Category: Personal Finance

LIC Housing Finance

Motilal Oswal has a buy call on the stock of LIC Housing post its quarterly numbers. “LIC Housing Finance surprised positively on growth, spreads, and addressing capitalization issues in 4QFY21. However, asset quality surprised negatively. We await clarification on the same. Given its parentage, it has been able to raise debt capital at low rates, which should keep margin healthy in a highly competitive environment. The sharp pick-up in disbursements is encouraging. Valuations at 1x price to book value is attractive. We look to revise our estimates post the earnings call,” the brokerage has said.

The housing finance company stock was last trading at Rs 510, down almost 2% in trade, post quarterly numbers of the firm.

Lemon Tree Hotels

Lemon Tree Hotels is a midscale business and leisure hotel. Again, Motilal Oswal has a buy rating on the stock.

“Revenue fell 46% YoY to Rs 951 million (estimated Rs 889 million) in 4QFY21. ARR declined by 45% YoY (to Rs 2,498) and occupancy fell 170 basis points (to 59.3%). RevPAR fell 46% YoY to Rs 1,481. On a QoQ basis, RevPAR grew 38% on the back of a 17 pp improvement in occupancy rate, marginally offset by a 1% decline in ARR.

EBITDA fell 55% YoY to Rs 285 milion (estimates Rs 302 million; v/s Rs 201 million in 3QFY21). On a QoQ basis, revenue/EBITDA grew 39%/42%. Adjusted loss stood at Rs 168 million v/s a loss of Rs 179 million in FY20,” the brokerage firm said.

Following its results, the shares of Lemon Tree was trading at Rs 42.60, up nearly 2% in trade.

Whirlpool of India

Whirlpool of India is a stock Motilal Oswa has a buy, following a decent set of quarterly results.

“As the economy recovers from the lockdowns, operating leverage should aid margin normalization by FY23E to 11.4%. While topline growth has been at par with our coverage universe companies, the low base of FY21 should help in faster earnings growth as peers witness margin erosion from a high base of FY21. This should help the stock catch-up with its peers. To account for the second COVID wave, we cut our FY22E/23E EPS by 20%/4% and price target to Rs 2,900 (from Rs 3,020 earlier) based on unchanged target FY23E P/E of 55 times. Maintain Buy,” the brokerage has said.

The shares of Whirlpool of India were at Rs 2,340 down 0.50%.

Disclaimer

The above mentioned stocks have been picked from brokerage reports. The author, the brokerage or Greynium Information Technologies do not take any responsibility for losses that maybe incurred. The above article is for informational purposes only

Godrej Consumer

Godrej Consumer is a leading personal-care company in India and has presence in India in countries across the globe. Recently, broking firm Motilal Oswal has placed a buy call on the stock of Godrej Consumer. The firm believes that the leadership offers scope for transformative change and also sees huge potential tailwinds in Soaps going ahead leading to growth in domestic market

“We think that the changes in top management along with: a) better capital allocation efforts in recent years, b) initial good results in GAUM (largely Africa) business in FY21, and c) potential tailwind in Soaps and Personal Wash products – are likely to unlock sustainable topline/earnings growth and revitalization RoCE over the next few years, leading to a sustained re-rating as well. We have seen transformative changes on all these fronts in the past with companies like Britannia, Nestle, Jubilant Foodworks and Hindustan Unilever. Therefore, maintain our positive outlook on the stock,” the brokerage has said.

The shares of Godrej Consumer were changing hands at Rs 933.90.

JK Cement

JK Cement is India’s top cement player, with significant presence in the white cement business as well.

Emkay Global has set a higher target price of Rs 3,000 on the stock of JK Cement. “We broadly maintain FY22 and FY23 estimates, factoring in 13% EBITDA CAGR. JK Cement’s RoIC was reset to around 16% in FY21 vs.

Our DCF-derived target price remains unchanged at Rs 3, 000 (Jun’22E), implying 12 times forward EV/EBITDA. Maintain Hold as the valuation re-rating is largely over and risk-reward appears balanced,” Emkay Global has said.

