Personal Finance – Page 49

This Stock Has A “BUY” Call From HDFC Securities With An Upside Gain of 22.49%

November 2, 2021 root Personal Finance

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Q2 FY22 results of Vimta Labs Ltd.

According to HDFC Securities, the revenue of the said pharmaceutical company has “grown 27% YoY and 23% QoQ at Rs 75.5cr. The company has included Rs 10.4cr in revenue and the same amount in the expenditure side to factor in Food lab expenses and that’s why reported sales growth seems very strong, however, adjusted revenue grew 9.6% YoY at Rs 65.1cr. “

“Adj. EBITDA margin surged 360bps YoY at 30.6%. Better operational performance was led by cost management measures. Net profit increased 29% YoY and 20% QoQ at Rs 9.7cr. It included Rs 1.2cr as an exceptional loss for the quarter. The company has registered robust performance in H1 FY22 and guides to better the performance in the second half of FY22. In Q1 FY22, Vimta set up a regional reference Lab at Kolkata. It would take 2-3 quarters to ramp up. In Q2 FY22, the company has set up a diagnostic lab at Delhi” according to HDFC Securities.

The brokerage has also claimed that “the company has set an ambitious target of revenue of Rs 550-600cr in FY26. It would need to put up CAPEX to reach the targeted revenue number and it would depend upon which category/division would grow at a better rate. It expects the Food testing business to cross Rs 100cr revenue in the next 2 years. National Food Lab (NFL) would have a better margin than average margin. And also it guided for CAPEX of Rs 25-30cr in FY22 and CAPEX of around Rs 30cr in FY23.”

HDFC Securities’ take on Vimta Labs

Vimta gets 60% of its revenue from the pharmaceutical sector, 20% from the diagnostics segment, 15% from the food segment, and the rest from other sources. “It supports regulatory authorities in mandatory certification of food and agricultural products exported from India. The company has partnered with the Govt. of India to set up a food laboratory at JNPT, which would drive revenue from FY23. Vimta enjoys a strong quality brand in the country and has a pan India presence offering both routine and specialized clinical diagnostic services. It has a network of 18 laboratories in India, including food testing and clinical diagnostics” the brokerage said.

HDFC Securities has also said that ” Despite the Covid-19 pandemic which impacted revenues in Q1 FY21, the company reported ~17% YoY growth in revenue in FY21. As per the Management, its current capacity can do optimal revenue of around Rs 300-350cr. The company aspires to reach revenue of > Rs 500cr by FY26 which implies around 20% CAGR in revenue over FY21-26E. The year FY22 will be the maiden year for the newly launched EMI/EMC services to IT, defence suppliers, medical devices, telecom, electronics and allied industries. EMI/EMC Testing (electromagnetic interference/compatibility) business enjoys high gross margin as consumables cost remains low however when it reaches maturity stage, it would give almost company level EBITDA margin. We believe the segment would drive revenue and profitability from FY23 onwards.”

What should investors do?

According to HDFC Securities “The future growth pillar of the company comprises continued growth momentum in Pharma and Food segment and scale-up of its new segment i.e. EMI/EMC testing. Vimta is one of the largest players in India in its business segments. We estimate revenue/EBITDA/PAT CAGR of 22.5%/32%/47% over FY21-23E. Management guided for > 20% CAGR in revenue in the next 4-5 years.”

“Company expects all the segments to register strong growth in the next 3-4 years. Management has an ambitious target of revenue of Rs 550-600cr in FY26. It would need to put up CAPEX to reach the targeted revenue number and it would depend upon which category/division would grow at a better rate. The company guided for CAPEX of Rs 25-30cr in FY22 and CAPEX of around Rs 30cr in FY23. The company expects the Food testing business to cross Rs 100cr revenue in the next 2 years. National Food Lab (NFL) would have better margin than average margin” the brokerage further reported.

