Category: Personal Finance

3 Stocks To Buy For Gains Up To 38%, Says ICICI Securities

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Buy eClerx Services stock for a potential upside of 22%

ICICI Securities sees an upside in the stock of eClerx Services to Rs 2650, from the current market price of Rs 2172.

According to the brokerage firm, margins are expected to expand 138 basis points to 25.9%, owing to higher revenue growth offset by Personiv acquisition-related costs. Due to the return of travel and an increase in facility costs, we project FY23E margins to fall off to 24.8 percent.

“eClerx’ share price has grown by ~1.4x over the past five years. We continue to remain positive and retain our BUY rating on the stock Target Price and Valuation: We value eClerx at Rs 2,650 i.e. 21x P/E on FY23E EPS.” the broking firm said.

Future price-performance triggers include:

  • To drive growth, get traction in customer service, RPA, analytics, content generation, and cross-sell and upsell to Personiv clients.
  • Revenues are likely to be driven by lower roll offs from one-time client-specific events, improved deal wins, and a resurgence in growth.
  • In FY21-23E, expect dollar revenues to expand at a 19.7% CAGR.

Buy Lemon Tree Hotels stock for a potential upside of 38%

Buy Lemon Tree Hotels stock for a potential upside of 38%

Lemon Tree (LTHL) is India’s largest hotel brand in the mid-priced market, promoted by Patanjali Keswani. ICICI Securities sees an upside in the stock of Lemon Tree Hotels to Rs 2650, from the current market price of Rs 2172.

According to ICICI Securities, LTHL is in capex mode, it has a lot of debt on its books. In FY21, it raised money from APG to deal with the Covid-induced issue. We believe the firm is now in a better position to manage liquidity without further dilution, thanks to improved demand visibility and a lower debt repayment schedule (Rs 115 crore for FY22 and Rs 140 crore for FY23E).

“The company remains a key branded player in the high growing mid-scale segment. We retain BUY rating on the stock Target Price and Valuation: We value the stock at Rs 55 on a SOTP basis i.e. 23x FY23E EV/EBITDA,” the brokerage said.

Key triggers for future price-performance:

  • With the economy opening up, performance is expected to improve dramatically starting in H2FY22E.
  • Due to an anticipated, 15- 18 percent decline in room supply as a result of continued stress and increased desire for branded players, the company is well-positioned to acquire the unorganized market share.
  • If a new requirement occurs, the company’s broad asset base, strategic alliance, and financial flexibility will continue to sustain its liquidity profile.

Buy Tata Steel stock for a potential upside of 38%

Buy Tata Steel stock for a potential upside of 38%

Tata Steel (TSL) is one of the most geographically diverse steelmakers in the world, with operations and commercial presence all over the globe. ICICI Securities sees an upside in Tata Steel‘s stock to Rs 2650, from the current market price of Rs 2172.

ICICI Securities believes that working capital, which increased in Q1FY22, is likely to decrease in the coming quarters. Indian operations steel volumes are predicted to be 1 million tonnes (MT) higher in FY22E than in FY21 (Indian operations steel sales volume was 17.3 MT in FY21).

“Tata Steel share price has grown by ~3.5x over the last 12 months. We maintain our BUY rating on the stock Target Price and Valuation: We value TSL at | 1750, based on SoTP valuation”, the brokerage has said.

Key triggers for future price-performance:

  • Tata Steel plans to increase its steel production capacity in India to 40 million tonnes (MT) by 2030. Both organic and inorganic approaches would be used to double domestic manufacturing capacity.
  • India’s share of Tata Steel’s overall consolidated production capacity has climbed from 29 percent in 2010 to 57 percent in 2020 and is expected to reach 73 percent by 2030.
  • Tata Steel’s gross debt reduction objective for FY22E is over US$2 billion, with offshore debt payback taking priority.

Disclaimer

Disclaimer

Investors should certainly not take any trading and investment decision based only on information discussed in this article. We are not a qualified financial advisors and any information herein is not investment advice. It is informational in nature, which is taken from the brokerage report of Khambatta Securities. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates, author and the brokerage house do not accept culpability for losses and/or damages arising based on information in the article.



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China cbank injects 600 bln yuan via medium-term loan, rate unchanged for 16th month, BFSI News, ET BFSI

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SHANGHAI, – China’s central bank injected billions of yuan through medium-term loans into the financial system on Monday, while keeping the interest rate unchanged for the 16th month in a row.