Shares of JK Cement were last quoting at Rs 2,777.

ICICI Prudential Life Insurance

Brokerage firm, Motilal Oswal has suggested buying the stock of ICICI Prudential Life Insurance. The fund says that the improving mix towards high margin products, pension and Annuity offer a strong business opportunity.

“We expect trends to continue, further aided by a higher mix of Non-Linked Savings/Protection business, both of which have a higher persistency rate. Profitability can witness some pressure, led by elevated provisions towards rising COVID-19 death claims. We estimate ICICI Prudential Life to deliver 31% CAGR in new business APE and VNB growth at 29% CAGR over FY21-23E, led by stable margin and controlled operating expenditure. We maintain our Buy rating with a price target of Rs 675 per share (2.4 times FY23E enterprise value).

Shares of ICICI Prudential Life Insurance Company were trading at Rs 587 on the NSE.

Coal India

Coal India is another stock Motilal Oswal has recommended to buy. The company’s is the world’s biggest coal miner.

“Coal India’s adjusted EBITDA (excluding OBR) fell 16% YoY to INR79.7b but was 38% ahead of our estimate of INR57.8b. The beat comes on the back of: a) higher than expected revenue, and b) lower than expected costs. Revenue at Rs 267 billion was down just 3% YoY (5% ahead of our estimate). Realizations in both the FSA and e-auction segments were better than our expectations. Other operating income (transportation and evacuation related income) stood a healthy 11% YoY higher at Rs 22 billion,” the firm has said.

Disclaimer

The above mentioned stocks have been picked from brokerage reports. The author, the brokerage or Greynium Information Technologies do not take any responsibility for losses that maybe incurred. The above article is for informational purposes only

1. Federal Bank:

Kochi-based Federal Bank is a leading commercial bank in the private space. The bank also has international presence in Abu Dhabi, Dubai, Oman, Kuwait etc. Total assets at the bank at the end of FY21 stood at Rs. 1.9 lakh crore, deposits had been at Rs. 1.56 lakh crore while the bank’s loan book was at Rs. 1.2 lakh crore.

For the Q4 quarter of FY21, the company’s loan book registered 7.9% YoY growth owing to strengthening of the retail portfolio. NIM as well as NII too registered an increase, with NII growing by a strong 16.8% YoY to Rs. 1437 crore.

“NPA’s have remained steady for the bank over the past few years with GNPA for Q4FY21 at 3.41% while NNPA ratio stood at 1.19%. PCR at the end of FY21 stood at ~65% which we believe is adequate. Total restructured book stood at Rs. 1409 crore at the end of Q4FY21. This is against earlier expectations of total restructuring of Rs. 3,000-3,500 crore”, added the report.

Key financials for FY2022E

NII- Rs. 7156 crore

NIM – 3.3%

PAT- Rs. 2311 crore

EPS- Rs. 11.6

ROE- 13.4%

P/E- 7.6x

2. IDFC First Bank:

This is the new age private banking firm in the country that other than offering basic banking services including deposits and loan is also into offering investments such as mutual fund, gold bonds etc.

“IDFC Fist Bank, Post management change has clearly outperformed in building liability franchise and retail lending. Since new management took charge, every qtr. liability franchise has been strengthened. CASA ratio improved from 10.4% in Q3FY19 to ~43% In Q4FY21. NIM’s have also been stable for the bank despite interest reversals in Q4FY21”, said the report.

Now as banks will see less of inflow coming from the asset side, the ability to raise funds at low cost shall be the key parameter that will drive banking space from here on. In April this year, the bank raised fresh equity worth Rs. 3000 crore.

For the last quarter ended March 2021, the bank posted a 78% jump in its net profit at Rs. 128 crore. In the corresponding quarter in the year ago period, the profit stood at Rs. 72 crore. For the full year 2021, the profit stood at Rs. 452 crore versus loss of Rs. 2864 crore in the previous fiscal. The stock last traded at a price of Rs. 59.85 per share on the NSE.