“Veeda clinical is one of the competitors in one of Vimta’s business segments. Veeda Clinical Research Ltd, a comparable Clinical Research Organisation, reported revenue of Rs 196cr, EBIDTA of Rs 66.5cr and PAT of Rs.62.9cr in FY21. In Jun-2021, It raised funds from Private Equity Investors at a Valuation of Rs 989cr. Veeda Clinical Research Pvt. Ltd has filed IPO Prospectus with SEBI to raise Rs 832cr at a significant premium valuation and seeking a much higher multiple. We feel investors can buy the stock at LTP and add on declines at Rs 302.5 (14.5x FY23E EPS) for a base case target of Rs 386 (18.5x FY23E EPS) and a bull case target of Rs 417.5 (20x FY23E EPS) over the next two quarters” claimed HDFC Securities.

Disclaimer

The above stock is picked from the brokerage report of HDFC 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.

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White Oak Capital completes acquisition of YES Bank’s MF business, BFSI News, ET BFSI

November 2, 2021 root Personal Finance

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HDFC Stock Retained On ‘Buy’ By ICICI Securities, HDFC’s NII Increased 18.4% YoY

November 2, 2021 root Personal Finance

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Q2FY22 financial report of HDFC

In the latest Q2FY22 financial report, HDFC, the private lender has reported a steady operational show. Their loan growth stood at 9.6% YoY, and Individual loans were up 15.4% YoY. Significantly, the lender’s Net Interest Income (NII) increased 18.4% YoY, while NIMs went down 10 bps QoQ, dividends boost other income. On the other hand, the company’s GNPA went south 24 bps QoQ to 2.0%, which is a positive note for HDFC.

Key triggers for future price-performance

According to ICICI Securities, pick up in business growth with a turnaround in real estate market is positive, funding advantage and adequate capital to aid growth and earnings, healthy provision buffer and improvement in the collection to aid asset quality, and improved performance from subsidiaries to add value – will be the key triggers for future price performance.

About HDFC’s company stock

HDFC is the largest NBFC engaged in the housing finance business with a consistently good performance in terms of both business growth, and asset quality. Individual loans contribute ~78% of AUM of the company.

Rating rational of ICICI Securities is mentioned below

Buy: >15%
Hold: -5% to 15%;
Reduce: -15% to -5%
Sell:

(Check company stocks here.)

Disclaimer:

The above stock was picked from the brokerage report of ICICI Direct. 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.

Story first published: Tuesday, November 2, 2021, 13:47 [IST]

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Stocks To Pay Out Final Dividend In November 2021

November 2, 2021 root Personal Finance

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1. P&G Health:

The stock of pharmaceuticals shall turn ex-dividend on November 2, 2021. The company declared Rs. 40 as its final dividend. Also, the company has declared special dividend, for which too the ex-date is November 2, 2021.

P&G Health was established as one of Merck’s Asia subsidiaries in the year 1967. In 2018, the company acquired Merck’s Consumer Health business. Procter & Gamble

Overseas India B.V. now holds 51.81% of the share capital in Merck Limited, while the remaining 48.19% is traded on the Bombay Stock Exchange Ltd. and National Stock Exchange of India Ltd.

The stock of the company last traded at a price of Rs. 5503.65 per share.

2. P&G Hygiene:

The company is among the leading fast moving consumer goods company in India. For its final dividend of Rs. 80, the stock shall turn ex-dividend on November 9, 2021. This dividend has been declared for the financial year ended June 30, 2021.

The renowned brand under the company’s banner include women hygiene brand- Whisper, vicks and Old Spice.

4. Jai Corp:

The steel company is slated to announce its Q2Fy22 earnings today and the company has announced dividend (final) of Rs. 0.5 per share. For this dividend ex-date is November 12, 2021. Notably, ex-date is the date when you should be holding the shares in your demat for being eligible to be considered for the dividend payment or you should have sold shares on this date.

Incorporated in 1985, the company is into manufacturing like that of steel, plastic processing and spinning yarn. Apart from expansion of its plastic processing business, it is now focusing and investing in emerging opportunities like developing SEZs, infrastructure, venture capital and real estate. It is listed on Bombay Stock Exchange and National Stock Exchange.

