ICICI Securities

Articles By ICICI Securities

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Bajaj Auto: Maintain ‘buy’, co posts 26.1% revenue growth

Gross margin contracted 341bps due to higher RM costs as commodity basket prices edge higher (~4% inflation in Q4).

Axis Bank: Maintain ‘buy’ with target price of Rs 942

Maintain ‘buy’ with a target price of Rs 942. Key risks: Covid resurgence unfolding further stress; lower-than-anticipated growth can cap RoE improvement.

This is despite the bank making additional provision aggregating Rs8.0bn on accounting change in provisioning rates on loans to commercial banking segment.

HCL Technologies Rating: add-A disappointing show from the company

Guidance’s underwhelming; FY22-23e EPS down ~4% despite INR fall; TP cut to Rs 1,060; downgraded to ‘Add’

Expectations around articulation of a formal capital return policy (like TCS & Infosys) too met with a disappointment.

Analyst Corner: Upgrade Hero MotoCorp to ‘add’, Gogoro JV to launch EVs

Hero MotoCorp (HMCL) and Taiwan’s Gogoro Inc. have announced a joint venture to collaborate on development of a battery-swapping network in India based on the latter’s tech platform.

hero motocorp, Gogoro JV, evs, electric vehicles, maintain buy, urban battery swapping and smart mobility innovation, Gogoro swappble batteries, HMCL EV investments (Aether)

Analyst Corner: ‘Buy’ on Brookfield India REIT with DCF-based TP of Rs 296

The REIT has reported resilient rental collections of 99% in 9MFY21 (Apr-Dec’20) post onset of Covid-19 (in line with listed peers) and is on track to close 0.10msf of new leasing in Q4FY21.

We expect BREIT’s Net Operating Income (NOI) to grow at a 9% CAGR over FY21-23E based on the expected ramp up in occupancies in existing assets, annual rental escalations (4-5% annual escalation in existing contracts) and mark-up of leases which are expiring. (Representative image)

Reiterate ‘buy’ on Embassy REIT, Oberoi Realty, DLF

We remain bullish on office asset developers and reiterate our ‘buy’ ratings on DLF, Embassy REIT, Oberoi Realty and Brigade Enterprises

REITs have emerged as a potent asset monetisation tool. With three REIT listings in India, the door has opened for more potential REIT listings from FY22E onwards.

HomeFirst: Initiate coverage with ‘buy’; target price Rs 625

Omni-channel lead generation drives sourcing at effective cost – it utilises diverse range of channels including connectors (~65%), affordable housing developer ecosystem (20%), branch (7%) marketing (5%) etc.

HDFC Bank Rating: Buy – HDFC Bank Rating: A commendable performance by firm

GNPAs settling at 1.32% at end of FY21 a positive surprise; FY22/23e EPS up 5/8%; TP revised to Rs 1,818; ‘Buy’ maintained

Analyst Corner: Upgrade Astral to ‘buy’ with revised TP of Rs 1,663

We expect ASTRA’s earnings to outpace its key peers in FY22 driven by likely least impact of the recent strict restrictions imposed by few states amid the ongoing second Covid wave.

Considering the robust growth outlook amid the ongoing second Covid wave, we increase our revenue and PAT estimates by 4.4%/8.3%/8.1% and 6.7%/7.2%/7.9% for FY21E/FY22E/FY23E, respectively.

BFSI: Momentum revival to reflect in Q4

Asset quality narrative will be key; >60% earnings growth expected for banks ex-Yes

Q4 is seasonally strong both on sourcing as well as collections.

Telecom: Key enabler of work-from-home culture

The sector has been the key enabler of work- from-home culture and keeping people connected in an otherwise travel-restricted world. We have seen certain trends emerging in FY21 that are likely to continue in FY22, too, risin


Cement: Yet another robust quarter in offing

Consensus earnings are likely to be upgraded again; SRCM & UTCEM are top picks

Analyst Corner: Maintain ‘buy’ on Piramal Enterprises; TP Rs 2,278

Piramal Enterprises’ (PEL) wholly owned pharma subsidiary Piramal Pharma (PPL) has announced the acquisition of Hemmo Pharma for an upfront cash consideration of Rs 7.75 billion and additional milestone linked payments.


