Fundamental Calls: Motilal Oswal bullish on HPCL, NTPC and Oberoi Realty

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New Delhi | Updated: August 23, 2016 3:16:51 PM

Brokerage firm Motilal Oswal is bullish on Hindustan Petroleum Corporation Limited (HPCL), National Thermal Power Corporation (NTPC) and Oberoi Realty with 'Buy' rating.

nifty bse nse sensex ntpc, hpcl, oberoi realtyBrokerage firm Motilal Oswal is bullish on Hindustan Petroleum Corporation Limited (HPCL), National Thermal Power Corporation (NTPC) and Oberoi Realty with ‘Buy’ rating.

Brokerage firm Motilal Oswal is bullish on Hindustan Petroleum Corporation Limited (HPCL), National Thermal Power Corporation (NTPC) and Oberoi Realty with ‘Buy’ rating. The brokerag firm believes shares of these companies can surge around 20 per cent in the next few quarters. At Tuesday, HPCL was trading 5.08 per cent down at Rs 1152.90 in the late afternoon trade (at 3.09 pm. Oberoi Realty and NTPC were trading down by 0.13 per cent and 2.78 per cent, respectively.

HPCL
Investment rationale: Motilal Oswal has maintained its buy rating for the oil marketing company. HPCL has reported EBITDA of Rs 3,560 crore in first quarter led by gross refining margins (GRM) at $6.8 per barrel and product inventory gains of Rs 1,100 crore. “While the GRM have softened recently, we note that the auto fuel marketing margins are inching higher (up Rs 0.5 per ltr in the last two fortnights) and should partly compensate for lower GRM in the near term. Valuations afre undemanding with dividend yield of around 3.5 per cent,” said Motilal Oswal. Refining margins, stable marketing profitability will boost the higher earning chances for HPCL. The brokerage house has ‘Buy’ on HPCL with a target price of Rs 1,490.

Oberoi Realty
Investment rationale: The robust first quarter result has boosted the forecast for the firm. Its revenue grew by 52 per cent to Rs 320 crore, EBITDA grew 30 per cent YoY to Rs 170 bn, and PAT grew 30 per cent YoY to Rs 110 crore. During the period, its net debt went up by Rs 60 crore QoQ to Rs 270 crore. “Despite a sluggish market, Oberoi Realty’s new operating cycle has been strong, with the success of Three Sixty West and its Borivli project. This speaks volumes about the company’s brand equity, product attractiveness, and cash flow strength,” said Motilal Oswal. The brokerage house is bullish on Oberoi Realty with a target price of Rs 352.

NTPC
Investment rationale: NTPC is the largest electricity producer in India has declared a capacity (DC) increase by 2.7 GW and regulated equity increase by Rs 5400 crore on year on year basis. During the quarter, it has added 250MW Bongaigaon and 200MW solar plants to DC. Its standalone adjusted net profit increased 13 per cent YoY to Rs 2400 crore for the quarter ended June 30, 2016. “NTPC’s consolidated EPS is estimated to grow at a CAGR of 11 per cent over FY16-20E. We expect DC to increase at CAGR of 7.5 per cent and regulated equity to increase at CAGR of 15 per cent over FY16-21E,” said Motilal Oswal. Shares of the company can touch Rs 199.

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