5. Gillette India:

The personal care company has announced a final dividend of Rs. 36 for the fiscal year 2021. For the june quarter the company’s income from operations came in at Rs.435.98 crore. Net profit for the financial year is at Rs. 27.5 crore.

The company’s stock price has been at Rs. 5820 per share.

Gillette India is in the business of manufacturing Blades and Razors, Oral care and Portable Power. Company has created brands like Duracell, Oral-B, MACH3 Turbo and 7oclock. .The company also in the business activities of Grooming, Oral Care, Portable Power

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2 Cement Stocks To Buy According To ICICI Securities For Gains Up To 28%

November 2, 2021 root Personal Finance

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JK Lakshmi Cement

In a 12-month target period, the brokerage has set a target price of Rs 785 on JK Lakshmi Cement, signifying a potential upside of up to 28 percent over the current market price of Rs 620.55. However, at the time of the buy call of the brokerage, the market price was Rs 615.

Q2FY22 Results:

“Owing to volume letdown and increased cost pressure, the results stayed poor. Revenues were up 7% to Rs 1118.2 crores led by sales realization growth of 10.3% YoY to Rs 4,820. Sales volume was down 2.9% YoY to 2.32 MT. EBITDA/t was down 10.3% YoY to Rs 701/t (vs. I-direct estimate of Rs 738/t). EBITDA margin was at 14.5%, down 333 bps YoY, 301bps QoQ. PAT of Rs 76.6 crore was down 5% YoY vs. (lower than the estimate of the brokerage: Rs 82.4 crore)” according to ICICI Securities.

Key triggers for future price-performance according to the brokerage:

With expected utilisation of 94%+ for FY22E, volume growth to moderate going forward as the new capacity will come on stream only in FY24E.

WHRS of 10 MW to get commissioned by Q3FY22 that should help contain power cost.

B/s strength to remain strong despite newly announced Capital Expenditure (CAPEX) of ~ Rs 1400 crore for its subsidiary unit UCWL.

Target Price and Valuation:

JK Lakshmi’s share price has grown by ~2.5x over the past three years (from ~ Rs 331 in August 2018 to Rs 816 in July 2021). We value the company at Rs 785 i.e.10x FY23E EV/EBITDA and we remain positive on the company and maintain BUY rating, said the brokerage.

“While the company may remain laggard in terms of growth during FY21-23E due to delayed capacity expansion (likely commissioning Q3FY24E), the focus on strengthening b/s with significant debt reduction in FY22E remains key positive. Given constructive sector outlook, we maintain the positive stance of the company and retain our BUY rating with revised TP of Rs 785/share (@ 10x FY23EV/EBITDA),” the brokerage has said.

Shree Cement

The brokerage has set a target price of Rs 34,500 on Shree Cement stock, implying a potential upside of up to 18% over the current market price of Rs 29,220 in an estimated period of 12 months. Nevertheless, the market price at the time of the brokerage’s buy call was Rs 29,150.

Q2FY22 Results:

“Revenues were up 5% YoY on sustained higher realisations. Volumes were down 3.6% YoY on heavy monsoon and transporters strike in the east. EBITDA/t of Rs 1427/t (down 7.5% YoY) remained ahead of our estimates and PAT was up 5.6% YoY to Rs 577.7 Crore on lower tax, higher other income” said ICICI Securities.

Key triggers for future price performance according to the brokerage:

Commissioning of a grinding unit of 3 MT in Maharashtra to take its domestic capacity to over 46.4 MT. The new clinker unit in Chhattisgarh (capacity of 12000t/day) to get commissioned by Q4FY22 (Capital Expenditure (CAPEX) of Rs Rs 1000 crore)

New CAPEX includes setting up of a new integrated unit with 3.5 MT GU and 3.8 MT clinker unit in Rajasthan, 3 MT grinding unit in WB, 106 MW solar power at various locations with a total CAPEX of Rs 4750 crore till FY24E. Total domestic capacity to reach 53.4 MT post these expansions.

The company will continue to maintain its cost leadership due to the structural advantage it has in terms of accessing raw materials and markets.

