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Motilal Oswal

Articles By Motilal Oswal

619 Articles

Analyst Corner: Upgrade BoB rating to ‘buy’ with revised TP of Rs 100

Asset quality trends were stable sequentially in a challenging environment, with fresh slippage at Rs 51.3 billion (annualized slippage rate of 3.1%).

Last week, Union Bank of India raised Rs 2,000 crore via AT1 bonds at an 8.70% coupon, and the issue has seen full subscription. All AT1 bonds were issued based on regulations amended by Sebi earlier this year.

Analyst Corner – Bandhan Bank: Maintain ‘neutral’ with TP of Rs 330

Overall, asset quality remains uncertain, and we estimate credit costs to remain elevated at 5.5% of loans for FY22 (similar to FY21 levels).

Maintain ‘neutral’ on Bandhan Bank with revised TP of ₹330

The restructured book increased sharply to ~₹53b (6.6% of total AUM). SMA loans surged to 21%, while a large portion of the SMA overdue in Assam was eligible for a relief package. As a result, LGDs would remain controlled.

We are indeed grateful for this opportunity,” said Chandra Shekhar Ghosh, managing director and chief executive officer.

Maintain ‘buy’ on LIC Housing Finance with Rs 525 TP

It delivered a healthy loan growth in Home loans. However, LAP and developer book growth has slowed down. Collection efficiency improved to 98% in Jun’21.

This move is in tune with the demand for larger spaces and affordability, and good traction for loans in the ticket size of Rs 5-20m.

Analyst Corner – Torrent Pharma: Maintain ‘neutral’; roll TP to Rs 2,800

The current valuation adequately factors in an upside in the Branded Generics segment. We maintain our ‘neutral‘ rating.

Analyst Corner – Kotak Mahindra Bank: Maintain ‘neutral’ rating

The bank carries total COVID-related provisions of INR12.8b (~0.6% of loans) and has not drawn anything during 1QFY22.

Till 1QFY22, the bank has disbursed Rs 119billion under the ECLGS scheme. Deposits grew 9.6% YoY to ~Rs 2.9trillion. CASA deposits grew ~16% YoY.

Axis Bank: Maintain ‘buy’, biz growth remains flattish

As a result, asset quality ratios deteriorated by ~15bp QoQ. Restructuring stood at 0.33% of loans (additional 11bp of restructuring, which is approved, but not implemented).

Shares of Axis Bank closed at Rs 842.25 apiece on the BSE, down 0.33 per cent from their previous close.

Burger King: Initiate coverage with ‘buy’ rating, TP of Rs 210

BURGERKI offers its services via four channels — dine-in, takeaway, delivery and drive-thrus. We initiate coverage with a ‘buy’ rating and a target price of Rs 210.

Given that the unorganised segment has been severely affected by Covid-19, QSRs can make further gains due to their better hygiene standards and well-positioned alternate channels, especially delivery.

Analyst Corner — Ashok Leyland: Maintain ‘buy’ with TP of Rs 156/share

The voluntary scrapping of trucks would boost CV demand, although not substantially.

Maintain ‘buy’ on Equitas Holding with TP of Rs 110

The muted trends were primarily attributable to lockdowns in core states/territories, which resulted in subdued disbursements of Rs 12.7b (~50% QoQ decline).

equitas small finance bank

Motilal Oswal maintains ‘Buy’ rating on Marico with target price of Rs 610

The management is adequately prepared to tackle any disruptions in the business environment resulting from the third wave of Covid-19.

Nalco: Retain ‘buy’ on strong earnings outlook

We raise our FY22E/FY23E ebitda estimate by 43%/27%, factoring in higher aluminum prices, which should support strong cash flows and a good dividend payout. Maintain 'buy'.

Analyst Corner: Downgrade JSW Energy to ‘sell’ with TP of Rs 130

At the consolidated level, EBITDA was up 10% YoY to `6.3b. The co. has set its sights on improving its Renewables footprint, with plansn to reach a total of 10GW of installed capacity by FY25 (v/s 4.5GW currently).