Bharat Electronics rating – Buy: Execution was strong in the last fiscal

Provisional revenues in FY21 higher than expected; upgraded to ‘Buy’ rating with revised TP of Rs 153

GSK Pharma rating – Add: Sale of plant to improve return ratios

Trend of recovery in acute therapies likely to continue; ‘Add’ rating retained with revised TP of Rs 1,575

Analyst Corner – GlaxoSmithKline Pharma: Maintain ‘add’ with revised TP of Rs 1,575

We expect this trend in recovery in the acute therapies to continue in the coming quarters. GSKP’s exposure only to domestic formulations, strong balance sheet and strong brand equity augurs well. Maintain ADD with a revise

In a prudent decision, GSKP impaired the asset to the tune of Rs6.4bn in its Dec’20 quarterly results and was exploring all options for the plant including sale.

Avanti Feeds rating – Buy: Revival in shrimp prices in the US augurs well

Hike in customs duty to aid domestic firms; mkt share gains likely; upgraded to ‘Buy’ with TP of Rs 560

The company is also steadily reducing its dependence on USA and non-USA market accounts for ~14% of its exports.

Analyst Corner: Maintain ‘buy’ on NHPC with target price of Rs 34

All these developments are positive for NHPC and will help it boost growth and earnings in the long term. Maintain BUY.

NHPC had signed MoU with J&K government for execution of five hydro projects totaling 4,134MW at an estimated investment of Rs 350bn.

Retain ‘add’ on Godrej Agrovet with revised TP of Rs 555

Revival in chicken and egg prices to benefit poultry feed and poultry business:

Kaveri Seed Company Rating: Buy; Increase in cotton prices augurs well

Higher share of cotton seeds revenue to aid margins; ‘Buy’ retained with TP of `710

kaveri seeds

Maintain ‘add’ on Varun Beverages, TP Rs 1,100

Company has been investing aggressively in driving in-home consumption over the past year.

UltraTech Cement Rating: Buy- Firm to gain most from demand revival

Ebitda growth of 35-40% expected in Q4; FY22-23e Ebitda up 2-3%; stock may re-rate due to mkt share gains; TP raised to Rs 8,000

Factoring in higher volumes, we raise our FY22-FY23e Ebitda by 2-3%, which takes it 12-13% ahead of consensus.

Analyst Corner: Retain ‘add’ on HUL; steps taken to drive growth

In year-1 of GSK integration (since April 2020), HUL has undertaken multiple measures to drive growth – some of them being, launch of 500gm pouch pack at 20% discount to existing 500gm refill pack (Chart 1

Srinivas Phatak, chief financial officer, HUL, said the demand outlook was hard to predict given “we are in midst of an unprecedented environment” with the Covid surge.

UPL Rating – add: Firm has multiple levers to maintain its margins

Synergy benefits are on track; PAT CAGR of 16% likely over FY20-23e; TP up to Rs 665; 'Add' retained

Prestige Estates Projects rating: Add; ICICI Securities says firm to be net cash positive by Q1FY22

Annuity business to see a fresh capex cycle; ‘Add’ retained with TP of Rs 311

PEPL had consolidated net debt of Rs 84.6 bn as of Dec’20 which will now reduce to ~Rs 9 bn (net D/E of 0.3x) post completion of Phase 1 of the transaction.

Maintain ‘add’ on Varun Beverages, TP at Rs 1,100

Most dealers were unable to achieve turnover targets, in our view, there is increase in net working capital days due to lower sales but working capital in rupee terms has also increased by Rs 0.5 billion YoY.

Analyst Corner | Maintain ‘add’ on AU SFB with target price of Rs 1,320

The same has strengthened its position at dealers point and will help it corner self-employed customers from NBFCs.

With improving visibility on growth, capital infusion of Rs 6.25bn and likely credit cost normalisation in FY22e (~40% coverage on proforma GNPL), we adjust our target multiple to ~5x FY23e (still ~35% lower than historical peak) and revise TP upwards to Rs 1,320 (earlier Rs 994). Maintain ADD.
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