Pick of the week (Jan 24)

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Recommendation by Yes Securities

Roll over 26x target PE to FY23 EPS for a revised TP Rs 400. Like the CRO + manufacturing franchise but await better entry point and retain SELL

Sagar Cements -- Add

We assign an EV/EBITDA multiple of 7x on Sep-22E and arrive at TP of Rs 798/share (previous TP of Rs 745/share) with potential upside of 13%. We maintain our ADD rating on the stock. Further upgrades in earnings estimates and stock price would depend upon sustainability of strong pricing in the South.

Shoppers Stop -- Sell

Recommendation by HDFC Securities

STOP (while recovering) continues to be among the worst hit within our apparel universe, given its predominant mall-based presence (87% of stores).

We continue to remain circumspect on the longevity of the business as cost arbitrage between pure-play department stores and online platforms continues to shrink with each passing year. Maintain FY22/23 EPS estimates and SELL recommendation with an unchanged DCF-based TP of Rs 175/sh.

Asian Paints -- Sell

Recommendation by HDFC Securities

While the demand rebound has certainly surprised us (courtesy pent-up demand timing), the normalisation trend is unlikely to change in a category like Paints. We marginally revise our FY22/23 EPS estimates upwards (3% resp), and consequently, our DCF-based TP stands revised to Rs 2,300/sh (earlier TP: Rs 2,250/sh), implying 56x FY23 P/E. Maintain SELL.

PVR Ltd--Reduce

Recommendation by Geojit Financial Services

Considering current valuation and slower pace of recovery, we remain cautious on the stock. Therefore, we downgrade our rating to REDUCE with a revised roll forward target price of Rs1,403 at 2.2xFY23E EV/Sales.

Bandhan Bank-Neutral

Recommendation by Motilal Oswal Institutional Equities

BANDHAN reported a sharp deterioration in asset quality trends, with pro-forma GNPA ratio increasing to 7.1%, while collection efficiency in the MF portfolio in its core state of Assam has witnessed a sharp decline. We cut our earnings for FY21E by 22% to factor in higher credit cost at 4.4%/2.6% for FY21E/FY22E. We downgrade our rating to Neutral on rising asset quality concerns and revise our TP to INR 370/share (2.5x Sep'22E BV).

Bajaj Auto -- Buy

Recommendation by JM Financial Institutional Securities

Maintain BUY with revised Mar'22 TP of INR 4,200 (17x fwd earnings vs. earlier multiple of 15x). Slowdown in the domestic market and sharp INR appreciation are key risks.

Kajaria Ceramics -- Buy

Recommendation by JM Financial Institutional Securities

Management guides for c.20-25% volume growth in FY22 (implies 4% CAGR in FY19-23) and 15% growth in FY23 given a) domestic market share gains as Morbi is focussed on exports, b) healthy demand from tier 1-3 cities, c) low base of FY21 . It also guides for 20% EBITDA margins in FY22/23 on the back of lower competitive intensity and savings in A&P cost. Maintain BUY with Mar'22TP of INR 870.

Westlife Development -- Buy

Recommendation by JM Financial Institutional Securities

We believe the competitive scenario has turned more favourable for the Western QSR segment post-Covid and Westlife Development would remain the major beneficiary given its leadership on footfalls and revenue per store metrics. Maintain our positive bias with a revised target price of INR 510.

Federal Bank -- Buy

Recommendation by Centrum Broking

We raise our FY21E PAT by 19% led by NIM increase (to 3.2% from 3.0%) and higher fee income due to outperformance over the last 3 quarters. As some stress recognition could shift to FY22E, our provisions rise by 4.5%. We like FB owing to lower stress and attractive valuations. Roll forward to FY23E ABV, maintaining a BUY with multiple at 1.2x. Valuation at 0.9x FY23E ABV is attractive. Raise TP to Rs100. Risks: higher stress.

Hindustan Zinc Ltd -- Hold

Recommendation by Emkay Global Financial Services

We raise our TP to Rs 281 as we assume a 19% increase in EBITDA for FY22E on the back of a 13% hike in Zinc price assumptions and 3% uptick in metals volume. The recent 23% rally in the stock in the last one month caps further upsides, but a dividend yield of 7.4% for FY22/23E should provide support.

Sterlite Technologies -- Sell

While topline performance has been decent, the margins have deteriorated on YoY basis.

We, however, do not expect significant improvement in margins from the current levels based on the current product mix. STL has a decent presence in Europe and extended lockdown in that region could impact revenues. We roll forward our estimates to FY23 and maintain our negative view on the stock for revised target price of Rs128. Retain SELL.

Disclaimer: Views and recommendations given are those of brokerages and analysts and do not represent those of IANS. Users should check with certified experts before taking any investment decision. IANS has no financial liability whatsoever to any user on account of the use of information provided.

--IANS

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