Share Market Update : Pick of the week

Insight Online News

Divis Lab — Buy

Recommendation by Motilal Oswal Financial Services, We reiterate Buy, encouraged by promising demand prospects and multiple growth levers — a) new product additions, b) a strong chemistry skill set, c) efficient manufacturing capabilities, d) scale-led advantage in legacy molecules, e) minimal financial leverage, and f) sufficient cash available for new projects.

NTPC — Buy

The Ministry of Power (MoP) has issued a guideline enabling DISCOMs to exit power purchase agreements (PPAs) on completion of 25 years. Each state/DISCOM can take a call on relinquishment based on demand and supply. This in turn can pose a risk to some of NTPC’s projects in the near term.

SAIL — Buy

We are raising our FY22E/FY23E EBITDA estimate by 34 per cent /37 per cent and TP by 28 per cent on expectation of higher realization and volumes. The stock trades at 4.2x FY22E EV/EBITDA, a 25-30 per cent discount to peers TATA and JSTL.

Bharti Airtel — Buy

We value BHARTI on an SOTP basis. We assign 10x EV/EBITDA to the India business and 6x to the Africa business in FY23E to reach INR 720/share. Our higher multiple captures the opportunity for an EBITDA increase from a potential price hike or market share gains.

Larsen & Toubro — Buy

Recommendation by Anand Rathi Share and Stock Brokers

We are upbeat about L&T as one of the key beneficiaries of infra-structure development for 90 per cent of the addressable opportunity in the government’s Rs102 trn planned investment over FY20-25 under the flagship NIP.

We expect NWC to stabilise, resulting in better cash-flows. We retain a Buy with a sum-of-parts based higher TP of Rs1,763 (earlier Rs1,616).

Birlasoft — Buy

Recommendation by Anand Rathi Share and Stock Brokers

Attractively valued at current levels. The company is up 100 per cent since the splitting off/merger (Q4 FY19) with KPIT Technologies. Its Digital Transformation vertical is seeing growth and is generating higher margins. It is a reasonably-sized play on the Manufacturing, BFSI, and Healthcare verticals. This represents 25 per cent potential for the next 12 months. We initiate coverage, with a Buy recommendation.

CreditAccess Grameen — Buy

Recommendation by HDFC Securities

With disbursements picking up to pre-covid levels and expansion into newer geographies we believe that the company could manage to post an AUM growth of ~22 per cent over FY20-23E. We have envisaged 30 per cent CAGR for Net Interest Income (NII) and 38 per cent CAGR for Net profit over same time frame. We build Loan Loss Provisions (LLPs) of 3.4 per cent over FY21-23E. We feel that investors can buy CreditAccess Buy at 618 (1.85xFY23E ABV) and add on dips to Rs 566 (1.7xFY23E ABV) for the base case fair value of Rs 685 (2.05xFY23E ABV) and the base case fair value of Rs 733 (2.2xFY23E ABV) over next 2 Quarters.

Bayer CropScience Ltd. — Buy

Recommendation by HDFC Securities

The company enjoys strong RoE/RoCE and consistently generates strong cash flow. We believe investors can buy the stock at LTP and add more on dips to Rs 4,599 (27.5x FY23E EPS) for base case fair value of Rs 5,603 (33.5x FY23E EPS) and bull case fair value of Rs 6,105 (36.5x FY23E EPS) over the next two quarters.

Jubilant FoodWorks Ltd — Buy

Recommendation by Emkay Global Financial Services

JUBI’s recent aggression with the launch of new formats/brands offers better growth outlook over the medium term. Though the scale-up plans for Popeyes are not yet indicated, we believe the expansion is likely to be reasonably aggressive and may drive some upsides to our revenue forecasts. The stock currently trades at 53x FY23E EPS. We have a Buy rating on the name. Key risk: Lack of success in new formats/brands can be margin-dilutive.

Cadila Healthcare Ltd — Buy

Recommendation by Emkay Global Financial Services

Given the lack of clarity on settlement terms and approval time, we view this as an option upside to our TP of Rs 655. We reiterate the Buy rating on the stock as we believe that the company’s innovation efforts continue to remain underappreciated.

Disclaimer: Views and recommendations given are those of brokerages and analysts and do not represent those of IANS. Users should check with certified experts before taking any investment decision. IANS has no financial liability whatsoever to any user on account of the use of information provided.


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