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SBI Life Insurance- Steady premium growth; elevated claims impact PAT

The brokerage has given a price target of Rs 1360 on SBI Life Insurance, with a 15% upside potential.

Q2FY22 Result

• Business is gaining traction, and the forecast for claims is positive.
• NBP rise of 17 percent YoY; gross premium growth of 14 percent YoY
• VNB margins are solid at 21.8 percent, thanks to product mix and pricing increases.
• Surplus increased by 1.3 times QoQ to Rs 256 crore, owing to higher investment income.
• For H1FY22, the net Covid claim is Rs 1338 crore, with a Covid reserve of Rs 266 crore.

Target and Valuation

“SBIL’s share price has grown by ~1.6x over the past four years. Factoring distribution strength & diversified product mix, we retain our BUY rating on the stock Target Price & Valuation: We value SBIL at 3.2x FY23 EV with revised TP of Rs 1360,” the brokerage has said.

According to ICICI Direct, to help with general growth and VNB, the company has launched a non-par and protection solution. Covid claim appears to be moderate; reserves of Rs 266 crore appear to be enough. Maintaining commercial momentum requires a strong distribution network. Product mix and improved persistency will help VNB margins stay around 21-22 percent.

Astec Lifesciences- CRAMS likely to witness strong growth ahead

Astec Lifescience, founded in 1994, specialises in the development of active ingredients and intermediates for the agrochemicals industry.

The brokerage has given a price target of Rs 1575 on Astec Lifesciences, with a 31% upside potential.

Key triggers for future price-performance:

Improved herbicide plant utilisation will boost revenue growth for the CRAMS business, which is forecast to grow in the high thirties between FY21 and FY24E.

Enterprise base business is expected to increase in the mid-teens, while commercialization of critical three compounds in a $1 billion industry provides great revenue visibility for enterprise sales in the long run.

Astec recently upped their R&D spending to 4% of sales. Because the main focus is on strengthening the speciality compounds portfolio, meaningful product development with a large industry size can be expected in the medium to long term.

This would help the company’s long-term performance. A new R&D centre may serve as a stand-in for the old one.

“Astec Lifescience’s share price has grown by 32% CAGR over the past six years. We believe this is a good opportunity to play on the CRAMS business theme. We initiate coverage on the stock under Stock Tales format with a BUY rating and target price of Rs 1575 Target Price and Valuation: We value Astec Lifescience at ~25x P/E FY24E EPS to arrive at a target price of Rs 1575/share,” the brokerage has said.

United Spirits-Premiumisation trend continues to strengthen

The brokerage has given a price target of Rs 1080 on United Spirits, with an 18% upside potential.

Q2FY22 Results

• On every front, USL outperformed I-direct predictions.
• Revenues increased by 14% year on year to | 2447 crore, owing to a 4% increase in volumes and a 10% increase in realisation.
• EBITDA increased by 58 percent to $ 426 crore, with margins of 17.4%. (12.6 percent in Q2FY21)
• PAT doubled to Rs 273 crore as a result of a one-time reversal benefit in interest expense.

Target and Valuation

“With its broad portfolio and focus on placing existing brands in the upper prestige segment, along with introduction of its several iconic brands from Diageo stable, USL is well placed to capitalise on the rapidly growing premiumisation trend in the sector. We remain positive on the long term growth prospects of the stock and maintain our BUY recommendation Target Price and Valuation: We value USL at Rs 1050 i.e. 58x P/E on FY23E EPS,” the brokerage has said.

Key triggers for future price performance;

EBITDA performance will be boosted by a better product mix and higher RoI brands.

Strong cash generating and double-digit return ratios Newer distribution channels (e-commerce), portable packaging (Hipster) to engage with a young client base

Disclaimer

The above stocks are picked from the brokerage report. 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.

SAMVAT 2078

Axis Securities recommend the following themes for SAMVAT 2078, taking into account all of these economic and market developments:

Small and mid-cap stocks are gaining traction, and balance sheet leveraging is expected to pay off in 2022, with increased return ratios and profitability.

