ICICI Securities

Articles By ICICI Securities

286 Articles

NTPC Rating ‘buy’; focus on ESG compliance augurs well for prospects

Focus on the plan is expected to help the company improve its ESG scores and bring it at par with some of its global peers. Maintain Buy with an unchanged target price of Rs 165.

Shree Cement Rating ‘buy’; market share gains likely to offset lower prices

Volume boost expected from demand revival post monsoons; risk-reward is favourable after recent correction; ‘Buy’ retained

Analyst Corner: Downgrade VA Tech Wabag to ‘reduce’ from ‘hold’

Higher mix of O&M orders in order book does not aid near-term growth, O&M orders’ proportion in the overall book has grown from 10% in FY19 to 30% as of Jun’20.

Hence, the company has come out with a proposal to further raise Rs 2.8bn.

Maintain ‘buy’ on Apollo; pharmacy business strong

Overall, revenues declined 15.6% YoY to Rs 21.7 billion due to 41.2% fall in the hospital business, although pharmacy business reported revenue growth of 21.0%.

Apollo Hospitals Enterprises, Ebitda margin, AHEL Q1FY21 performance, CAGR, Pharmacy business, Covid-19

Analyst Corner: Maintain ‘buy’ on Spandana Sphoorty

In-line with industry, collections for Spandana also improved from lows of 2% in April to 23%/75%/95% in June/July/August, respectively.

Bharat Heavy Electricals rating: Sell — Covid-19 impacted execution in Q1

FY22 EPS cut by 10% given muted outlook; downgraded to ‘Sell’ with revised TP of Rs 24

HDFC rating: Buy — Excess buffers to back earnings traction

Restructuring likely to be limited; disbursal of loans normalising; FY21/22 EPS up 10/1% due to capital raise; TP revised to Rs 2,423

Similar to actions in Q4FY20, HDFC might proactively prefer recognising non-Covid stress upfront (rather than restructuring).

Analyst Corner: Reiterate ‘sell’ on Blue Dart as headwinds will sustain

Globally, the rate hike has been driven by decline in belly cargo capacity, which is leading to an increase in freight load factor despite drop in freight ton-km.

Due diligence suggests that rates have gone up in India by 7-15% — a hope-inducing factor for Blue Dart Express (BDE) given its operating leverage.

Downgrade Jubilant Life Sciences to ‘hold’ from ‘add’

Consolidated revenue remained dropped 13.2% y-o-y Rs 18.9bn (I-Sec: Rs 23.1bn) and adjusted PAT declined 52.4% y-o-y on lower revenue and margins.

Jubilant Life Sciences, Ebitda margin, covid 19, CDMO business, US market, Remdesivir

Automobiles August dispatches are sign of early festive kick-off

As per media reports, Tata Motors saw highest sales since Mar’18 at ~18.6k units, up 154% y-o-y to become 3rd largest player for two straight months as incremental market share gains are driven by relatively better demand f

NMDC rating: ‘Buy’ — It makes a compelling investment case

The in-principle approval by the NMDC board to demerge the steel plant, i.e. creating a separate listed company eventually with a shareholding akin to NMDC will be value accretive to the minority shareholders.

The cost surprise can be attributed to the bulged other expense of Q4FY20, which has largely normalised in the current quarter.

Ambuja Cement rating: Maintain ‘buy’ with unchanged target price of Rs 255

ACEM plans to set up WHRS plants at Darlaghat and Bhatpara (19.5MW at each location) at a capex of Rs 3.8bn by Q4CY21. Subsequently, the company may set up WHRS plants at Maratha and Ambujanagar in addition to solar plants to

Upgrade rating to ‘buy’ on Embassy REIT from ‘add’ with revised NAV of Rs 430/unit: ICICI Securities

At CMP of Rs360, the Embassy REIT offers a distribution yield of 6.8% in FY21E, 7.1% in FY22E and 7.8% in FY23E.

The Embassy REIT distributed Rs18.8 billion of NDCF in FY20 or Rs24.4/unit.

NTPC rating: Maintain ‘buy’ with unchanged target price of Rs 165

The company’s core RoE remained strong at 19.5%, but fixed cost under- recovery was at Rs 2.3 billion (Rs 1.2 billion in Q1FY20).

