Auto and Media Stock To Buy From Broking Firm Sharekhan For Good Gains

Buy Zee Entertainment Stock, says Sharekhan

Sharekhan has set a price target of Rs 310 on the stock of Zee Entertainment with a buy call, as against the current market price of Rs 256.

Recently, the largest shareholder of Zee Entertainment, Invesco demanded a reconstitution of the board, with the removal of three directors and appointment of six independent directors. “We await greater clarity at the Extraordinary General Body Meeting and monitor closely whether Punit Goenka continues as MD & CEO of the company considering the promoter family’s low holding (less than 4%) in Zee Entertainment. We believe irrespective of any development relating to Punit Goenka would be considered positive among investors, though the continuance of Punit Goenka as MD & CEO would evade any shot-term hiccups in business,” the brokerage has said.

“We believe shareholder activism would be a key re-rating trigger as this could alter the board/management, increase in cash conversion and improve efficiency of capital allocation,” Sharekhan has said.

The brokerage has also stated that the FY2021 free cash flow of Rs. 1,342 crore stood at 75% of EBITDA, implying a strong improvement in cash conversion over previous years. “We expect earnings to report an 18% CAGR over FY2021-FY2024E. We maintain a Buy on the stock with a revised price target of Rs. 310, given reasonable valuations and expectations of improvement of corporate governance standards,” the brokerage has said.

Buy GNA Axles, Says Sharekhan

Sharekhan is also bullish on the stock of GNA Axles. According to the brokerage the company is well placed to benefit from sharp improvement in commercial vehicle sales across geographies and healthy outlook for the farm sector.

“GNA is witnessing strong traction from domestic and global original equipment manufacturers, driven by recovery in US’s and Europe’s CV market and India’s tractor market. The outlook remains positive with strong recovery expected from FY2022E and FY2023E, driven by normalisation of economic activities. Operating profit margin would expand due to operating leverage and cost-control measures. We have increased our earnings estimates for FY2022E and FY2023E by 1.4% and 9.4%, respectively, and introduced FY2024E estimates,” the brokerage has said.

The stock is trading at P/E multiple of 13 times and EV/EBITDA multiple of 7.6 times of its FY2023E estimates, which is slightly premium to long-term average multiples. We believe the premium valuation is justified, given upcycle in the domestic CV segment and healthy growth momentum in exports and farm segments. We retain our Buy rating on the stock with a revised price target of Rs. 948.

Disclaimer

The above stocks are 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. Please consult a professional advisor.