PICK OF THE WEEK

Divis Lab -- Buy

Recommendation by Anand Rathi Share and Stock Brokers

 

Divi's Laboratories Ltd. is one of the leading manufacturers of Active Pharmaceutical Ingredients (API) in the world. Growth prospects of Divi's look decent with favourable traits in the API industry due to supply chain readjustments/ diversification from China into other countries, including India amid the Covid-19 pandemic. As global players are looking to reduce dependency on China and preferring India, companies like Divi's remain well placed to capitalize on such opportunity. Also, in custom synthesis, the company is connected with several pharma giants and looks to benefit as India may tap opportunities in terms of the consumption of custom synthesis.

We remain positive on Divi's given its strong market position, strength in API manufacturing, established long-term contract with customers and benefit from its capex programs. We maintain our BUY rating with a revised target price of Rs 4,095.

ICICI Bank -- Buy

Recommendation by Emkay Global Financial Services

We believe that ICICI's likely strong delivery on growth, asset quality and return ratios despite the Covid-induced disruption, coupled with its evolution as a strong retail-cum-digital bank, will call for a re-rating. Retain Buy/OW in EAP with a revised TP of Rs 600.

TTK Prestige Limited -- Buy

Recommendation by Geojit Financial Services

TTK's EBITDA margin is largely stable as pricing is built on a cost plus. Any cost escalation passes to the cons'mer which shows pricing power and margin improvement will be through efficiencies. Relatively high ad-spend also provides a comfort to protect margins. TTK has a strong balance sheet with net cash of Rs 350cr. Covid-19 is expected to have an impact on FY21E earnings. But, gradual relaxations along with good monsoon, end of loan moratorium, increased penetration of cooking gas through PMUY would support demand. Expect revenue/PAT to grow at 6%/13% CAGR over FY20-22E. Factoring gradual improvement in volumes, we value the stock at 40x FY22E (2Yr avg=40x) with a Target of Rs 6,870. Recommend Buy considering healthy Balance Sheet and return ratios.

NCC -- Buy

Recommendation by Centrum Broking

Led by a robust order backlog, we expect a strong execution scale up for NCC in H2FY21 and FY22/FY23. Meanwhile NCC's margins have remained resilient and liquidity position has improved. We estimate Revenue/EPS of Rs 98.4bn/Rs 5, up 33%/48.5% YoY in FY22 and Revenue/EPS of Rs118 bn/Rs 9.5 in FY23. Having generated revenue of Rs121bn in FY19 (on opening order backlog of Rs 300 bn) NCC possesses capability to scale back to similar levels in FY23 (Sept-20 OB: Rs 280 bn). Stock trades at 8.5x/5.8x FY22/FY23 earnings and provides adequate room for upside. As such, the stock does not factor any material recovery of AP receivables or from the Sembcorp arbitration award and any incremental inflows will be upside triggers. We value NCC at 10x FY23 core EPS of Rs 8.2 (without other income; 10x FY22 earlier) with Mar-22 PT of Rs 82. Maintain Buy. Key risk -- an adverse outcome of dispute with Sembcorp which results in cash outflow for NCC.

Laurus Labs --Buy

Based on growth visibility in Formulations as well as in the API segment, we are confident of sustaining the momentum in earnings. We also believe that the company is well positioned for continued long term growth and initiate our coverage on Laurus Labs Limited with a BUY rating and a target price of ?424 per share.

Graphite India -- Buy

We expect the company to benefit from the pick-up in steel production and higher realisations in electrodes. We expect it to report an EBITDA loss in FY21 and a Rs6.6bn EBITDA Profit in FY22. GRIL is trading at 4.7x FY22e EV/EBITDA. We recommend a Buy on the stock, with a higher target price of Rs 373 (8x FY22 EV/ EBITDA). Risk: Less-than-expected demand for electrodes would cap prices, leading to lower realisations.

Titan Company -- Buy

Recommendation by Emkay Global Financial Services

Titan's plan to scale down operations of Favre Leuba substantially is a positive move as it should lead to lower losses from the venture in the future. Despite significant investments made by Titan, Favre Leuba has failed to make a dent and has been reporting losses of Rs 550 mn per annum and revenues of Rs 65-85 mn over FY17-20.

The exit from Mont Blanc - another loss-making venture - and the scale-down of Favre Leuba are steps in the right direction and should improve overall profitability and enable Titan to invest in its core growth businesses. We maintain Buy with TP of Rs1,450.

L&T Infotech -- Buy

Recommendation by Motilal Oswal Institutional Equities

LTI has deep domain capabilities. Low exposure to segments that faced headwinds (legacy IMS, BPO) should be favourable in the current context.

The reinstatement of PAT margin guidance, the ability to sustain operational efficiencies (offshore), and strong deal pipeline indicate an optimistic outlook.

Industry-leading growth, RoCE, and prudent capital allocation should defend its rich multiples. We value the stock at 25x Sep'22E EPS (10% discount to our TCS valuation). Maintain Buy.

Godrej Properties -- Add

Recommendation by HDFC Securities

Godrej Properties Ltd (GPL) is a sectoral bell-weather with an innate capacity to build homes.

We believe GPL only constrains itself, and that is its biggest strength or weakness. Given recent run up we initiate coverage on the stock with an ADD recommendation and SOTP of Rs 1,164/sh (40% NAV premium).

IndiaMart Intermesh -- Buy

Recommendation by Motilal Oswal Institutional Equities

Going ahead the company will keep focussing on its core business along with potential growth from entering into other aspects of the SME value chain. We remain confident of strong fundamental growth in operations of the company. Our DCF-based Target Price of INR 5,830 implies upside of 14% from current levels. Reiterate Buy.

Source: IANS