Articles By Edelweiss

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Steel Authority of India Rating: hold: A robust performance by the company

Debt reduction of 30% y-y in FY21 a positive; H1FY22 earnings likely to stay firm; risk-reward is balanced; ‘Hold’ rating maintained

Punjab National Bank rating – ‘Under Review’: Asset quality continued to disappoint in Q4

Stock is a structurally weak investment proposition; ‘UR’ maintained pending clarity on critical issues

Asset quality challenges will persist and credit cost should remain elevated in near to medium term.

Gujarat State Petronet rating – Buy: Q4FY21 Ebitda was ahead of expectations

Debt reduction is a positive; plentiful gas supply is likely to drive volumes; TP up to Rs 342; ‘Buy’ maintained

Emami rating – Buy: Growth was strong across categories

Outlook is positive, though Covid will affect Q1; ‘Buy’ retained with TP of Rs 610

UPL rating – Buy: Higher topline growth drove profitability

Debt reduced; commodity cycle to be growth driver; TP up to Rs 850; ‘Buy’ retained

Asian Paints rating – Buy: Stellar performance by decorative business

Execution and market leadership will continue to drive volumes; Buy retained with revised TP of Rs 3,185

Overall, we believe APL’s operational prowess and market leadership will help it continue to drive volume growth. Maintain Buy with revised TP of Rs 3,185.

Bandhan Bank rating – Reduce: Asset quality pressure cast a shadow on Q4

Uncertainty and depletion of provision buffer lead to cut in TP to Rs 280; ‘Reduce’ retained

Given added uncertainty and near full depletion of provision buffer, we cut target multiple to 2.2x (2.5x earlier), leading to revised TP of Rs 280 (earlier Rs 310). Maintain Reduce.

Dabur India rating – Buy: Volume growth came as a disappointment

Company well placed to capitalise on consumers’ changing preference; TP cut to Rs 630 due to tax rate; ‘Buy’ retained

Volumes grew 25.4% y-o-y on a base of -14.6% (Q3 saw 18.1% y-o-y jump on a base of 5.6% y/y).

Hero Motocorp rating – Hold: A solid performance in the final quarter

FY22/23 EPS down 7/11% due to Covid wave, cost pressure; TP cut to Rs 3,224 from Rs 3,812; Hold retained

Godrej Properties Rating: Buy-A robust show by firm in the final quarter

Recovery from Covid impact expected in H2; Buy retained with a TP of Rs 1,526

The company has a healthy launch pipeline of ~12.3msf for FY22. We believe the pandemic will impact sales velocity in the near term, but expect recovery in H2FY22.

IndusInd Bank: Upgrade to ‘buy’ from ‘hold’, TP Rs 1,150

IIB has been steadily delivering on core performance. Stabilisation of deposits and its stance of building on its existing provision buffer render outlook stable.

IndusInd Bank

Tech Mahindra Rating: buy: Execution was strong in the final quarter

Deal momentum expected to stay strong; firm looking at double-digit growth in FY22; ‘Buy’ maintained

HDFC Life: Upgrade to ‘hold’, lift TP to Rs 720 from Rs 610

The share of revolver loans continued to decline from 38% (pre-COVID-19) to 28%. Thus, the decline in interest yields more than offset the benefit of reducing funding costs.

The pension subsidiary clocked robust growth of 98% in AUM to over Rs 160billion.

Bajaj Consumer Care Rating ‘Hold’; Results show recovery is underway

Dividend payout normalised; TP up to Rs 350 from Rs 260; ‘Hold’ rating maintained

Cost optimisation and a favourable base, however, drove Ebitda margin expansion of 1,125bps y-o-y.

Mindtree Rating ‘Buy’; Solid set of numbers in Q4FY21

Given strong execution, firm well-positioned to gain from upcycle

Management remains confident of delivering double-digit growth along with Ebitda margin of 20% plus in FY22.

ICICI Prudential Life: Maintain ‘buy’ with target price of Rs 790

ICICI Prudential Life (IPru Life) reported NBP/APE growth of 23%/27% YoY in Q4FY21, following 3 straight quarters of decline. March month’s APE growth of 108% YoY was a standout.

ICICI Prudential Life, APE growth, Positive investment variance, maintain buy, ULIP growth

Tata Power Rating: Buy; Primed for sustainable and clean growth

Sunrise segments pushing growth; huge scope to improve ESG rating given firm’s focus; TP raised to Rs 120; ‘Buy’ maintained

IT Sector: Q4FY21 preview- A robust fourth quarter in offing

1.5–5.2% q-o-q growth estimated in cc terms; upgrades in consensus forecasts likely

Meanwhile, Street would have to catch up with estimates revisions.

Initiate with ‘buy’ on Alkem Lab; target price Rs 3,315

Alkem boasts best-in-class domestic anti-infectives portfolio and leadership in multiple GI and vitamin sub-therapies. Its Chronic base is small, but growing at 18-20%.

Vedanta Rating: Hold; Edelweiss says concerns persist for the company

Despite sweetened deal, full tendering of shares may be difficult; near-term volatility is possible; ‘Hold’ retained

All in all, we retain ‘HOLD/SP’ on Vedanta with a TP of Rs 186, implying 3x Q1FY23e Ebitda. Our recommendation also factors in a dividend yield of 9%.

United Spirits Rating: Hold, Edelweiss says the worst is over for the company

Home delivery is structurally positive; competition, taxes are concerns; ‘Hold’ retained

We look forward to any strategic changes by Hina Nagarajan, who will take over as CEO from 1st July, 2021.

Analyst Corner: Maintain ‘buy’ on Coal India with target price of Rs 185

Coal India (CIL) posted a 7% YoY decrease each in its Feb-21 production and offtake. Key points Larger subsidiaries MCL and SECL lagged.

coal india

Vesuvius India Rating ‘Hold’; Performance was subdued in relative terms

Margins were hit sharply in CY20; company regaining market share is key; TP up to Rs 1,092; ‘Hold’ retained

Production at large steel mills has recovered from the pandemic-led uncertainty. We await VIL’s growth to catch up with large steel mills’ production led by its sharpened R&D focus and new product offerings.

Edelweiss maintains ‘buy/SO’ on ABFRL with target price of ₹224

The business of casualwear remains the group’s cash cow, generating ₹3bn in annual FCF for the last five years. Growth opportunities still available (targeting 3,750 new stores over FY21–26E) driven by new concepts such

Maintain ‘buy’ on Nestle India with TP of Rs 21,110

Nestlé India (Nestlé) has been among the most consistent performers, clocking double-digit domestic sales growth in 12 of the past 13 quarters.


Sunteck Realty Rating: Buy – A robust third quarter for the company

Strong launch pipeline is likely to boost sales; healthy leverage’s another positive; ‘Buy’ rating maintained

By H1FY22, SRL intends to launch projects in Vasai and Vasind as well as the new phase in Naigaon (Phase III).

Sadbhav Engineering Rating: Buy; execution, order book got a boost

Toll collections rose 11% y-o-y; outlook is positive; TP raised to Rs 94; ‘Buy’ maintained

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