Key financial metrics for FY22E

NII- Rs. 8488 crore

NIM- 4.9%

EPS- Rs. 2.5

PAT- Rs. 1425.8 crore

ROE- 7.7%

P/E- 22.7x

3. Shriram City Union

The leading NBFC from the house of Shriram Group offers specialized services in MSME and retail lending. The major portion of the company’s loan book comprises small business accounts as of FY 2020 end. Also, the company extends 2-wheeler, auto, personal and gold loans.

“The company posted a good set of numbers for the quarter due to positive surprise on the asset quality front. NII for Q4FY21 was up by 3.2% YoY to Rs. 928.5 crore while PPOP was up by 7.2% YoY to Rs. 551 crores. Provision during the quarter was down by 47.4% yoy to Rs. 163.8 crore while profits were up by 84% yoy to Rs. 282 crores. Shriram City Union reported a strong 6.0% sequential growth in disbursement for the quarter which led to a 3.9% qoq growth in AUM to ~ Rs. 29,571 crore”, said the report.

“SCUF surprised positively on the asset quality front Gross stage 3 loans decreased by 9bps qoq to 6.37% in Q4FY21. Net stage 3 for the quarter declined to 3.08% while PCR ratio stood at 51.6%”, added the report.

Key metrics FY2022E

NII- Rs. 4295 crore

NIM- 12%

PAT- Rs. 1343.8 crore

EPS- Rs. 203.6

ROE- 15.3

P/E- 7.8%

GoodReturns.in

This company shares skyrocketed in price in the last one year and comparing its closing price as on June 15, 2020 of Rs. 157 per share on the NSE, the stock after exactly a year today settled at a price of Rs. 1431.9. In the intra-day trade the company from the steel-sponge iron space touched a new 52-week high price of Rs. 1550.05, a remarkable rally of 887 percent. On the BSE, the stock hit a 52-week high of Rs. 1561.95. This is also the stock’s all-time high price.

Which is this company that has delivered multibagger returns and why it is rallying?

The company is none other than Chhattisgarh based integrated steel manufacturer, Godawari Power & Ispat Ltd. (GPIL) Before going to the details of why the stock is rallying here are the few key points of the stock:

1. Number of FII/FPI holding in the stock has increased from 8 to 17 in the quarter ended March, though stake has been reduced to 0.62% from 0.65%.

2. MFs have increased holdings from 0.42% to 0.46%

3. Bullish momentum -As the stock is trading above its short, medium and long term moving averages.

4. M-cap of the firm stood at Rs. 5041 crore after the market closing hours as on June 15, 2021

Why Godawari Power stock rallied phenomenally in the last one year?

The firm’s encouraging financial performance is one main factor that is fuelling the stock price rally. For the March ended quarter, the firm recorded a sharp 879% growth in profit at Rs. 326.95 crore versus Rs. 33.37 crore in the same quarter during the year ago period. Operating profit (excluding other income) also registered an increase of 214.73% to Rs. 489.63 crore versus Rs 155.57 crore profit in the same quarter of the last fiscal year.

For the FY ending 2021, the net profit at the firm climbed 282.77 percent to Rs. 638.39 crore. Also, net sales at the firm edged higher by 23.82% to Rs. 4071 crore versus Rs. 3288 crore for the FY ending March 2020.
Other developments that triggered price rally in Godawari Power and Ispat include:

1. Shareholders of the company gave an approval to pare its stake/ holding in Godawari Green Energy (GGEL) i.e. an important subsidiary of the steel manufacturing company. GGEL is a SPV, with GPIL as the promoter entity and having an equity holding of 77.82 percent on a fully diluted basis.

2. At its meeting on May 25, the board of Directors of the company approved the plan of setting up a captive Solar PV Power Plant of 250 MW capacity in Raigarh District of Chhattisgarh with a cost outlay of Rs. 750 crores.

3. Furthermore, in March this year, the company got clearance from the Chhattisgarh Environment Conservation Board, Raipur in respect of ‘consent to operate’ the augmented capacity of iron ore pellet plant as well as consent with regard to setting up manufacturing facilities in other divisions.

GoodReturns.in