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HDFC Securities take on Bharti Airtel:

The company offers a gamut of telecom services ranging from fixed line to broadband to DTH and enterprise services. In the Covid 19 era, there has been seen strong penetration of data even in rural and among low income users.

Key highlights:

• Revenue market share improved to 34.9% as on 30 June, 2021.

• Debt has been limited owing to company’s equity raising, value unlocking in the African subsidiary, Indus Towers, and Bharti Telemedia.

• Tariffs will increase going ahead and ARPU shall rise to Rs. 200/month by end FY22 (vs ARPU of Rs 146 in Q1FY22).

• Transition of company’s 2G and 3G customers to 4G will be ARPU accretive.

• The company has also expanded its spectrum holding by taking over spectrums in auctions. Other than this the company has acquired data centric spectrum from Videocon, Aircel and Tikona and through acquisition of Telenor, and consumer mobile business (CMB) of the Tata Group.

• The company took over subGHz spectrum which improves the overall network coverage services.

• The company came up with the rights issue for raising Rs. 21000 crore.

“The multiple structural and process reforms in the Telecom sector approved by the Union Cabinet in Sept 2021 were much needed to help reduce the regulatory burden on Telecom Service Providers (TSPs). Bharti will now be able to defer around Rs4000 cr towards AGR and Rs7500 cr towards spectrum dues in FY23E and use these to fund its 5G capex”, added the report.

Rationale for investment

Bharti enjoys diversified presence across geographies with non-India operations (primarily Africa) contributing 26% to the consolidated revenues in FY21. The company is collaborating with leading companies for 5G deployment.

“Strong market position in the domestic mobile and non-mobile segment, diversification across businesses, healthy operations in Africa, high financial flexibility makes Bharti Airtel attractive for Investment”, adds the brokerage report. Also an increase in tariffs as well as lesser competition is beneficial for the company with lower leverage as well as improvement in return ratios.

Global telcos have not given ample returns to investors, nonetheless given the market reset, integrated telco nature and ability to drive revenue growth exceeding nominal GDP could help Bharti provide returns to investors over the next few years. “Also growth acceleration in the B2B space by rising demand for cybersecurity, home entertainment, new products like Airtel IQ and Airtel Ads and Africa, can provide superior returns as risks remain contained”, says the report.

Valuation And Recommendation

“We feel investors could buy the stock in the Rs 669-681 band (8x Sept FY23E EV/EBITDA), and add on dips to Rs. 605-617 band (7.5x Sept FY23E EV/EBITDA). Base case fair value of the stock is Rs 733 (8.6x Sept FY23E EV/EBITDA) and the bull case fair value of the stock is Rs 798 (9.2x Sept FY23E EV/EBITDA). At the CMP of Rs 691.4 the stock trades at 8.2x Sept FY23E EV/EBITDA”, suggests HDFC Securities.

Disclaimer:

The above specified scrip is taken from the recommendations of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies Pvt Ltd, the author, and the analysts are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.

Muthoot Finance: Leadership in gold financing

Muthoot Finance is India’s top gold financier, with an AUM of Rs 52613 crore in gold loans as of June 2021.

ICICI Securities suggested buying Muthoot finance stock at a target price of Rs. 800, representing an 18percent increase over the last trading price of Rs. 1523. The recommended investment horizon is for one year.

ICICI Direct believes that, there is a large market opportunity for long-term growth. Business growth will be steady, thanks to low gold penetration and management’s goal of achieving a 1 lakh crore book by FY24-25. Exceptional asset quality, with a GNPA of less than 2% and a recovery rate of more than 90%.. Healthy financials with a 12-14 percent margin, led by a gold loan earning 21%.

Muthoot Finance: Valuation

“Muthoot Finance’s share price has grown by ~4.2x over the past five years. We believe this is a good opportunity to play on the gold finance theme. We initiate coverage on the stock under Stock Tales format with a BUY rating and target price of Rs 1800. Target Price and Valuation: We value the core business (gold loan) at ~3.2x FY23E ABV and assign Rs 44 to subsidiaries to arrive at a target price of Rs 1800 per share,” the brokerage has said.

We commence coverage on Muthoot Finance under the Stock Tales format with a BUY rating and value the core business at 3.2x FY23E ABV with subsidiaries allocated at Rs 44 per share (after 20% discount) to arrive at a target price of Rs 1800/share, it said.

Key triggers for future price-performance:

• A crucial driver for growth is a gradual increase in ticket size, as well as an increase in working capital requirements.
• Lower credit costs lead to a stronger RoA and RoE of +5% and +25%, respectively. Solid asset quality, low leverage, positive ALMs, and sticky client base levers all contribute to strong operating performance.

