Category: Personal Finance

Buy the stock of Tata Consumer Products, says Sharekhan

Sharekhan has a buy call on the stock of Tata Consumer Products with a price target of Rs 960, as against the current market price of Rs 866.

“Domestic raw tea prices are stabilising and declined by 35% from their high in August-September 2020. Stable raw-material prices, price hikes in the beverages portfolio, and synergistic benefits from acquired companies would help in better margins from Q3.

Tata Consumer Products is progressing well on strategic priorities of increasing the direct coverage (targets 1mn outlets by Sept, 21), adding innovation on various platforms/markets (targets 3.5% of sales in FY22), and embed digitalisation across the value chain,” the brokerage has said.

Tata Consumer Products: Expanding its reach

According to Sharekhan, the company launched 14 products in FY2021 and targets to launch 50 new products in FY2022.

“Tata Consumer Products presence has expanded to 0.82 million outlets, rural feet on street grew by 3x, and contribution from e-commerce has gone upto 7.5%. Direct distribution reach is expected to reach 1 million outlets by September 2021 and will continue to increase in the coming quarters. TCPL targets to achieve high single digit volume growth in the domestic branded tea business and double-digit volume growth in the foods business in the medium term. Out-of-home businesses such as NourishCo and Tata Starbucks registered much better performance than the first wave in Q1FY2022,” the brokerage has said.

“We maintain Buy on Tata Consumer Products with a revised price target of Rs. 960. With strong growth prospects and sturdy cash flows (FCF/EBIDTA of 100%), TCPL is one of our top picks in the FMCG space,” Sharekhan has said.

Schaeffler India Ltd: Buy says Sharekhan

From the auto space, Sharekhan has a buy on the stock of Schaeffler India Ltd. “We remain positive on Schaeffler India Limited, driven by a strong outlook for its automotive, industrial businesses, and an improvement in content per vehicle. The company’s management has given a cautious positive outlook during the Q1FY2022 conference call, as the company expects volumes to recover, as COVID-19 wave subsides and consumer sentiments improve. Schaeffler India Limited would benefit from the industrial and automobile aftermarket segments, strong growth traction in export markets, and better prospects for the bearings business,” the brokerage has said.

Schaeffler India Ltd: Price target of Rs 8,000

According to Sharekhan, Exports is a high-growth area for Schaeffler India Ltd, given the pedigree of its parent company. Increasing localisation and focus on market share gains would help revenue and EBITDA growth. We retain Buy on Schaeffler India Limited with a revised price target of Rs. 8,000, led by a strong outlook for its automotive and industrial businesses and an upgrade in earnings estimates,” the brokerage has said.

Disclaimer

Investing in equities 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. The above article is for informational purposes only and is picked from the brokerage report of Sharekhan. Be careful while investing as the Sensex has now crossed 57,000 points mark, while Nifty is above 17,000 points. Investors can invest small amounts and avoid putting lumpsum.

KNR Constructions

According to Sharekhan, KNR Constructions is expected to benefit from the government’s continued focus on increasing investments in the road sector and significant deleveraging of its consolidated balance sheet, giving further headroom to improve its already strong order backlog.

“The company’s board approved the sale of three assets (KNR Srirangam Infra, KNR Tirumala and KNR Shankarampet) for which the company had signed share purchase agreements with Cube Highways during 2019. The three assets are valued at 1.1x P/B at an equity value of Rs. 466 crore to be received by the company,” the brokerage has said.

KNR Constructions: Massive road infra push to benefit company

According to Sharekhan, the government’s Rs 111 lakh crore worth of investments envisaged over FY2020-FY2025 entails Rs 20.3 lakh crore (18% share) investments in the road sector.

According to it, the government has identified 104 national highways spanning 26,700 kms (22% of the total nation al highways estimated at 1,21,155 kms excluding private BOT projects) which will be monetized by FY2025 under the National Monetization plan.

“The asset divestment would reduce National Highways Authority of India leverage and increase project tendering in the sector, of which KNR constructions, with a strong balance sheet, is expected to be one of the key beneficiaries.

The roads sector saw project awards drop in July 2021 (by 28% y-o-y) after a healthy growth in June 2021 (which saw 12% y-o-y rise in awards at 1018 km). However, construction activities remained strong with road construction during FY2022 till July 2021 rising by 10% y-o-y to 2,927 km. Road project awards is expected to gather pace from as early as next month as per our interaction with industry players, while awarding pipeline for FY2022 remain robust,” the brokerage has said.