The People’s Bank of China (PBOC) kept the rate on 600 billion yuan ($92.64 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions steady at 2.95% from previous operations.

The PBOC said in a statement that the operation was a rollover of 700 billion yuan of maturing MLF loans due on Tuesday, and effectively drained 100 billion yuan of mid- to long-term liquidity from the banking system.

The central bank also injected another 10 billion yuan worth of seven-day reverse repos into the banking system on the day. ($1 = 6.4768 Chinese yuan) (Reporting by Winni Zhou and Andrew Galbraith Editing by Shri Navaratnam)

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Inclusion of traders, retailers as MSMEs to improve ease of doing business, BFSI News, ET BFSI

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By: Gaurav Mohan

The Micro, Small and Medium Enterprises (MSME) sector in India has emerged as a highly vibrant and dynamic sector of the Indian economy over the last five decades.

It not only plays a crucial role in providing large scale employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural & backward areas and in reducing regional imbalances, assuring more equitable distribution of national income and wealth.

MSMEs are complementary to large scale industries such as ancillary units and this sector contributes enormously to the socio-economic development of the country.

MSME Act

The Micro; Small and Medium Enterprises Development (MSMED) Act was notified in 2006 by the MSME Ministry to address policy issues affecting MSMEs as well as the coverage and investment ceiling of the sector.

The Minister of MSME and Road Transport had announced the inclusion of Retail and Wholesale traders as Micro, Small and Medium Enterprise (MSMEs). This move by the Government is expected to benefit over 2.5 crore retail and wholesale traders in a positive way..

In 2020, the Government of India had launched Atma Nirbhar Bharat Abhiyan (ABA) and also changed the MSMEs classification by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition was removed in year 2020.The following is the current MSMEs classification, where the investment or annual turnover are to be considered for deciding an MSMEs:

 Micro enterprises-where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;

 Small enterprises-where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and

 Medium enterprise- where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees

If any enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.

Thereby it can be said that wef July 1, 2020 above limits would be equally applicable for every entity in the service sector, so as to establish the eligibility criteria under MSMEs laws.

Inclusion of traders, retailers in MSMEs

Earlier in the year 2017, the Government had removed retail and wholesale traders from the MSMEs category. Thereby the existing definition of MSMEs covers only Manufacturing and Service Sector enterprises. Government of India received many requests and representations to include more services provided by wholesales & retailers under the regime of MSMEs to give support to their businesses, especially during the pandemic crisis.

The Ministry of MSME wide Office Memorandum dated- July 2, 2021 had issued an order to include retail and wholesale trade as MSME. This will enable them to harness the benefit of priority sector lending, and they will now be able to register on the Udyam Registration Portal. To be specific, now from 02.07.2021follwing additional services are being added to this list eligible for MSME:

 Wholesale and retail trade and repairs for services related to motor vehicle and motorcycles

 Wholesale trade except of services related to motor vehicles and motorcycles

 Retail Trade Except of services related to Motor Vehicles and motorcycles

MSME tag benefits

This move to include more services in MSMEs would be of great benefit to wholesalers and retailers, few of which are listed below:

 Benefit from various schemes issued by Government of India in order to help them to access to the funds available and manage the pandemic situation & financials crisis such as:

 Cap of Rs. 500 crores of loan outstanding removed.

 100 % guarantee cover on loans up to Rs. 2 crores.

 ECLGS scheme expansion.

 Benefits of RBI restructuring.

 The Udyam portal is a free, paperless online and instant registration portal for MSME and now retail & wholesale traders can register on it and can become eligible for many more benefits available to MSME Sector like-

 Concessional loan rate by bank.

 Concession in Electricity bills

 Exemption in direct tax & indirect tax laws.

 Various COVID-19 relaxations related to business and taxation.

 To take benefits of Emergency Credit Line Guarantee Scheme (ELCGS), the total budget has now been increased to INR 4.5 lakhs crore by Finance Ministry on June 28, 2021 to provide relief to MSMEs affected by the second wave of COVID-19.

 More than 400 old customs duty exemptions granted this year.

 Nationalised exemptions on import of duty free items as an incentive to exporters of garments, leather & handicraft items. Most of these are manufactured by MSMEs entities.

 Reduced compliance burden and limit increased for tax audits from INR 5 crores to INR 10 crores.

Such benefits would definitely help the registered Wholesale & Retail traders to stand up in the Indian Economy during the COID-19 Pandemic crisis situation & now they will be governed by MSME’s regulations issued by MSME Ministry for MSMEs.