Titan Company: Jewellery glitters with strong consensus beat in Q2

ICICI Securities suggested buying Titan Company stock at a target price of Rs. 2550, representing a 19 percent increase over the last trading price of Rs. 2148. The recommended investment horizon is for one year.

Titan has evolved from a watchmaker to a desirable lifestyle brand, with jewelry as its most prominent vertical (82 percent of revenues). A robust distribution network that spans 2.5 million square feet and includes over 1900 establishments.

Key highlights of Q2FY22 update:

• Titan saw a significant increase in demand across all segments. In Q2FY22, the overall number of store operational days surpassed 90%.
• Titan’s entire revenue for Q2FY22 was much above than analysts’ expectations. Standalone revenue growth (excluding gold bullion sales) was 78 percent year over year (compared to a consensus projection of 40%).
• Tanishq continued to gain market share in Q2FY22, despite strong topline growth of 78 percent YoY and a two-year CAGR of 32 percent. In H1FY22, it grew by 16 percent over FY20 levels, surpassing pre-Covid levels.

Titan: Valuation

“Titan has been an exceptional performer in the discretionary space with stock price appreciating at ~40% CAGR in last five years. We continue to remain structurally positive and maintain a BUY rating. Target Price and Valuation: We value Titan at Rs 2550 i.e. 65x FY24E EPS, the brokerage has said.

Key triggers for future price-performance:

• Its strong bank sheet and asset-light distribution approach have allowed it to outperform competitors in terms of store expansion (35 Tanishq outlets planned for FY22).
• Tanishq’s presence in the Indian jewellery sector is still in its infancy. The introduction of mandatory gold hallmarking is projected to boost market share gains in the unorganised sector.
• The focus on weddings is paying off, with wedding jewellery becoming a key growth driver and its share of overall jewellery revenue increased significantly.
• Going forward, a gradual rebound in the studded ratio would help margins.
• In FY21-24E, we factor in revenue and earnings CAGRs of 22% and 53%, respectively.

Disclaimer

The above is prepared from the recommendations of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies Pvt Ltd, the author, and the analysts are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only.

Amid the post extension of due dates for filing of Income Tax Returns (ITR) and various reports of audit for the Assessment Year 2021-22. The country’s largest lender State Bank of India (SBI) has announced a big deal for the taxpayers. According to the lender, taxpayers can now file their Income Tax Return (ITR) for free with Tax2win on YONO, all they need is 5 documents only. “Do you want to file an ITR? You can do it FREE with Tax2win on YONO. All you need is 5 documents,” SBI has said via its Twitter handle.

• The five documents that taxpayers need to keep handy are PAN Card, Tax deduction details, Aadhaar Card, Interest Income Certificates, Form-16 and Investment proofs for tax savings.
• Taxpayers would receive eCA assistance for just Rs 199 and the deal is only available until October 31st.
• Taxpayers need to Login on YONO >> Shop and Order >> Tax and Investment >> Tax2Win to file their ITR for free.

Do you want to file an ITR? You can do it FREE with Tax2win on YONO. All you need is 5 documents. Download now: https://t.co/BwaxSb3HYQ#YONO #Tax2Win #ITR #Offer pic.twitter.com/NXB32NNB60

— State Bank of India (@TheOfficialSBI) October 5, 2021

Last month the Central Board of Direct Taxes (CBDT) decided to further extend the due dates for filing of Income Tax Returns and various reports of audit for the Assessment Year 2021-22. Owing to the new extension the due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st July 2021 under sub-section (1) of section 139 of the Act, as extended to 30th September 2021 is hereby further extended to 31st December 2021.

The due date of furnishing of Report of Audit under any provision of the Act for the Previous Year 2020-21, which is 30th September 2021, as extended to 31st October 2021 is hereby further extended to 15th January 2022. The due date of furnishing Report from an Accountant by persons entering into an international transaction or specified domestic transaction under section 92E of the Act for the Previous Year 2020-21, which is 31st October 2021, as extended to 30th November 2021 is hereby further extended to 31st January 2022.

The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 31st October 2021 under sub-section (1) of section 139 of the Act, as extended to 30th November 2021 is hereby further extended to 15th February 2022. The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 30th November 2021 under sub-section (1) of section 139 of the Act, as extended to 31st December 2021 is hereby further extended to 28th February 2022.

The due date of furnishing of belated/revised Return of Income for the Assessment Year 2021-22, which is 31st December 2021 under sub-section (4)/sub-section (5) of section 139 of the Act, as extended to 31st January 2022 is hereby further extended to 31st March 2022.

On consideration of difficulties reported by the taxpayers and other stakeholders in filing of Income Tax Returns and various reports of audit for the Assessment Year 2021- 22 under the Income-tax Act, 1961 the above extensions have been made, according to the CBDT.