Category: Personal Finance

Praj Industries with target price of Rs 422

Praj Industries has received a ‘Buy’ recommendation from Axis Securities, with a target price of Rs. 422 per share. This indicates a nearly 22% gain from the previous trade price of Rs. 347.

Stalwart of Bio-Economy Revolution!

According to Axis Securities, Praj is well-positioned to benefit from a shift in global focus on the decarbonization theme due to key competitive strengths such as a) Market leadership position in domestic 1G Ethanol and frontrunner in 2G Ethanol, b) Capability to produce the highest yields of CBG vis-à-vis its peers by leveraging its proprietary RenGas technology, and c) Improvement in working capital.

Outlook & Valuation – Initiate with BUY

“We expect the company to report Revenue/EBITDA/PAT CAGR of 33%/37%/41% over FY21-FY23E driven by increase in orderbook, operational leverage and a debt free balance sheet. This will lead to a significant improvement in ROE/ROCE to 18.8%/24.8% in FY24 from 10.7%/14.7% in FY21 derived from 178% increase in the overall profitability,” the brokerage has said.

The brokerage believes that Praj is expected to benefit significantly from the bio-economic revolution’s many tailwinds, providing revenue visibility over the next 3-5 years.

Buy Hero Motocorp with target price of Rs 3,400

Hero Motocorp has received a ‘Buy’ recommendation from Axis Securities, with a target price of Rs. 3,400 per share. This indicates a nearly 16% gain from the previous trade price of Rs. 2932.

Diversification Strategy On Track; Structural Growth Drivers Remain Intact

Despite the negative impact of the Covid-19 outbreak, Hero Motocorp Ltd (HMCL) had a strong performance in FY21, maintaining its indisputable market leadership position in the sub125cc motorcycle sector.

Outlook & Recommendation

According to Axis Securities, due to the Covid-19-induced headwinds, HMCL has seen a drop in demand since March 21. However, we expect Hero’s growth to pick up in the coming years. The demand is also projected to be bolstered by the fundamental transition away from shared mobility to personal mobility.

“We expect Hero to continue its dominance in the two-wheeler industry driven by the benefits of product premiumization, a strong foothold in the economy and executive motorcycle segments, and aggressive product offerings in the premium bikes and scooters segments. We maintain a BUY rating on the stock and revise our Target Price to Rs 3,400/share as we value the stock at 16x its FY24E EPS. TP implies an upside potential of 16% from current market Price, ” the brokerage has said.

Buy Camlin Fine Sciences with target price of Rs 215

Axis Securities has given Camlin Fine Sciences a ‘Buy’ recommendation, with a target price of Rs. 215 per share. This represents an almost 21% increase over the previous trade price of Rs.178.

Novel Opportunities to Drive Topline Growth and Profitability

Camlin Fine Sciences Ltd. (CFS) had a strong year in FY21, thanks to the addition of new downstream products, increased capacity utilization at the Dahej plant, and a positive recovery in global economic activity in H2FY21.

Outlook & Recommendation

The company’s growth prospects are bolstered by factors such as its strategic focus on expansion, global presence, predicted growth in the blends market, and rising global demand for vanillin. The organisation is in a great position to take advantage of expanding prospects in India and other international markets.

“We maintain a BUY rating on the stock with an unchanged TP of Rs 215/share valuing the stock at 17x FY24E EPS. Key risks – a) Slower-than-expected ramp-up in plant commissioning, b) Volatility in RM prices and Forex, c) COVID-led disruptions and business uncertainties,” the brokerage has said in its latest research report.

Disclaimer

The above stocks are picked from the brokerage report of Axis 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.

HDFC Securities’ take on Indian Bank:

Indian Bank is much better placed as it has not required much of support from the government. The bank’s asset quality paints a better picture in comparison to other peers.

No loss of a single rupee in the last decade

It is noteworthy that Indian bank despite the credit crisis faced by the industry for a quiet long time has not reported even a single penny of loss. Nonetheless, it has distributed dividends 7 times in the past ten years. Also, it has a diversified portfolio, and has active and increased focus in RAM segment or retail agriculture and MSME segment that will increase risk diversification, increased revenue as well as improved margins.

Cautious stance linked to high corporate book:

The brokerage is however concerned on the bank’s over position with respect to high corporate book. It has high BB & below rated book and has high exposure to sectors like Infrastructure, NBFC etc. Even the management is circumspect about retail and MSME segments for the coming quarters. However inexpensive valuation along with strong liability franchise and low cost of funds gives us comfort for the long term. It is a play on the gradual recovery in the Indian economy, adds the brokerage firm.

Banking sector can be up for Re-rating in case of Acquisitions in the space given the privatization buzz

The latest NARCL guarantee will augur positively chiefly for large PSBs. “Faster resolution by the IBC could also help in recoveries and bring down slippages in future. Privatization buzz has kept the PSU bank sector in limelight and we believe acquisition of some PSU Banks by the any prestigious corporates/Institutions – local or foreign – at a good valuation may rerate the sector”.