JSW

Analyst Corner: Assign ‘neutral’ on Tata Steel with TP of Rs 1,210

While a part of this increase should be offset by the carbon surcharge of €12/t recently levied by Tata Steel UK, the sustainability would depend on demand-supply tightness.

PowerGrid: Maintain ‘buy’ with DCF-based TP of Rs 270

Nevertheless, the capex trajectory is on a decline. With proceeds from InvIT, we see strong scope for higher dividends.

The Centre’s net tax receipts more than tripled to Rs 4.13 lakh crore or 26.7% of FY22BE compared with a mere 8.2% of the corresponding target reported in the pandemic-hit quarter a year ago.

Analyst Corner: Maintain ‘buy’ on Hindustan Unilever with TP of Rs 2,780

Prediction of a normal monsoon, good Rabi harvest, favourably timed kharif sowing, and MNREGA provide prospective support as well. The modern trade (MT) channel was affected.

Analyst Corner: Maintain ‘buy’ on SBI with target price of Rs 530

On a segmental basis, the Corporate segment has reported profits after four years of consecutive losses. On the other hand, Retail PBT has declined 48% YoY, impacted by pandemic-led provisions.

This is primarily attributable to >95% of unsecured credit being offered to government/PSU employees and ~41% of corporate loans being offered to PSUs / govt. undertakings.

Eicher Motors rating – Buy: Performance in line with estimates

New products will be vital to growth; FY22e EPS cut by 7% due to Covid wave and inflation; ‘Buy’ maintained

EPS by 7%, accounting for the COVID impact on volumes and commodity inflation, while maintaining FY23e earnings estimates. Maintain Buy, with TP of Rs 3,200 (Mar’23 SOTP).

Analyst Corner: Maintain ‘buy’ on Coal India with TP of Rs 180

Offtake growth in May 2021 comes on the back of: a) a 15% rise in coal-based generation (based on initial data from POSOCO), amid a 7% rise in overall power demand, and b) re-stocking of inventory at power plants (up 5 mt MoM

CIL, coal india

Analyst Corner: Colgate downgraded to ‘neutral’ with TP of Rs 1,700

Notably, certain factors that led to the positive margin surprise in 4QFY21 and the full-year FY21 — resulting in all-time high EBITDA margins — are not sustainable.

Jindal Steel & Power rating – Buy: Deal improves growth outlook for steel business

Debt level to go down; stock valuation is attractive; ‘Buy’ retained with TP of Rs 539

Motilal Oswal maintains ‘Buy’ rating on ICICI Securities with TP of Rs 650

C/I ratio declined 200bp QoQ and 17pp YoY to 40%. The management has guided at near term C/I ratio above these levels. The lending book grew 37% QoQ to Rs 25.7b.

Distribution revenue was up 22% YoY to Rs 1.41b (QoQ not strictly comparable due to seasonality).

Bandhan Bank Rating: Neutral – In a position to better growth trajectory

Collections have seen strong improvement; ‘Neutral’ retained with TP of Rs 370

Collection trends in the total portfolio improved to ~96%.

Analyst Corner: ‘Neutral’ on Dr Reddy’s; firm gets rights for 250m doses of Sputnik

Dr Reddy’s (DRRD) has exclusive marketing and distribution rights for the first 250m doses of Sputnik V vaccines in India.

dr reddy

IPCA Labs: Reiterate ‘buy’, target price at Rs 2,480

Superior execution, market share gains to drive growth in DF. While doctors have resumed their clinics, partly on account of having received their vaccinations, patient footfall is yet to return to normal levels.

Coromandel International: ‘Buy’ with TP of Rs 1,030

Overall fertilizer industry volumes grew 8% YoY in FY21 on the back of 19% volume growth in MOP; NPKS and SSP volumes grew 17% each for FY21.

To be sure, the sample is heavily stacked in favour of well-performing IT companies, but others haven’t done too badly either.

Britannia Industries Rating: buy-Attractive investment prospects on offer

Strong structural outlook; second Covid wave could boost FY22 EPS; valuations are inexpensive; TP up to Rs 4,575; ‘Buy’ maintained

BRIT’s FY21e revenue of ~$1.8 bn is a fraction of this addressable market.
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