The recent price hikes of 7-9% in October 2021 to sustain on the back of healthy demand and help recoup margins, to some extent.

Target Price and Valuation:

With volume-led expected revenue CAGR of 18.7% and expected RoCE of 20%+, we remain positive on the company. Hence maintain BUY rating and we value Shree at Rs 34,500 i.e.22x FY23E EV/EBITDA said the brokerage. “Cost leadership, a strong presence in north & east along with robust balance sheet justifies premium valuations, ICICI Securities further added.

Disclaimer

The above stocks are picked from the brokerage report of ICICI Direct. 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.

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LIC’s Jeevan Akshay Pension Policy With Multiple Annuity Options

November 2, 2021 root Personal Finance

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Insurance

oi-Kuntala Sarkar

|

Published: Tuesday, November 2, 2021, 12:44 [IST]

LIC’s Jeevan Akshay is an Immediate Annuity plan is a single premium policy. That means the policyholder will have to buy the plan with a lump sum amount, while the annuity is available on a monthly, quarterly, biannually or annually basis.

Annuity options

There are multiple annuity options available under the LIC Jeevan Akshay policy. According to LIC, the available options have been enlisted below.

Option A: Immediate Annuity for life.
Option B: Immediate Annuity with a guaranteed period of 5 years and life thereafter.
Option C: Immediate Annuity with a guaranteed period of 10 years and life thereafter.
Option D: Immediate Annuity with a guaranteed period of 15 years and life thereafter.
Option E: Immediate Annuity with a guaranteed period of 20 years and life thereafter.
Option F: Immediate Annuity for life with return of Purchase Price.
Option G: Immediate Annuity for life increasing at a simple rate of 3% PA.
Option H: Joint Life Immediate Annuity for life with a provision for 50% of the annuity to the Secondary Annuitant on the death of the Primary Annuitant.
Option I: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of the annuitants survives.
and,
Option J: Joint Life Immediate Annuity for life with a provision for 100% of the annuity payable as long as one of
the Annuitant survives and returns of Purchase Price on the death of the last survivor.

LIC has fixed the Annuity Mode into Monthly, Quarterly, Half-yearly, and Annual modes. The Minimum Annuity is Rs. 1,000 per month, Rs. 3,000 per quarter, Rs. 6,000 per half-year, and Rs. 12,000 per annum.

Benefits of the LIC Jeevan Akshay policy

For Option A

• The annuity payments will be made in arrears till the Annuitant is alive, according to the mode of the annuity payment.
• On the death of the Annuitant, nothing shall be payable and the annuity payment shall cease immediately.

For Option B,C,D,E

• The annuity payments shall be made in arrears for as long as the Annuitant is alive, according to the annuity payment mode.
• On the death of the Annuitant during the guaranteed period of 5/10/15/20 years, the annuity will be paid to the nominee(s) till the guaranteed period.
• On the death of the Annuitant after the guaranteed period, nothing will be paid and the annuity payment will cease immediately.

Option F

• The annuity payments will be paid in arrears for as long as the Annuitant is alive, according to the annuity payment mode.
• On the death of the annuitant, the annuity payment will cease immediately, and Purchase Price will be paid to nominee(s) as per the option chosen by the Annuitant.

Option G

• The annuity payments will be made in arrears for as long as the Annuitant is alive, according to the annuity payment mode. The annuity payment will be increased by a simple rate of 3% PA for each completed policy year.
• On the death of annuitant nothing shall be payable and the annuity payment shall cease immediately.

Option H

• The annuity payments will be paid in arrears till the Primary Annuitant is alive, according to the annuity payment mode.
• On the death of the Primary Annuitant, 50% of the annuity amount will be paid to the surviving Secondary Annuitant till the Secondary Annuitant is alive. The annuity payments will cease on the subsequent death of the Secondary Annuitant.
• If the Secondary Annuitant predeceases the Primary Annuitant, the annuity payments will continue to be paid and will cease upon the death of the Primary Annuitant.

