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Dodla Dairy

ICICI Securities has a ‘Buy’ rating on Dodla Diary for a target price of Rs. 700, the last traded price of Rs.618 per share.

Dairy: One of the fastest-growing industries in India

According to ICICI Securities, Between FY15 and FY21, the Indian dairy industry grew at a CAGR of 9% in value terms. The primary growth drivers are steady nominal GDP growth, market share gains from the unorganized sector, and increased demand for value-added products. We anticipate that, in the medium to long term, expanding population, growth of HoReCa, and rising demand for milk as a source of protein will help the dairy sector sustain robust growth rates.

Valuation

“We value Dodla on DCF-basis arriving at a target price of Rs700. As per reverse DCF (assuming cost of equity at 11.3% and terminal growth at 4%), the company needs to achieve an EBITDA CAGR of 12% over FY21-FY32E. The EBITDA CAGR over FY11- 21 was 29.4%.

We model revenue and PAT CAGRs of 14.2% and 17.6%, respectively, over FY21-FY23E. We forecast RoE to be upwards of 17% in FY23E. We initiate coverage on the stock with a BUY rating and DCF-based target price of Rs700 (24x FY23E),” the brokerage has said.

Chalet Hotels

IDBI Capital has a ‘Buy’ rating on Chalet Hotels for a target price of Rs. 295, the last traded price of Rs.206 per share with a potential upside of 43%.

Strong positioning in high-end branded hotels in key business cities

According to IDBI Capital, Following a large revenue loss in FY21, the domestic hotel business is likely to rebound better in FY22, aided by a vaccination drive and pent-up demand in the leisure travel sector. To run its hotels under high-end worldwide names, the company has worked with well-known global hospitality giants such as “J W Marriott” and “The Accor.”

Valuation

“We expect on a low base of FY21, net sales to grow at a CAGR of 68% over FY21-24E supported by net sales CAGR of 77% and 42% in hotels and retail-commercial segment respectively. Cost optimization measures and increasing share of high margin commercial segment will drive EBITDA CAGR of 341% over the same period.

We believe Chalet is poised to benefit from multiple levers viz active asset management of the assets, inventory addition in the hotel and commercial segment, mixed-use of retail-commercial properties, inorganic growth opportunities, and value unlocking opportunities in the Koramangla project. BUY with a TP of Rs295,” the brokerage has said.

Disclaimer

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

Special home loan rates to push demand, says Motilal Oswal

According to the brokerage the company extended its lowest home loan rate of 6.66% for the festive season to borrowers having a CIBIL score of 700 and above, for loans up to Rs 20 million (the earlier limit was Rs 5 million).

“By segmenting borrowers based on their CIBIL score, irrespective of the category of employment, LIC Housing Finance aims to cater to a larger borrower base. This move is in tune with the demand for larger spaces and affordability, and good traction for loans in the ticket size of Rs 5million to 20 million,” the brokerage has said.

Disbursement growth to pick up

According to Motilal Oswal, the retail home loan demand was impacted by localized lockdowns in 1QFY22.

“Nevertheless, individual Home loan disbursements comprehensively exceeded YoY levels. We expect pent-up demand to be pronounced in the remaining nine months of the current fiscal year, leading to healthy growth in disbursements for FY22. We expect 11% loan book CAGR over FY21-24E. Since Jun’21 there has been an improvement in economic activity, and collection efficiency has also improved to 98%, which is encouraging. The sharp rise in Stage 3 loans is concerning. The same got exacerbated due to the impact of the second COVID wave. We now estimate a credit cost of 85bp/60bp in FY22E/FY23E,” the brokerage has said.

Partnership to augur well for LIC Housing Finance

India Post Payments Bank and LIC Housing Finance recently announced a strategic partnership for providing Home loan products to over 45 million customers of India Post Payments Bank. “Through its robust and extensive network of 650 branches and more than 136,000 banking access points, India Post Payments Bank will make LIC Housing Finance’s Home loan products accessible to its customer’s pan-India. The alliance will also provide LIC Housing Finance’s access to India Post Payments Bank’s on-ground workforce of nearly 200,000 postal employees that are equipped with micro ATMs and biometric devices through its innovative Doorstep Banking Service. This will play a significant role in offering LIC Housing Finance Housing loans,” the brokerage has said.

Valuation and view

With the completion of the preferential equity allotment to its promoter LIC, the capitalization/leverage concerns for LIC Housing Finance now been ironed out. “Given its parentage, it has been able to raise debt capital at low rates, which should keep margin healthy in a highly competitive environment. While asset quality pain has been pronounced so far, we draw comfort from LIC Housing Finance’s ability to source low-cost liabilities, favorable Housing Finance cycle, and 11-12% RoE. While we expect FY22E to be impacted, we estimate ~1.1%/12% RoA/RoE in FY23E, after having penciled in the preferential allotment of fresh equity shares to the promoter. We maintain our Buy rating with a target price of Rs 525 pe rshare (1.1x FY23E BVPS),” the brokerage has said.

Disclaimer:

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