Motilal Oswal

Articles By Motilal Oswal

618 Articles

Reiterate ‘buy’ on SAIL; expect volumes to post 9% CAGR

SAIL, in a press release, informed that it has reduced its gross debt by Rs 161 billion (30%) in FY21 to Rs 353 billion (excluding lease liabilities).

The work on the expansion is likely to start in 2023-24.

Maruti Suzuki: Expect ~30% volume growth in FY22E

We expect ~30% volume growth in FY22E and positive evolution of margin. We see 27% upside at our TP of Rs 8,700/share. MSIL is our top auto pick.

Demand for passenger vehicles was stronger than expected once Covid-related lockdown restrictions were lifted due to shift in preference towards personal mobility.

Divi’s Labs Rating ‘Buy’; Generic API molecules boost outlook

Product offerings and better asset utilisation to drive EPS CAGR of 38% over FY20-23; Buy retained with Rs 4,530 TP

Various factors augur well for our expectation of a 21% sales CAGR to Rs 8 bn over FY20–23.

Steel Authority of India Rating: Buy-Stock best bet on higher steel prices

FY22/23e Ebitda up 34/37%; TP revised to Rs 104; valuations attractive; ‘Buy’ retained

We are raising our FY22e/FY23e Ebitda estimate by 34%/37% and TP by 28% on expectation of higher realisation and volumes. The stock trades at 4.2x FY22e EV/Ebitda, a 25-30% discount to peers TATA and JSTL.

Bharti Airtel: Assign 10x EV/EBITDA to India biz

This deal should also incorporate lease agreements and the sites in these regions. This transaction is expected to be completed by end-FY22.

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 Rs 720/share.

Analyst Corner| HCL: Maintain ‘Buy’; higher exposure to IMS, cloud benefits

HCL remains one the most attractive stocks in our coverage, trading at 15x FY23E P/E (38%/26% discount to TCS /Infosys), despite delivering 20% earnings growth in FY21 YTD.


SBI Cards and Payments Services rating: Buy; Motilal Oswal says valuations have turned attractive

Growth momentum is likely to accelerate; earnings CAGR of 47% is estimated over FY21-23; upgraded to ‘Buy’

We expect outstanding credit card/spends CAGR of 22%/27% over FY21-23e for the industry. The same for SBICARD would be higher at 27%/32% CAGR.

Maintain ‘neutral’ on Bajaj Auto, target price Rs 3,875

On the core business side, we expect strength in the export markets to continue, especially since the Africa business would see the benefit of higher crude oil prices (with a lag).

Orient Electric rating – Buy: Earnings don’t reflect value of business

Margins likely to converge with its peers; coverage initiated with ‘Buy’ and TP of Rs 350

Endurance Tech rating- Buy: Firm’s the best play on the 2W industry

It has several levers to grow faster than industry; ‘Buy’ retained with TP of Rs 1,750

Endurance Tech rating- Buy: Firm’s the best play on the 2W industry

Analyst Corner: Retain ‘buy’ on V-Mart, TP increased to Rs 3,500

In the last one-year, the Apparel retail sector has been one of the worst hit and is still operating below pre-COVID levels, raising concerns of a permanent business impairment risk to retailers.

v mart

InfoEdge holds 18.4% stake in Zomato, maintain ‘neutral’

Apart from early deliveries (online shopping), exclusive deals, and video/audio content, food delivery is another angle for entry into the prime ecosystem.

Food delivery is through a tab built-in the flagship Amazon app, visible only to customers who are located in the delivery regions.

UPL: Maintain ‘neutral’ view with a target price of Rs 631/share

The pact allows UPL access to key markets prior to the patent expiry and to commercialise Rynaxypyr Active: FMC’s leading insecticide. According to the agreement, UPL will toll manufacture and supply Rynaxypyr to FMC in Ind

Analyst Corner| Reiterate ‘buy’ on GUJS with target price of Rs 400

Gujarat State Petroleum has a 54% stake in Gujarat Gas (GUJGA), which amounts to a market capitalization of Rs 197b, much higher than GUJS’ m-cap at Rs 156b.