Valuation & Recommendation:

“We expect Indian Bank to grow its loan book at 9% CAGR while NII and Net profit are expected to grow at 7.5% and 39.5% (due to lower base) CAGR respectively over FY21-23E. ROAA is estimated to improve to 0.8% in FY23E from current 0.6% in FY21 and RoE could rise to 12.4% from 9.9% in FY21. We expect healthy recoveries and upgrades in next two years. Asset quality trend of corporate and MSME would be the crucial monitorables. Most of the concerns arising out of pending writeoffs out of restructured/SMA accounts are already in the price. We have assumed higher recoveries and lower slippages going forward. NIMs may also start stabilizing around 3% level. We believe that investors can buy Indian bank at LTP of Rs.139 (0.46xFY23E ABV) and add more at Rs.121 (0.4xFY23E ABV) for the base case fair value of Rs.158 (0.52xFY23E ABV) and for the bull case fair value of Rs.170.5 (0.56xFY23E ABV) over the next two quarters” adds the brokerage.

Long term Triggers that could propel the stock higher:

Capital adequacy ratio at the bank as of June 21 came in at 11.6 percent with tier I at 15.92 percent. In the just ended quarter, the bank via QIP raised a sum of Rs. 1650 crore in which shares were issued for Rs. 142.15 per share. . The bank had also raised Additional Tier 1 bonds and Tier 2 bonds of Rs.2,000 Cr each in FY21. Any asset quality lapse can be easily accommodated by the bank.

Amalgamation to be completed this year itself

The bank is in the process of completing integration with Allahabad Bank and likewise would generate synergies in the long run. Further, the amalgamation has resulted in larger balance sheet size and optimized capital utilization, wider geographic reach leading to deeper penetration, sharing and scale of product capabilities and platforms with greater cross sell across segments, increase in operational and process efficiencies through scale benefits and elimination of duplication.

Improved low cost funding base:

The management believes that they are able to maintain a relatively low-cost funding base as compared to other competitors, by leveraging strengths, expanding base of retail savings and current deposits, carrying out government business, and increasing the free float generated by transaction services. The cost of deposits and cost of funds have been consistently decreasing. This low cost fund helps the bank in creating edge over other private players, adds the report.

NARCL guarantee as well as SC order to invoke personal guarantee

NARCL security as well as the SC guideline to invoke personal guarantees in case of company default will also help in swifter recoveries.

Disclaimer:

The PSB stock is taken from the brokerage report of HDFC Securities and is not a recommendation to take position in the stock.

GoodReturns.in

Bullion is considered as a hedge against inflation and currency debasement likely resulting from the widespread stimulus. A hawkish move by the Fed would diminish gold’s appeal, while an eventual interest rate hike would also raise the opportunity cost of holding the non-interest bearing asset.

FUNDAMENTALS
Spot gold was steady at $1,763.60 per ounce, as of 0123 GMT.

Prices had recovered on Monday from an over one-month low on safe-haven demand as China’s Evergrande debt woes fuelled sharp sell-off in stocks worldwide.

US gold futures were flat at $1,764.40.

Worries about the fallout from property developer Evergrande’s solvency issues spooked financial markets and lifted the dollar index, which hit a near one-month peak on Monday. A firmer dollar generally makes bullion more expensive for other currency holders.

Fed is likely to provide an outlook on how soon and how often they think the economy will need interest rates rises over the next three years when they release new forecasts at their policy meeting on Wednesday.

The volume of the European Central Bank‘s bond purchases is becoming “less important” as the economic outlook improves and the money-printing scheme becomes a tool for guiding rate expectations, ECB board member Isabel Schnabel said on Monday.

Russia’s gold reserves stood at 73.8 million troy ounces as of the start of September, the central bank said on Monday.

Silver edged up 0.1% to $22.26 per ounce, having hit a more than nine-month low of $22.01 in the previous session.

Palladium climbed 0.6% to $1,896.30 after slumping to its lowest level since June 2020 on Monday.

Platinum rose 0.5% to $915.05, having touched a 10-month low on Monday.

Investors are cautious ahead of Federal Reserve and ECB meeting this week, awaiting indications as to when the central bank will start withdrawing its monetary stimulus and start raising interest rates eventually. This along with worry over slower economic growth and rising Delta variant cases globally continue to keep market nervous. Even valuations are not comfortable and hence could lead to bouts of profit booking.

Thus traders should adopt stock specific approach while investors could tap this opportunity to accumulate quality stocks, says Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Here are a few stock trading ideas for intra-day traders for Sept 21 from analysts and experts.

1) Dr. Ravi Singh, Founder and Director, DRS Advisory
Havells: Sell at Rs1406, Target Rs 1350, Stop Loss Rs 1425
Tata Motors DVR: Buy Rs 146.50, Target Rs 155, Stop Loss Rs 142

2) Manoj Dalmia, Founder and Director, Proficient Equities Private Limited

Summit Sec: Buy at Rs 815, Target Rs 880, Stop Loss Rs 780

3) Ravi Singhal, Vice chairman, GCL Securities Limited

PEL: Sell at Rs 2503, Target Rs 2470, Stop Loss Rs 2522

4) Kapil Goenka, Founder at Eternity Financial Services

Sona BMW: BUY at Rs 566, Target Rs 588, Stop loss Rs 550