinical laboratory tests. As of FY2021, the company has a total of 125 laboratories including 13 reference labs and 112 other laboratories. Apart from this, the company has around 2555 patient service centers.

Disclaimer

The above stock has been picked from the brokerage report of Sharekhan. Investing in equities 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.

Target Price

The Current Market Price (CMP) of Endurance Technologies is Rs. 1,816. The brokerage firm has estimated a Target Price for the stock at Rs. 2,100. Hence the stock is expected to give a +16% return, in a Target Period of 12 months.

Stock Outlook
Current Market Price (CMP)	Rs. 1,816
Target Price	Rs. 2,100
1 year return	16.00%

Company performance

Endurance Technologies’ 2QFY22 performance has been impacted by RM cost inflation and semiconductor shortage, and the near term outlook was also impacted by weak 2W demand. Consolidated revenue of the company has increased by 8% YoY and 11% QoQ to Rs. 18.9b. EBITDA declined by 9% YoY (+6% QoQ) to Rs. 2.6b. Adjusted PAT declined by 8% YoY (+11% QoQ) to Rs. 1.3b. On the domestic front, its standalone revenue has increased by 19% YoY and 30% QoQ to Rs. 15b. India 2W industry volumes fell 4.5% YoY, whereas ENDU’s India revenue climbed up 16.5% in 2QFY22.

Comments by Motilal Oswal

According to Motilal Oswal, “We cut our FY22E/FY23E EPS estimate by 12.5%/2% to factor in weak 2W OEM demand and impact of the semiconductor shortage in India and the EU business. We increase our P/E multiple to 30x (from 28x earlier) to reflect newer revenue streams like non-Auto in die-casting, brakes and transmission for over 200cc Motorcycles, etc., which are not yet factored into our estimates. We maintain our ‘Buy’ rating with a Target Price of Rs. 2,100 per share (30x Sep’23E EPS).”

About the company

Endurance Technologies has grown to have 27 strategically located manufacturing facilities near our OEMs. They have manufacturing centers in 3 countries from 27 plants and exporting to more than 28 countries.

Disclaimer

The above stock has been picked from the brokerage report of Motilal Oswal. Investing in equities 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.