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Buy Hindalco with upside potential of 28%

ICICI Securities rates Hindalco stock as a ‘Buy,’ with a potential upside of 28 percent in one year with a target price of Rs 600.

Q2FY22 Results:

Hindalco reported a stellar performance in Q2FY22.

• Hindalco’s wholly owned foreign subsidiary Novelis reported sales volume of 968 KT (up 5% YoY) in Q2FY22, which was generally in line with our expectation of 974 KT.
• Hindalco’s India business reported a topline of Rs17393 crore for Q2FY22. Hindalco’s India business had an EBITDA of Rs 3602 crore. Hindalco’s India business’s subsequent PAT was Rs 1815 crore.
• Hindalco reported consolidated topline of Rs 47665 crore for Q2FY22, up 53% YoY and 15% QoQ, while consolidated EBITDA was Rs 8048 crore, up 56% YoY and 19% QoQ.

Target Price and Valuation

‘Hindalco’s share price has given a return of 125% over last 12 months. We maintain our BUY rating on the stock Target Price and Valuation: We value Hindalco at Rs 600, based on SoTP valuation, the brokerage has said.

Key triggers for future price-performance:

• Novelis has kept its EBITDA/tonne projection of US$500/tonne unchanged.
• We estimate Hindalco’s consolidated topline to increase at a CAGR of 19.6 percent between FY21 and FY23E, while consolidated EBITDA and consolidated PAT will grow at a CAGR of 23.6 percent and 53.1 percent, respectively.

Gujarat Pipavav

ICICI Securities rates Gujarat Pipavav stock as a ‘Buy,’ with a potential upside of 18 percent in one year with a target price of Rs 130.

Q2FY22 Results:

• Container volume declines are offset by bulk volume gains.
• Net revenues increased by 7% year on year to $ 195 crore.
• EBITDA increased by 6% year on year to | 109 crore, with margins of 56% (up from 56.3 percent in Q2FY21).

Target and valuation

“We expect the normalisation of global container trade (in the medium term) and extension of agreement (in the medium term) to be key triggers for a re-rating of the stock. We remain positive on the stock and maintain our BUY recommendation Target Price and Valuation: We value the stock at Rs 130 i.e. 19x P/E on FY23E EPS,” the brokerage has said.

Key triggers for future price-performance:

• Despite a tariff increase (5-6%), GPPL container realisation remains at a significant discount to Mundra (15%), which the company aims to lower (via frequent small hikes).
• DFC commissioning is slated to begin in September (increased market share and scheduled train operating).
• Exim volumes are likely to increase as a result of the addition of two new service lines.
• In FY23E, the company will be debt-free, with return ratios reaching 16 percent or higher.

Disclaimer

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

Target Price

The Current Market Price (CMP) of Metropolis Healthcare is Rs. 3070. The brokerage firm has estimated a Target Price for the stock at Rs. 3622.6. Hence the stock is expected to give an 18% return, in a Target Period of 12 months.

Company performance

Metropolis reports a muted performance for Q2FY22 and earnings marginally missed estimates. The revenues at Rs. 303 crore increased by 5% YoY, while PAT at Rs. 58.4 crore dropped by YoY 3.5%. The Non-Covid revenues of the company have increased strongly by 38% YoY to Rs. 260 crore. The total no of tests done during the quarter was up 29% YoY to 0.62 crore. The penetration of B2C in the focus cities has increased to 60% from 58% as of FY21, and Metropolis aims to take this to 65%.

Comments by Sharekhan

Sharekhan thinks that although Metropolis Healthcare had a Muted Q2; but the company is carving a strong growth path. The brokerage firm comments, “The management’s relentless focus on the business-to-consumer (B2C) segment, backed by its wide portfolio of tests, expanding laboratory and patient service center network.” The brokerage firm remained the buy status on the stock.

About the company

Metropolis Healthcare (Metropolis), a leading diagnostics player in India, also has a presence in other countries of South Asia, Africa, and the Middle East. Metropolis offers a comprehensive range of 4,000+ clinical laboratory tests. As of FY2021, the company has a total of 125 laboratories including 13 reference labs and 112 other laboratories. Apart from this, the company has around 2555 patient service centers.

Disclaimer

The above stock has been picked from the brokerage report of Sharekhan. 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.

Target Price

The Current Market Price (CMP) of Endurance Technologies is Rs. 1,816. The brokerage firm has estimated a Target Price for the stock at Rs. 2,100. Hence the stock is expected to give a +16% return, in a Target Period of 12 months.

Company performance

Endurance Technologies’ 2QFY22 performance has been impacted by RM cost inflation and semiconductor shortage, and the near term outlook was also impacted by weak 2W demand. Consolidated revenue of the company has increased by 8% YoY and 11% QoQ to Rs. 18.9b. EBITDA declined by 9% YoY (+6% QoQ) to Rs. 2.6b. Adjusted PAT declined by 8% YoY (+11% QoQ) to Rs. 1.3b. On the domestic front, its standalone revenue has increased by 19% YoY and 30% QoQ to Rs. 15b. India 2W industry volumes fell 4.5% YoY, whereas ENDU’s India revenue climbed up 16.5% in 2QFY22.

Comments by Motilal Oswal

According to Motilal Oswal, “We cut our FY22E/FY23E EPS estimate by 12.5%/2% to factor in weak 2W OEM demand and impact of the semiconductor shortage in India and the EU business. We increase our P/E multiple to 30x (from 28x earlier) to reflect newer revenue streams like non-Auto in die-casting, brakes and transmission for over 200cc Motorcycles, etc., which are not yet factored into our estimates. We maintain our ‘Buy’ rating with a Target Price of Rs. 2,100 per share (30x Sep’23E EPS).”

About the company

Endurance Technologies has grown to have 27 strategically located manufacturing facilities near our OEMs. They have manufacturing centers in 3 countries from 27 plants and exporting to more than 28 countries.

Disclaimer

The above stock has been 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.