Pick of the week (Feb 21)

Nestle India — Reduce
Recommendation by HDFC Securities

We maintain our EPS estimate for CY21E/CY22E. We value Nestle at 55x P/E on CY22E EPS to derive a TP of Rs 16,326. The stock is trading at 58x P/E on CY22E EPS and limits absolute upside in the medium term, making the risk-reward unattractive. Maintain REDUCE.

Repco Home Finance — Buy

Recommendation by Motilal Oswal Institutional Equities

While we forecast a pick-up, we expect the company to deliver only 8% loan book growth over FY21-23E. We increase our FY22E/FY23E EPS estimate by 2-4% to factor in higher margin. Maintain Buy with a TP of INR430 per share (1x FY23E BVPS).

New India Assurance — Sell

NIACL is India’s largest insurer but continues to make high underwriting losses. We note that the company’s competitive positioning is weakening and remain concerned about its ability to write profitable business. We estimate an FY23E adj. ROE of just 8.7% and can at best assign a valuation of just 0.6x Sep-22E ABV (less 10% discount for additional 10.4% supply). We rate NIACL a SELL with a TP of INR 106.

Berger Paints — Sell

While we marginally revise our EPS estimates upwards by 3-4% each for FY22/23 to account for quicker revenue pick-up, we maintain our SELL recommendation with a DCF-based target price of Rs 610/sh (implying 62x FY23 P/E).

Bata India Limited — Accumulate

Recommendation by Geojit Financial Services

We upgrade to Accumulate rating with a revised Target of Rs 1,750 (earlier Rs1,480) factoring volumes nearing pre-Covid levels.

Indraprastha Gas Limited — Buy

Recommendation by Geojit Financial Services

Improved capacity utilization, easing of Covid restrictions and institutions reopening will support the company’s operational and financial performance in the near future. Hence, we reiterate BUY rating on the stock with a revised price target of Rs 630 based on SOTP methodology.

Graphite India — Buy

Recommendation by Anand Rathi Share and Stock Brokers

The company has maintained its market share in Q3 FY21. We introduce FY23e and maintain our Buy rating on the stock, with a higher target of Rs 590 (8x FY23e EV/EBITDA), earlier Rs 373.

Mayur Uniquoters — Buy

Recommendation by Anand Rathi Share and Stock Brokers

After a significant de-rating of its scrip since FY18 on its declining earnings, we now see good scope for a re-rating, backed by strong earnings growth/better RoE. At ~13x FY23e P/E, we retain a Buy with a target of Rs 474 (16x FY23e P/E).

Glaxo SK Pharma — Buy

Recommendation by Centrum Broking

We have adjusted our FY22 earnings amid pandemic and gradual recovery, rolling over to FY23E earnings estimates. We maintain our BUY rating on stock and value at 39x FY23E, with a target price of Rs 1,750.

JK Lakshmi Cement — Add

Recommendation by Centrum Broking

We assign EV/EBITDA multiple of 7.5x as we rollover to FY23e earnings and arrive at a fair value of Rs 394/sh (earlier Rs 334/sh). At our TP the stock trades at a replacement cost of Rs 4.9bn/mnt. Maintain ADD rating.

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
san/dpb

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