Option I

• 100% of the annuity amount shall be paid in arrears for as long as the Primary Annuitant and/or Secondary Annuitant is alive, according to the annuity payment mode.
• On the death of the last survivor, the annuity payments will cease immediately and nothing will be paid.

Option J

• 100% of the annuity amount will be paid in arrears till the Primary Annuitant and/or Secondary Annuitant is alive, according to the annuity payment mode.
• On the death of the last survivor, the annuity payments will cease immediately, and Purchase Price will be paid to the nominee(s) according to the option exercised by the Primary Annuitant.

Minimum Annuity Chart

Annuity Mode Monthly Quarterly half yearly Annual

Minimum Annuity RS. 1,000 per month RS. 3,000 per quarter RS. 6,000 per half year RS. 12,000 per annum

Source: LIC

Eligibility and minimum purchase

The minimum entry age for the LIC Jeevan Akshay Plan is 30 years, while the maximum entry age is 85 years. However, for the above-mentioned Option F, the maximum entry age can be 100 years.

The Minimum Purchase Price of the plan is Rs. 1,00,000, but this will depend on the Minimum Annuity as specified below. There is no limit on the maximum purchase price.

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Story first published: Tuesday, November 2, 2021, 12:44 [IST]

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Aditya Birla Capital jumps 6% after posting record profit in Q2, BFSI News, ET BFSI

November 2, 2021 root Personal Finance

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NEW DELHI: Shares of Aditya Birla Capital zoomed over 6 per cent in Tuesday’s session after the company posted a strong set of numbers for the quarter ended September 2021.

The counter was up 6.08 per cent as of 9.37 am at Rs 105.55 on the BSE.

In a statement, the company said it has delivered the highest ever consolidated quarterly profit with “strong growth across businesses” during the second quarter.

The consolidated revenue of the company, which includes that of recently listed Aditya Birla Sun Life and Aditya Birla Wellness, grew 22 per cent year-on-year (YoY) to Rs 5,961 crore. The consolidated profit after tax (after minority interest) grew 43 per cent YoY, to Rs 377 crore.

“The company’s focus on building scale, growing its retail base and delivering consistent profitability, continues to yield results. The retail-isation strategy has led to the active customer base growing to ~28 million, a 42 per cent year on year growth. The scale is evidenced with overall AUM across asset management, life insurance and health insurance businesses growing 24 per cent year on year, to over Rs. 3,70,290 crore,” it said in a statement.

The overall lending book (NBFC and Housing Finance) at Rs 59,060 crore shows the scale of the lending businesses. The gross premium (across Life and Health Insurance) for the half year grew 25 per cent on-year to Rs 5,685 crore, reflecting the scale in insurance businesses.

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Rupee inches higher by 8 paise to 74.79 against US dollar in early trade, BFSI News, ET BFSI

November 2, 2021 root Personal Finance

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Mumbai: The rupee inched higher by 8 paise to 74.79 against the US dollar in opening trade on Tuesday ahead of the US Fed and other central bank meeting this week. At the interbank foreign exchange, the rupee opened strong at 74.83 against the dollar and inched further to 74.79 in early deals, a rise of 8 paise over its previous close.

On Monday, the rupee had settled at 74.87 against the US dollar.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.03 per cent to 93.84.

Most emerging market and Asian currencies have started mixed this Tuesday, while crude continued to remain firm and could appreciation bias, Reliance Securities said in a research note.

Global oil benchmark Brent crude futures rose 0.08 per cent to USD 84.78 per barrel.

On the domestic equity market front, BSE Sensex was trading 20.46 points or 0.03 per cent higher at 60,158.92, while the broader NSE Nifty advanced 9.35 points or 0.05 per cent to 17,939.00.

Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 202.13 crore, as per exchange data.

According to Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors, before the US Fed meeting, OPEC and the NFPR, all markets are trading in a small range.

Rupee is expected remain in a range of 74.60 to 75.20 with flows from IPOs getting absorbed by oil buying/RBI, he said.

“Euro and GBP unable to move up against the dollar and now markets awaiting Fed comments on Wednesday. Importers are likely to buy near 74.80 fearing a hawkish Fed and bullish oil, while exporters may sell for the near term above 75.00 levels,” he noted.