Gujarat State Petroleum , Gujarat Gas, m-cap, market capitalization , decline of tariff of GIJS, ONGS

‘Neutral’ on SBI Cards and Payment Services: Motilal Oswal

SBI Cards and Payments Services (SBICARD) has strengthened its position as the second-largest card player in the country — with market share of ~19% in o/s cards and ~20% in overall spends.

The regulator also carried out an examination of the correspondence with the bank regarding payment of remuneration to its employees in the form of commission to arrive at its decision.

Britannia Industries Rating: Buy- Firm widening the gap with its peers

It is poised to gain market share in biscuits; valuations are inexpensive; upgraded to ‘Buy’ with TP of Rs 4,120

On the other hand, the stock is now attractive at 36.5x FY23e EPS, a discount to its 3/5 year average P/E multiple of 48x/46x and also on a relative basis as compared to its peers.

Analyst Corner| NTPC: Maintain ‘buy’ with DCF-based TP of Rs 141

The Ministry of Power (MoP) has issued a notification on Late Payment Surcharge (LPS).

The overall power demand in Uttar Pradesh is around 21,116 MW, and NTPC curtailing supply implies the state losing around a quarter of its power source.

Maintain ‘buy’ on Maruti, SUV remains the focus area

Maruti (MSIL) eyes ~12.7% volume CAGR in passenger vehicles (PV) in Asia (excluding Japan) over CY20-25.

maruti suzuki

Analyst Corner: ‘Buy’ on RIL; investment may come in O2C business as well

RIL in a recent presentation announced initiation of the formal process of carving out the O2C business into a wholly owned subsidiary.


Gujarat Gas: Reiterate ‘buy’ with TP of Rs 560

Gujarat Gas (GUJGA) has proved to be a clear outperformer since the curbing of polluting fuels at Morbi – an impetus by the government toward the adoption of greener fuel.

gujarat gas

Power Grid rating – Buy: Strong show by transmission segment

Decline in capitalisation could impact growth; valuations are attractive; TP raised to Rs 248; ‘Buy’ rating maintained

Valuations at 1.5x FY22e P/BV and ~7% FY22e dividend yield remain attractive for a company with steady RoEs of ~17%. Maintain Buy, with DCF-based TP of Rs 248/sh.

Analyst Corner: Maintain ‘neutral’ on Info Edge, target price Rs 5,440

Billings fell 31% YoY in 1HFY21. The same reflected in the 15% revenue decline during 3QFY21, given the subscription-based model of the business.

info edge

ONGC: Gas output may clock 6% CAGR over FY20-23

Crude oil production has reached last year's levels, while gas is still marginally lower YoY due to lower offtake by customers on account of Covid-19.


Bharti Airtel Rating ‘Buy’; India wireless business showing cause for cheer

Subscriber mix was behind healthy ARPU rise; trend of robust subscriber growth persists; net debt, interest cost up; ‘Buy’ maintained

ARPU continued to see a steady uptick – it came in 2% q-o-q higher at Rs 166 (v/s est.Rs 164).

Escorts: Maintain ‘neutral’ as positives are largely priced in

Escorts (ESC)’s 3QFY21 performance was in-line, with strong profitability and over 80% PAT growth.


ICICI Bank: Raise FY21E estimate by 20% due to lower credit cost, maintain ‘buy’

On the asset quality front, controlled slippages led to a 6bp Q-o-Q rise in the pro forma GNPA ratio, while total restructuring stood at 0.4% of loans (v/s 1% guided earlier). Pro forma PCR stood ~78%, the highest in the indu

We raise our FY21E estimate by 20% due to lower credit cost while largely maintaining our FY22E/FY23E estimates. Maintain ‘buy’.
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