Because of their improved outlook and present low interest rate regime, housing and banking will be significant subjects to watch in 2022.

The infrastructural sector is becoming a more prominent theme as the government increases its spending in this area.

Long-term structural topics such as digital and cloud will continue to be important.

The demand for home improvement has increased and is expected to remain strong in 2022.

Travel & Tourism appears to be a more promising theme, which has gained traction following a boost in vaccination rates.

ACC Limited – Capacity Expansion And Premiumization To Drive Growth

The brokerage firm recommends ACC buy with a target price of Rs. 2570. The stock was last trading at Rs. 2236, representing a gain of 15 percent.

“With its unwavering focus on cost optimization measures through project PARVAT, robust product demand, and improved pricing, we expect the company to register Revenue/EBITDA/APAT CAGR of 9%/13%/14% over CY21-CY23E driven by volume CAGR of 7% over the same period. The stock is currently trading 9x and 8x CY22E and CY23E EV/EBITDA which is attractive compared to other larger peers in the sector. We, therefore, recommend a BUY on the stock with a target price of Rs 2,570/share which implies an upside of 15% from the CMP,” the brokerage has said.

KNR Constructions Limited – Well-positioned To Capitalize On The Industry Tailwinds

The brokerage firm recommends KNR Constructions a buy with a target price of Rs. 325. The stock was last trading at Rs. 282, representing a gain of 15 percent.

“We expect the company to report Revenue/EBIDTA/APAT growth of 18%/17%/30% CAGR respectively overFY21-24E. The stock is currently trading at 17x and 15x FY23E and FY24E earnings. We recommend a BUY in the stock with the target price of Rs 325/ share, implying an upside potential of 15% from CMP,” the brokerage has said.

Cyient – Resilient Business Structure and Long-term Contracts to accelerate Growth

The brokerage firm recommends this stock a buy with a target price of Rs. 1300. The stock was last trading at Rs. 1094, representing a gain of 19 percent.

“We believe Cyient has a strong business structure from a long-term perspective and possesses multiple long-term contracts with the world’s leading brands. Furthermore, with depreciation in INR, lower travel cost, and lower on-site expenses, the company’s EBITDA margins are likely to expand in the near term. Against this backdrop, we recommend a BUY and assign a 22x P/E multiple to its FY24E earnings of Rs 59.2/share to arrive at a TP of Rs 1,300/share, implying an upside of 19% from CMP,” the brokerage has said.

Mindtree – Encouraging Growth, Superior Visibility

With a target price of Rs. 5100, the brokerage company recommends a buy. The stock was last trading at Rs. 4,555, a 12 percent increase.

“We believe Mindtree enjoys a resilient business structure and has a proven track record of strong and efficient execution capabilities. With INR depreciation, lower travel cost, and lower on-site expenses, EBITDA Margins are likely to expand in the near term. We recommend a BUY on the stock and assign 39x P/E multiple to its FY24E earnings of Rs 129.3/share to arrive at a TP of Rs 5,100/share, implying an upside potential of 12% from CMP,” the brokerage said in its Diwali report.

ICICI Securities – More Than Just a Broker!

With a target price of Rs. 940, the brokerage company recommends a buy on ICICI Securities. The stock was last trading at Rs. 763, a 23 percent increase.

“The re-engineered business model will help ISEC remain a formidable player in an intensely competitive landscape and will also enable gains in market share. We continue to like ISEC for its superior ROE profile, better brand recall, and innovative product proposition offered across customer segments, making it an eligible candidate to trade at premium valuations vis-a-vis its peers. We recommend a BUY on the stock, valuing ISEC at 20x Sept’23E EPS and arrive at a target price of Rs 940/share,” Axis Direct said in its research report.

Can Fin Homes- Well-positioned for the next leg of growth

With a target price of Rs. 800, the brokerage company recommends a buy. The stock was last trading at Rs. 656 a 22 percent increase.

“The management is now focusing more on the growth front. The affordable housing space is still relatively ‘a specialist housing finance arena’ and companies catering to this segment have traded at P/B valuations upwards of 3x. We believe CANF has notable scope for expansion in its valuations and hence we maintain a BUY rating on the stock with a target price of Rs 800 (3x FY23E ABV),” the brokerage has said.