Strong order book

The company already has a strong order backlog of Rs 11,679 crore, translating to 4x TTM standalone revenues providing strong revenue visibility in the next two years. “Overall, we expect KNR Constructions to benefit from a better outlook for the road sector and strengthening KNR construction’s balance sheet. KNR Constructions currently trades at a P/E of 17x FY2024E standalone earnings with enough levers of earnings upgrade going ahead. Hence, we maintain our Buy rating on the stock with a revised price target of Rs 400 on the stock,” the brokerage has said.

Disclaimer

Investing in equities 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.

The above article is for informational purposes only and is picked from the brokerage report of Sharekhan. Be careful while investing as the Sensex has now crossed 57,000 points mark, while Nifty is above 17,000 points. Investors can invest small amounts and avoid putting lumpsum.

Revenue growth for Birlasoft expected in mid teens in FY 2022

According to Emkay Global the demand remains robust across verticals, specifically in the areas of Cloud, Digital and Cybersecurity.

The management is confident of delivering revenue growth in the mid-teens in FY22, driven by strong deal intake (USD 861mn TCV in LTM; 13% YoY), robust deal pipeline and improving win rates, growing annuity revenue, and broad-based demand. Management indicated that the supply-side issue is the only constraint to growth and that Birlasoft could have achieved

revenue growth of 20% in FY22 in the absence of the talent crunch,” the brokerage has said.

The company expects the supply-side constraints to ease by the end of FY22. Annuity revenue is currently at 70% and management aims to take it to 75% by FY22-end, which would further improve revenue predictability.

“Management indicated that Birlasoft will continue to make investments to capitalize on demand. As part of its micro vertical strategy, Birlasoft has identified medical devices (part of Life sciences), high tech (part of Manufacturing; growing at over 20%), heavy industries (Cement, Building Materials; part of Manufacturing), and lending and payment (partof BFSI) as key micro verticals to focus on in order to accelerate growth. Birlasoft has also improved its partnership status with Microsoft Azure and AWS, while progress on Google cloud has been slow but may soon accelerate,” the brokerage has said.

Birlsoft: Buy for a price target of Rs 500

“The management remains confident of accelerating revenue growth on the back of broad-based demand and increased traction in the areas of Cloud, Digital and Cybersecurity. While the shortage of talent is a constraint on achieving higher growth (20%), Birlasoft is confident of delivering revenue growth in the mid-teens in FY22,” the brokerage has said.

According to Emkay Global, supply side challenges persist due to an industry-wide shortage of talent. Management expects the situation to improve by the end of FY22. Supply-side hurdles, wage hikes and high subcontracting costs could limit any upside in margins in the near term. “Considering improving earnings predictability (annuity revenue at 70% from 60% in Q1FY21), strong earnings trajectory (25% EPS compounded annual growth rate over FY21-24E) and robust cash generation, we retain Buy on Birlasoft with a target price (Sep’22E) of Rs 500 at 25 times Sep’23E EPS,” the brokerage has said.

Buy L&T says Motilal Oswal

Broking firm, Motilal Oswal is bullish on the stock of L&T and has recommended buying the stock for a price target of Rs 1,950. The brokerage remains optimistic and sees good value in the stock.

“L&T is our top pick in the wider Capital Goods space as a proxy to play India’s capex story. So far, weak order inflows have impacted the stock’s performance, but will gain momentum once final awarding picks up. We estimate an FY21-24E EPS CAGR of 24%, driven by 15% CAGR in the core E&C business and declining loss from the Hyderabad Metro. Over last

one month, L&T Infotech/ Mindtree/ L&T Technology Services rallied by 18%/28%/11%. Factoring in the current maret price of the listed subsidiaries (holding

company discount of 20%), our target price for L&T now stands at Rs 1,950. Adjusted for the valuation of subsidiaries, the core business is available at 14.3 times FY23E PE v/s its long-term one-year forward average P/E multiple of 22x. We maintain our Buy rating on the stock,” the brokerage has said.

Disclaimer

The above stock is based on the report of Emkay Global and Motilal Oswal Investing in stocks is risky and investors should do their own research. The author, the brokerage firms or Greynium Information Technologies are not responsible for any losses incurred due to a decision based on the above article. Investors should hence exercise due caution as are at record peaks. Please consult a professional advisor.