Tata Steel rating: Buy — A suboptimal Q1 but outlook is good

Europe Ebitda came as a disappointment; net debt was flat q-o-q; earnings tailwind augurs well; ‘Buy’ retained; top sectoral pick

Tata Steel remains our top pick, as earnings tailwind (domestic price increases + impending price increase in Europe) and elevated net debt to market cap augurs well.

Shree Cement rating: ‘Buy’; Market share up without margin being hit

FY21-22e EPS up 22-32% due to lower depreciation and higher other income; TP raised to Rs 25,800 from Rs 22,400; ‘Buy’ retained

SRCM’s consistent track record of market share gains coupled with industry-leading margins justifies its premium valuation, in our view.

Sun Pharma rating: Buy — Strong performance in operational terms

India business expected to remain robust while the other markets are likely to recover; EPS estimates up 3-5%; TP revised to Rs 612

Gross margin improvement of 330bps was driven by better revenue mix and focus on operational efficiency in manufacturing, partially sustainable in our view.

Tata Consumer rating: Retain ‘add’ with target price at Rs 480

Drivers are focus on distribution expansion and increase in direct reach, higher in-home consumption of beverages leading to market share gains for Tata Tea and rising acceptance of packaged food brands like Tata Sampann.

Tata Consumer, Tata Consumer rating, Tata Consumer target price, Tata Sampann

Cholamandalam rating: Retain ‘buy’ with target price of Rs 262

Chola exuded confidence in the adequacy of its Covid/macro provisions and chose not to make additional accelerated provisions in Q1FY21.

Cholamandalam rating, Chola, chola asset quality, Cholamandalam target price

United Spirits rating: Retain ‘add’ with target price of Rs 650

Gross margin declined 570 bps to 41.7% due to lower franchise income, input cost inflation and one-off obsolete inventory write off.

Reported Ebitda margin declined 2540 bps to -7.5% as EBITDA came in at a loss.

Oil & Gas: Q1 preview — Earnings of OMCs likely to surge

ONGC expected to be in red; steep EPS fall likely for CGD players; GAIL, PLNG, GSPL to see more moderate decline

We estimate strong earnings growth for OMCs but loss for ONGC, steep earnings fall for CGD players and more moderate earnings fall for GAIL, Petronet LNG (PLNG) and GSPL.

Prism Johnson rating ‘add’ – sale of subsidiary to help the balance sheet

Cement business showed better results in Q1; -18/9% change in FY21/22e Ebitda; TP up to Rs 52; ‘Add’ retained.

Besides, PRSMJ disclosed operational performance during Q1FY21e which shows better performance by cement, while TBK/RMC still remains impacted.

Analyst Corner: ‘Buy’ on JK Cement with target price at Rs 1,725

JK Cement’s (JKCE) recent capacity additions in high utilisation/better pricing markets of north/central regions are likely to see a quick ramp-up along with better cost efficiencies.

Analyst Corner, JK Cement, JKCE, utilisation markets, UAE subsidiaries, EBITDA, Nimbaher

AIA Engineering rating: Buy — Execution in Q4 was better than expected

FY21/22 EPS up 12.3/11.8% given results and recovery in output; TP raised to Rs 1,890

Though new client development has taken a back seat due to the travel ban, it is likely to pick up once the situation normalises.

Analyst Corner| Glenmark Pharma: ‘Buy’ with revised TP of Rs 488

Glenmark initially received DCGI nod to conduct phase-3 clinical trials with oral antiviral Favipiravir among COVID-19 patients in early May’20 and has now received manufacturing & marketing approval in India for treatment

Hindustan Petroleum Rating: Buy — Best placed to gain from strength in auto fuel marketing margins

Q1FY21e EPS expected to rise by 232% y-o-y; EPS for FY21-22e up 11% due to tax rate; top pick among OMCs; ‘Buy’ maintained

Factoring in the lower tax rate has boosted FY21-FY22 EPS estimates by 11% and target price by 2% to Rs 278 (32% upside).

Analyst Corner: Grasim Industries rating ‘add’; a weak final quarter for the company

Pricing outlook for core business is weak; FY21-22e Ebitda down 6-17%; TP raised to Rs 635 due to rise in stock price of holdings.

Net debt increased by Rs 34 bn y-o-y to Rs 29.8 bn as of Mar’20-end, mainly led by investment in subsidiaries/associates.
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