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3 Stocks To Buy As Recommended By The Morning India Report

November 2, 2021 root Personal Finance

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Buy the stock of Indian Oil, says the Morning India report

Motilal Oswal sees an upside of nearly 22% on the stock of Indian Oil for a target price of Rs 160. “The company reported a beat on our estimates owing to better than expected reported GRM (USD6.6/bbl) and marketing margin (Rs 7/liter), although refining throughput and marketing sales volumes were lower than our estimate. Petchem margin for Indian Oil fell by 23% QoQ, in line with the softening of PE/PP cracks in 2QFY22 (averaging 15-19% lower QoQ),” the brokerage has said.

“Indian Oil is likely to benefit the most from an uptick in refining margin, further aided by robust petchem margin in the near term (as mentioned above). We maintain our Buy rating on the stock,” the Morning India report has said.

Buy HDFC Stock

The Morning India report has recommended buying the stock of HDFC for a 17% upside. The company reported 2QFY22 PAT (in-line) of INR37.8b, up 32% YoY / 26% QoQ. According to Motilal Oswal, the increase was primarily driven by lower credit costs of 31 basis points (which stood at Rs 4.5 billion, against the expectation of Rs 6 billion).

Individual disbursements in Oct’21 were the highest ever in a non-quarter-end month. Growth in home loans was seen in affordable housing as well as high-end properties. The increasing sales momentum and new project launches are positive developments for the Housing Finance sector

“We have largely maintained our estimates. We now model assets under management growth of 13% (v/s 11% earlier) in FY22E. We estimate HDFC to deliver core RoA/RoE of 2%/13% in FY23E. We reiterate our Buy rating, with SOTP-based target price of Rs 3,370 (Sep’23 SOTP-based),” the brokerage has said.

Buy Tata Motors

Motilal Oswal has set a target price of Rs 565 on the stock of Tata Motors. The company’s 2QFY22 performance was heavily impacted by the semiconductor shortage in JLR and India.

“Demand remains strong in JLR, with a record order book of 127k units. The semiconductor shortage situation remains dynamic. However, JLR expects a gradual recovery starting 2HFY22, with higher production (by 50k units) in 3Q from 2QFY22 levels,” the brokerage has said.

“Operating performance beat in JLR was driven by a favorable mix and lower fixed cost. India CV business missed our estimates due to commodity cost pressures. We expect a strong recovery/traction in JLR/India businesses from 3QFY22E onwards,” the brokerage has said.

Nifty company results better than expectations

According to the Morning India report, the 2QFY22 earnings are marginally ahead of expectations as the companies benefitted from a) strong revenue growth in the technology sector b) steady recovery in loan growth, as well recovery and upgrade in the asset quality of most private sector banks (except Bandhan), c) higher commodity prices and volume growth in the energy and metal sectors, and d) opening up of the economy which boosted consumer and retail growth. Nifty profit for the 34 companies that have announced their results grew 22% YoY (v/s estimate of 13% YoY). On the other hand, for the 127 companies in the Motilal Oswal Universe, profit grew 26% YoY (v/s estimate of 19% YoY).

Disclaimer

The above stocks are picked from the brokerage report of Motilal Oswal. 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.

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4 Stocks To Buy As Suggested By ICICI Securities After Q2FY22 Results

November 2, 2021 root Personal Finance

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IDFC First Bank- Improved performance on most parameters

The brokerage has set a price target of Rs 60 on IDFC First Bank‘s stock, representing a 22% upside potential over the current market price of Rs 49.

Q2FY22 Results:

Consistent operational results.

NII increased by 27.4% year on year to Rs 2272 crore, while NIMs increased by 25 basis points quarter on quarter to 5.76 percent.

Provisions are down 74 percent year over year. Net profit increased by 49% year on year to $ 151.7 crore.

GNPA fell 34 basis points from the previous quarter to 4.27 percent, with 2.9 percent of loans restructured.

Advances are up 3.1 percent quarter over quarter and 9.8 percent year over year, deposits are up 19 percent year over year, and the CASA ratio is at 51.3 percent.