Conclusion

COVID-19 pandemic affected traders will now be able to restore their businesses by obtaining necessary finances from the banks which were earlier denied by the Banks which will boost the Indian Economy in a positive way.

Taking into consideration the situation of COVID-19 in India, MSME Ministry should increase the limit of Annual turnover & Investments so that more service providers can get registered as MSMEs and can get relief with loss in second COVID-19 wave & expected upcoming waves.

About the Author: Gaurav Mohan is CEO at AMRG & Associates.

Disclaimer: The views expressed are solely of the authors and ETCFO.com does not necessarily subscribe to it. ETCFO.com shall not be responsible for any damage caused to any person/organisation directly or indirectly.



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Voda Idea Q1 net loss widens to Rs 7312.9 crore; ARPU falls to Rs 104, BFSI News, ET BFSI

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Vodafone Idea (Vi) posted a net loss of Rs 7312.9 crore in the fiscal first quarter compared to Rs 6985.1 crore in the previous quarter, hurt by slowdown in economic activities which dragged down the revenues of the debt laden telco.

The third-largest operator reiterated its viability concerns unless it manages to raise funds, which in turn depends on the status of statutory dues that it owes the government, and also on other factors such as negotiations with lenders on better terms for repayment.

“The Company’s financial performance has impacted its ability to generate the cash flow that it needs to settle/ refinance its liabilities and guarantees as they fall due, which along with its financial condition, is resulting in material uncertainty that casts significant doubt on the Company’s ability to make the payments mentioned therein and continue as a going concern.,” India’s only loss-making private operator said.

Total quarterly revenue for the cash-strapped operator fell to Rs 9152.3 crore in the April-June from Rs 9,607.6 crore when compared sequentially, the company said in a notice to the stock exchanges on Saturday.

Adjusted gross revenue (AGR), is the moot issue between Department of Telecommunications (DoT) and Vi, and the telco has has filed a review petition in the Supreme Court against DoT’s calculation “errors”.

The DoT has asked for Rs 58,254 crore from Vi, of which the telco has paid Rs 7,854 crore. The telco Saturday said that as of June end, its AGR liabilities, including interest, stood at around Rs62,180 crore, according to DoT’s calculations.

Vi said that the total debt of the Group stands at Rs 191,588.8 crore of which the next instalment of the AGR liability – of around Rs9,000 crore – and debt amounting to Rs 16,853.4 crore is payable in next 12 months.

The results are the first after Aditya Birla Group chairman Kumar Mangalam Birla quit as Vodafone Idea non-executive chairman and as a director on the boad. His resignation had come less than two months after he wrote to the government that he is willing to give up his stake in Vi to any government entity, which can ensure the telco’s survival.

Funds are now the telco’s lifeline and the operator on its attempts to raise Rs 25,000 crore said ” We continue to focus on executing our strategy to keep our customers ahead, and our cost optimization plan remains on track to deliver the targeted savings. We are in active discussion with potential investors for fund raising, to achieve our strategic intent,” said Ravinder Takkar, MD & CEO.

Both parents – Vodafone Group and the ABG – though have refused to infuse fresh equity into the cash strapped telco. The company had cash & cash equivalents of Rs. 9.2 billion at June end.

“The said assumption of going concern is essentially dependent on its ability to raise additional funds …successful negotiations with lenders for continued support/additional funding, monetisation of certain assets, outcome of the review petition filed … Supreme Court and clarity of the next instalment amount, acceptance of its deferment request by DoT and generation of cash flow from its operations that it needs to settle/renew its liabilities/guarantees as they fall due,” Vi said.

It added, “As result of earlier rating downgrades, certain lenders had asked for increase of interest rates, and additional margin money/security against existing facilities. The Group has exchanged correspondences and continues to be in discussion with the lenders for the next steps/ waivers”. Also, the company needs to provide additional bank guarantees of Rs 975.7 crore to avail additional moratorium of one year on spectrum installments for November 2012, February 2014 and October 2016 auctions, amounting to Rs 6439.2 crore. Guarantees amounting to Rs 13,358 crore are due to expire during the next 12 months.

In its review petition, Vi said it has “outstanding utilised facilities” of approximately Rs 47,000 crore from banks, non-banking finance companies (NBFCs) and mutual funds, of which Rs 25,000 crore is from public sector banks, over and above the amount due to DoT.

