Indusind Bank — Buy
Recommendation by LKP Securities
Indusind Bank has reported better than expected numbers in 2QFY21, as it gross slippages declined at Rs 3.9 billion v/s Rs 15.4 billion in 1QFY21.
The bank’s collection efficiencies have improved significantly (~95% as on Oct-20) and one of the best among large private banks. The capital infusion (post money CET 1: 14.5%) would provide further cushion. Furthermore, the liquidity surplus of ?400bn is likely to safeguard the balance sheet. We expect the credit cost to normalize in 2HFY21 and return ratios to reach the previous run rate.
Hence, we have a positive outlook on the bank with a BUY rating.
Axis Bank — Buy
Recommendation by Centrum Broking
Axis Bank Q2FY21 earnings were largely in-line with PAT at Rs16.8 billion (est. Rs 17.2 billion). NII was a beat mainly driven higher NIM led by lower deposit cost. Loan growth was slightly lower at 10.5% YoY as SME was a drag though retail/corporate performed well.
We maintain our BUY rating and raise multiple/TP to 2.0x/Rs633.
RBL Bank — Buy
RBL Bank holds a healthy positioning in fight against COVID demonstrated by 1) adequate COVID provisioning, 2) improved PCR, and 3) healthy liquidity position with LCR of 171%. Furthermore, a healthy capital position (CET 1: 17.4%) post fund raise would provide cushion. Thus, we recommend a BUY rating on the bank with target price of Rs 198 (based on 0.85xFY22 Price to Adjusted Book Value).
Nippon Life India Asset Management — Add
Recommendation by Centrum Broking
We lower AUM growth for FY21/FY22 by 1.2%/2.2% respectively while accounting for lower opex and higher other income in FY21. This might result in higher PAT by 4.0%/2.1% for FY21/FY22E. Maintain our P/E multiple at 30.6x to arrive at a TP of Rs288 (vs Rs284 earlier) and retain ADD. Risks: lower AUM growth, regulatory challenges.
VST Industries — Buy
Recommendation by Centrum Broking
We believe strong tailwinds for DSFT segment will help VST gain market share. Moreover, 3% dividend yield to provides support to stock. We maintain our revenue estimates, however, given the strong focus towards ‘Total’ and tight cost control, we increase our PAT est. for FY21/FY22 by 6.8%/3.4% and maintain a Buy rating with DCF-based revised Target Price of Rs 3,985, implying 18.5x FY22E EPS. Risks to our call include sharp increase in any form of taxation and disruption in supply chain due to lockdowns.
SBI Cards & Payment Services — Buy
Recommendation by Geojit Financial Services
SBI Cards & Payment Services (SBI Cards) is the leading issuer of credit cards in India. Company offers wide range of value-added payment products and services. SBI cards operates in more than 130 cities in India.
Growth momentum should pick-up in retail credit activity and daily spends in upcoming quarters. Given current upside potential, we reiterate BUY on the stock with a TP of Rs. 913 based on 10.5x FY22E.
HDFC Asset Management — Buy
Recommendation by BofA Securities
We believe margin recovery post bottoming in 1Q will likely continue with a recovery in AUM share of high margin equity – we factor operating margins of 39bp in FY21. We tweak our FY21-22E earnings and reiterate Buy with an unchanged PO.
HDFC AMC lost market share in 2Q as well but is confident of bouncing back with similar experience in 2010/13 and has already initiated steps including (i) diversification of investment style to reduce concentration risk – hired 2 new FMs with a distinctive investment style with more hires likely, (ii) strong pipeline of new product launches (New Fund Offerings primarily in equity) aiming to plug the product gaps or thematic funds. The funds will be launched over the next 3-4 months post SEBI approvals, with a target of launching 1 product every alternative month post that.
Tech Mahindra — Buy
Recommendation by Geojit Financial Services
The improved demand/supply scenario, margin expansion and increase in deal wins should support the company’s steady recovery. Hence, we retain our BUY rating on the stock with a revised TP of Rs. 923 on 17x FY22E adj. EPS.
Biocon — Buy
Recommendation by Centrum Broking
Biocon delivered Q2FY21E earnings below our estimates. Lower patient to clinic movements due to pandemic, operational challenges, higher R&D spend led to lower than expected biosimilar margins. We also believe the inventory mismatch is driving the weaker margin performance. We still remain optimistic as we are seeing market share ramp-up like Fulphila and Ogivri along with the Insulin glargine launch.
We expect the 2H would reflect better share from developed and MOW markets for key products along with normalised profit share from partner and better cash flow generation as the working capital improves. We have revised our FY21E earnings by 7% to absorb the 1H underperformance while hold on to our FY22E estimates. Maintain BUY with a SOTP target price of Rs 498.
Aarti Drugs — Buy
Recommendation by Centrum Broking
Aarti Drugs Q2FY21 results continued to deliver stellar performance. The earnings were marginally ahead of our estimates. The API industry has experienced overall sustained price inflation across product baskets and strong volume demand. Most of the Pharma players across globe working on securing most reliable APIs sources. India plays crucial role in global pharmaceutical supply chain which would enhance its overall market share. Indian govt. is also supporting the industry with PLI scheme and has allowed even the exports as part of the scheme.
ADL has announced Rs 6 billion capex over 2-3 year with asset turnover of higher than 2.5-3x. ADL continuing with strong volume growth and sustaining elevated EBITDA margins we have further upgraded our earnings by 8%/33% (we were awaiting confirmation), for FY21E/FY22E, respectively. We maintain Buy rating with 18xFY22E (aligning with Lead multiple) with new target price of Rs 825.
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