PICK OF THE WEEK

ITC Limited--Buy

Recommendation by Centrum Broking

We believe, with improved disclosures recommended by us (ESG roadmap, 2QFY21 results presentation) should gain confidence, and yet renewed focus on maintaining cigarette market share, tailwinds from foods business, strong FCF, high dividend yield and compelling valuations proved to be attractive for long term investors. We move to FY23E estimates and reiterate strong Buy rating with DCF-based Target price of Rs.353, implying 23.6x FY23E EPS. Key risks are sharp increase in any form of taxation & higher leaf tobacco prices.

Navin Fluorine--Buy

Recommendation by Anand Rathi Share and Stock Brokers

To strengthen its specialty chemicals division and for growth, Navin Fluorine announced Rs1.95bn capex in agro and pharma, expected to be funded through internal accruals and debt. The multi-purpose plant at its wholly-owned subsidiary, Navin Fluorine Advanced Sciences, at Dahej, Gujarat, is expected to be commissioned in H1 FY23, with ~1.4x asset turnover. The expansion would help launch products of complex fluorinated chemistry and strengthening customer relations. We upgrade our rating to Buy with a higher target of Rs 3,000, valuing the stock at 34x FY23e EPS, earlier Rs 2,500.

Infosys--Buy

Recommendation by Anand Rathi Share and Stock Brokers

We remain optimistic on Infosys given its strong digital portfolio, healthy deal pipeline, account expansion, cost discipline and upbeat management expectations. Also, the company is set to benefit form the rapid increase in demand for digitization across industries amid the pandemic. We initiate a BUY on Infosys with a target price of Rs 1,385 per share.

Bharat Petroleum Corporation Limited--Buy

Recommendation by Emkay Global Financial Services

A new private owner can enhance cash flow generation more than our estimates through efficiency, capital reallocation and lower cost leverage. Maintain positive view and reiterate Buy on BPCL with a TP of Rs 490 (up 2% due to investments) and OW stance in EAP.

NMDC Limited--Buy

Recommendation by Emkay Global Financial Services

We raise iron ore price assumption by 22 per cent/16 per cent for FY21/22, resulting in EBITDA growth of 40 per cent/23 per cent. We raise our TP to Rs 160 (from Rs 136), comprising Rs 132 for core mining business at 5x FY22 EV/EBITDA and Rs 28 for steel CWIP. Maintain Buy with OW in EAP. Key risk is a sharp rise in domestic ore production leading to price correction.

Blue Star--Sell

Recommendation by Motilal Oswal Financial Services

Blue Star remains concentrated in South India and is yet to see meaningful expansion in North India - the market has got tougher with Lloyd back on growth track.

Adj. for projects business, Blue Star (FY22E/23E PE of 63x/47x) trades expensive than Voltas (FY22E/23E PE of 52x/46x), despite being a single product company. Blue Star remains a single product company, while Voltas is expanding into the wider White Goods space of Refrigerators and Washing Machines. Restructuring of projects business in Voltas may be a precursor to a demerger and can help sustain higher multiples. Thus, on a relative basis, VOLT scores over BLSTR as an investment thesis. We downgrade Blue Star to Sell and have a Neutral rating on Voltas.

Mahindra & Mahindra-Buy

Recommendation by Nomura

We maintain MM (MM IN, Buy) as our top pick in the sector on rural play and initiatives to address capital allocation concerns. Current valuation at 5.2x FY23F EV/EBITDA for the core auto business is attractive, in our view.

Bandhan Bank--Long

Recommendation by Equirus

We appreciate the bank's track-record to absorb event risks and believe it is well equipped (professional expertise, network and customer franchise) to change its loan mix and capitalise on the cross-sell opportunities. Initiate coverage with LONG. Key risks: Uptick in rural NPAs, delayed economic revival and imposition of lockdown.

Sumitomo Chemicals-Accumulate

Recommendation by Elara Securities

We initiate on Sumitomo Chemicals with an Accumulate rating and a 12-month target price of INR 330, implying 10 per cent upside. Our TP is based on 35x FY23E EPS of INR 9.4. Current valuation at 30x FY23E EPS of INR 9.4 factors in near-term earnings visibility. However, we remain positive in the medium to long term on balanced business model of domestic and exports. SCC's rich product pipeline is likely to increase technicals outsourcing opportunity for SUMICHEM and access to distribution network would provide significant visibility on medium-term growth.

Godrej Consumer Product --Buy

Recommendation by Phillip Capital

Maintain GCPL as our top anti-consensus high-conviction BUY. We believe operating performance is expected to be broad-based across categories / geographies in the medium term.

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Source: IANS