The company said its subscriber base declined by 12.3 million to stand at 255.4 million subscribers as against rivals Jio and Airtel who have 440.6 million and 321.23 million, respectively. The telco said pandemic related lockdowns impacted gross additions but despite that, its 4G user base was steady at 112.9 million 4G customers.

Its quarterly earnings before interest, tax, depreciation & amortization (Ebitda) reduced to Rs 3,707.7 crore from Rs4,408.7 crore.

Ebitda margins contracted to 40.5% from 45.9% in the previous quarter.

The operator’s average revenue per user (ARPU) was Rs 104, lower than Rs 107 clocked in the previous quarter. Rivals Bharti Airtel and Reliance Jio, have posted an ARPU of Rs 146 and Rs 138.4 respectively in the April-June quarter.



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Sports minister promises expansion of TOPS, financial windfall for Tokyo performers, BFSI News, ET BFSI

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NEW DELHI: Driven by India’s best medal haul in Tokyo Olympics, the government will expand the size and scope of the Target Olympic Podium Scheme (TOPS) keeping the 2024 and 2028 Games in mind, Sports Minister Anurag Thakur said on Sunday.

During a felicitation programme organised for the triumphant Indian athletes, the Indian Olympic Association (IOA) awarded Olympic champion Neeraj Chopra with a cash award of Rs 75 lakh.

This is the first time, IOA is offering cash incentives to Olympic medallists.

The silver medallists — wrestler Ravi Dahiya and weightlifter Mirabai Chanu — received Rs 50 lakh each for their heroics in Tokyo.

The bronze medallists — shutter PV Sindhu, boxer Lovlina Borgohain and wrestler Bajrang Punia — got Rs 25 lakh after their fine show at the recently-concluded Olympics.

“I assure you we are going to increase TOPS so that more and more athletes can be benefitted,” a delighted Thakur said on the sidelines of the programme.

Optimistically, he added, “When such a function is held after the 2024 Olympics, I hope the medallists are so many that there is no space left here (for them to occupy).”

Each member of the bronze-medal winning men’s hockey team got richer by Rs 10 lakh each. The coach of gold winner Chopra will receive Rs 12.5 lakh, while coaches of Dahiya and Chanu get Rs 10 lakh. The coach for the bronze winners was given Rs 7.5 lakh.

It was also announced that Rs 1 lakh will be given to all 128 Tokyo Olympians. All the medallists were present.

Besides, the medal-winning National Sports Federations (NSFs) were presented with cheques of Rs 30 lakh each.

Along with Thakur and the other dignitaries present, Indian Olympic Association (IOA) president Narinder Batra, too, lauded the country’s athletes for their performance at the showpiece.

“There was a lot of gloom and despondency in the country due to COVID-19 before the Olympics. But your (athletes) performance in the Tokyo Olympics has changed all that and you have brought a smile to 1.3 billion people of the country,” Batra said.

“You must have realised what you all have done for the country.”

Chopra’s coach Klaus Bartonietz and Jaiveer Choudhary, who introduced the athlete to the Shivaji Stadium in Panipat, did not turn up for the event.



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2 Stocks To Buy That Can Generate Up To 49% Returns In The Next 1-Year

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Buy HG Infra with a price target of Rs 800, says Emkay Global

As against the current market price of Rs 535, Emkay has set a target of Rs 800 on the stock of HG Infra in the next 12-months.

According to Emkay Global, HG Infra started its journey as a sub-contractor to some of the renowned EPC players in the country and has now become one of the leading EPC players with a portfolio of HAM projects.

Sub-contracting, which accounted for 75% and 50% of revenue in 2012 and 2017, now contributes less than 25%. HG Infra has increased its pre-qualification to Rs 28 billion from Rs 15 billion a few years back, the brokerage has said.

According to the brokerage, the medium-term growth prospects high in road sector.

“Investments in the road sector during FY21-FY25 are expected to be 1.6x investments made during FY16-FY21 as per industry estimates. EPC opportunities in water, railways and urban infrastructure are large and, hence, diversification efforts will pay off in the long term,” the brokerage has said.

“We estimate a 24% EPS CAGR over FY21-FY24, aided by order wins in both EPC and HAM as HG Infra can now bid for a majority of large road projects. We initiate with a target price of Rs 800, valuing the EPC business at 13 times Sep’23E EPS of Rs 59. Peers are trading in the 9-17 times range with a 500-700 basis points lower RoE,” the brokerage has said.

Buy Bharat Forge

Buy Bharat Forge

Emkay Global has set a target price of Rs 928 on the stock of Bharat Forge, as against the current market price of Rs 819.