Target and Valuation

“The IDFC First stock has jumped over 65% in the past one year. Gradual improvement in margin, pick up in loan growth, and operational performance is expected to aid return ratios. We retain our BUY rating on the stock Target Price and Valuation: We value IDFC First Bank at ~1.6x FY23E ABV and maintain target price of Rs 60 per share,” the brokerage has said.

Mahindra Logistics- Expect margin bounce-back in Q3

The brokerage has set a price target of Rs 750 on Mahindra Logistics‘s stock, representing a 17% upside potential over the current market price of Rs 640.

Q2FY22 Results:

Profitability was harmed because margins were lower than expected.

Revenues increased by 22% year on year to Rs 1019 crore, owing to better-than-expected performance in the SCM business.

EBITDA increased by 34% to 50 crore, with margins of 4.9 percent (vs. expected 5.6 percent )

PAT, on the other hand, fell 37% YoY to Rs 9 crore, as increased interest and depreciation weighed on operating performance.

Target and Valuation

“While the company has been facing challenges w.r.t. auto sector in the short run (non-passage of crude oil price, optimisation of SCM, etc), the company is adding customers on the 2-W and non-auto segment (more warehousing) and continuously improving its service mix. We remain positive on the long term growth prospects of the stock and maintain our BUY recommendation. Target Price and Valuation: We value the stock at Rs 750 i.e. 49x P/E on FY23E EPS,” the brokerage has said.

Key triggers for future price performance:

Increased storage space requirements and 3PL importance due to a shift in buying behaviour (more online shopping).

Customers will benefit from increased investment in technology and a multi-modal transportation option.

Gail (India)- Rebound in gas trading segment drives profitability

The brokerage has set a price target of Rs 180 on Gail’s stock, representing a 20% upside potential over the current market price of Rs 150.

Q2FY22 Result

On the profitability front, Gail’s performance were better than predicted.

Revenue increased by 57.7% year over year to | 21511 crore (our estimate: 21439.2 crore).

While LPG/LLH performance was below expectations, all other segments-gas transmission and trade, petchem, and LPG-reported higher profits than predicted.

Following that, EBITDA increased by 159.7% YoY to Rs 3475.1 crore (our estimate: | 2882.9 crore). PAT was reported at Rs 2862.9 crore, increasing 130.9 percent year over year (our estimate was | 2158.2 crore).

Escorts-Robust capital efficiency, healthy b/s merit upgrade

The brokerage has set a price target of Rs 1900 on Escorts’s stock, representing a 23% upside potential over the current market price of Rs 1550.

Q2FY22 Results:

The corporation had a good second quarter of FY22.

Total operating income was up 1.4 percent year on year at Rs 1,622 crore.

EBITDA margins fell 131 basis points QoQ to 12.6 percent, which was lower than projected.

PAT fell by 24.5 percent year on year to Rs 173 crore.

Target and Valuation

“The share price of Escorts has grown ~4x over last five years from ~| 380 levels in October 2016, vastly outperforming Nifty Auto Index. We upgrade Escorts to BUY amid robust capital efficiency, net cash b/s. Target Price and Valuation: We value Escorts at revised SOTP-based TP of | 1,900 (20x P/E on core FY23E EPS, 20% discount on treasury shares; previous TP | 1,325),” the brokerage has said.

Key triggers for future price-performance:

Construction equipment (CE) and railways (RED) growth to be faster amid expected economic activity and positive outlook for mining, construction, road building, and general infra push by government Operating leverage gains to expand EBITDA margins to 14% by FY23E Optimal utilisation of surplus cash on b/s, possible stake increase by Kubota Corporation (currently 10%) could be a large value driver

4 Stocks To Buy As Suggested By ICICI Securities After Q2FY22 Results

Price in Rs.
Upside Potential GAIL India 180 20% Mahindra Logistics 750 17% IDFC First Bank 60 22% Escorts 1900 23%

Disclaimer

The above stocks are picked from the brokerage report of ICICI Direct. 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.

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