Cholamandalam Investment – Revival On The Cards

With a target price of Rs. 690, the brokerage company recommends a buy. The stock was last trading at Rs. 604, a 14 percent increase.

“We continue to retain our positive long-term outlook on the company backed by the marquee management and its ability to resiliently sail the business through tough periods. We keenly eye management’s plan to roll out new strategies in the near term and the possibility of a banking license. We recommend a BUY with a target price of 690 (4.5x FY23 P/ABV),” the brokerage has said.

SBI Life Insurance – Huge Potential For Growth

With a target price of Rs. 1350, the brokerage company recommends a buy. The stock was last trading at Rs. 1172, a 15 percent increase.

“SBIL, among private life insurers, possesses by far the largest bancassurance network, which plays the most critical role in providing scalability. Furthermore, SBIL has low-cost ratios which protect margins during downturns. With the gradual shift toward a profitable product mix and relatively comfortable valuations, SBIL remains well-placed in the life insurance space. We remain positive on the stock and maintain a BUY with a Target Price of Rs 1,350/share (2.6x FY24EV),” the brokerage has said.

APL Apollo Tubes – Robust Performance Backed by Strong Fundamentals

With a target price of Rs. 960, the brokerage company recommends a buy on APL. The stock was last trading at Rs. 807, a 19 percent increase.

“The current volume expansion plan with a consistent focus on growing market share, improving contribution from value-added products and leaner balance sheet bode well from the medium to long-term growth perspective. We recommend a BUY on the stock with the TP of Rs 960 (adjusted for 1:1 bonus) valuing it at 30x P/E of FY24E EPS,” the brokerage has said.

Safari Industries – Set to Pack and Roll as Normalcy Kicks In

With a target price of Rs. 930, the brokerage company recommends a buy. The stock was last trading at Rs. 840, an 11 percent increase.

“We remain believers in the promising Indian Luggage Industry growth story given multiple growth levers such as 1) accelerated shift from unorganized labels to brands, 2) rising preference for leisure travel, 3) increased focus on strengthening the Safari brand, and 4) de-risking of sourcing from China to alternate sources in Bangladesh and India. We recommend a BUY on the stock with the TP Rs 930/share valuing the stock at 45x P/E on its FY24E EPS as we expect Safari to report strong 40% Revenue CAGR over FY21-24E,” the brokerage said in its Diwali report.

Disclaimer

The above stocks are picked from the Diwali 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.

After the Ministry of Railways withdrew the IRCTC convenience fee-sharing decision, shares of the Indian Railways’ catering, tourist, and online ticketing arm – Indian Railways Catering and Tourism Corporation (IRCTC) recovered from drastic fall.

The Ministry of Railways has decided to reverse its decision on the IRCTC convenience fee, according to the Secretary of the Department of Investment and Public Asset Management.

Ministry of Railways on Friday withdrew its proposal to seek 50 percent of the convenience fee that IRCTC generates. The fresh development comes after IRCTC stock took a dive earlier in the day, falling over 25 percent on fears of derating amid regulatory risks.

Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee pic.twitter.com/HXIRLxXTlL

— Secretary, DIPAM (@SecyDIPAM) October 29, 2021

IRCTC shares fell as much as 29% to an intraday low of 650.10 on the BSE earlier in the day after the firm informed exchanges that the Ministry of Railways had ordered it to share half of the convenience fee money it collects.

The state-owned IRCTC is the only company authorised to administer train dining services and has a monopoly on Indian Railways’ online ticketing and catering services.

Currently, IRCTC and MoR do not share convenience fees. According to the IRCTC website, income from the convenience fee is calculated based on the value of the convenience fee earned on domestic tickets booked through the website.

IRCTC stock soared 20% in the prior session after it began trading ex-stock split. Starting on Thursday, IRCTC shares were split in a 1:5 ratio, reducing the face value of each share from ten to two dollars. On August 12, the IRCTC board of directors declared its intention to divide the stock.