“Our positive view on Bharat Forge is underpinned by its leadership position in automotive forgings, focus on diversification and expected recovery in the core segments. Medium term performance should be aided by new segments such as Defense, Railways, Aerospace, E-mobility, and Light-weighting solutions,” the brokerage has said.

According to the brokerage the management commentary was positive as it expects sequential revenue growth in Q2FY22. Apart from this Oil & Gas revenues stood at Rs1.5 billion in Q1 vs. Rs 450 million in Q4FY21. The company Expects revenue momentum to continue for the next few quarters. In fact, the management expects aluminum forging revenues for overseas subsidiaries to more than double in the next three years.

“We retain Buy with a revised target price of Rs 920, based on 27 times price to earnings for the standalone business on Sep’23E EPS (Mar’23E EPS earlier),” the brokerage has said.

Disclaimer

Disclaimer

The article is informational in nature, which is taken from the brokerage report of Emkay Global. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.



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Pandemic hits India's prospects to become $5 trillion economy by FY25: Top US economist

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According to him, even if everything goes according to current growth projections by the RBI and IMF, Indian economy will be smaller for a considerable period of next year than it was in 2019.

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Paradeep Phosphates files IPO papers with Sebi, BFSI News, ET BFSI

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New Delhi: Fertiliser company Paradeep Phosphates has filed draft papers with capital markets regulator Sebi to raise funds through an initial public offering. The IPO comprises fresh issue of equity shares worth Rs 1,255 crore and an offer for sale (OFS) of up to 120,035,800 shares by existing shareholders and promoters, according to the draft red herring prospectus (DRHP).

Under the offer for sale, Zuari Maroc Phosphates Pvt Ltd (ZMPPL) will offer up to 75,46,800 shares while the Government of India will offer 112,489,000 equity shares.

Currently, ZMPPL holds 80.45 per cent and the Government of India owns 19.55 per cent stake in the company.

Proceeds of fresh issue will be used to partly finance the acquisition of the fertiliser manufacturing facility in Goa, payment of debt and general corporate purposes.

Paradeep Phosphates is primarily engaged in manufacturing, trading, distribution and sales of a variety of complex fertilizers such as di-ammonium phosphate (DAP) and NPK fertilizers. Its fertilizers are marketed under some of the key brand names in the market ‘Jai Kisaan – Navratna’ and ‘Navratna.

Axis Capital, ICICI Securities, JM Financial and SBI Capital Markets are the lead managers to the issue.



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TN plans new industrial parks; aims to create 3.5 lakh jobs, BFSI News, ET BFSI

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Chennai: Setting up of parks for manufacture of defence components/international furniture/electronic vehicle/medical devices/leather products/food products, establishing a Fintech City and coming out with a new “Life Sciences – Research and Development and Manufacturing Policy” are on the cards of Tamil Nadu government.

Presenting the budget for 2021-22 Finance Minister Palanivel Thiaga Rajan, taking a dig at the Central government said: “Although the Government of India announced establishment of Defence Industrial Corridors connecting Hosur, Salem, Tiruchirapalli and Coimbatore, the support of the Union Government has been limited.”

“The state government will take this project forward with the establishment of a defence component manufacturing park at Coimbatore over 500 acres at a cost of Rs 225 crore. This park is expected to attract investment of Rs 3,500 crore,” Rajan said.

According to him, an international furniture park will be set up at a cost of Rs 1,000 crore on 1,100 acres of land in Thoothukudi district, to attract investment of Rs 4,500 crore and enable employment of 3.5 lakh persons.

An electronic vehicle park at Maanallur in Tiruvallur district, a medical devices park at Oragadam in Kancheepuram district, leather product park at Panappkkam in Ranipet district and three food parks will be established at Manaparai, Theni and Tindivanam, Rajan said.

A 60 MLD Sea Water Desalination Plant at Thoothukudi for industrial units and 10 MLD TTRO plant for industries at Hosur will be established.

According to him, a Fintech policy will be released shortly. A separate ‘FinTech Cell’ will be formed in guidance to facilitate the establishment of Fintech companies in Tamil Nadu. A Fintech city in Chennai will be developed in two phases at Nandambakkam and Kavanur.

The first phase will be developed at Nandambakkam at an estimated cost of Rs 165 crore, Rajan said.

A new Policy for “Life Sciences – Research and Development and Manufacturing” will be released shortly to enable Tamil Nadu to strengthen its presence in these emerging sectors, he added.



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