PICK OF THE WEEK (Oct 18)

10

Coromandel International Limited-Buy
Recommendation by Geojit Financial Services

CRIN saw significant revenue growth of 51 per cent YoY to Rs.3,213cr during the quarter as its key markets of Telangana and Andhra Pradesh saw above-average rainfall and water reservoir levels as well as growth in Kharif sowing activities. Additionally, the increased focus on the CPC business augurs well for the company and we expect new launches and enhancement in R&D to propel this segment as well as improve overall margins.

Hence, we value CRIN at 18x FY22E EPS with a target price of Rs.942 and reiterate a “Buy”.

Infosys Ltd-Buy

Recommendation by Emkay Global Financial Services

Infosys delivered another stellar quarter, beating consensus estimates on revenue and margins. Revenue grew 6.1 per cent QoQ to $3.3bn. EBITM expanded 270bps to 25.3 per cent (highest quarterly margin since Q4FY16). Strong operating performance led to a net profit beat.

Infosys continues to outperform TCS in terms of revenue growth (4.8 per cent YoY cc on TTM basis vs. -0.1 per cent for TCS), with the margin differential also narrowing. We expect Infosys valuation gap with TCS to narrow further (trades at ~15 per cent discount vs. >30 per cent in early CY20) with sustained strong operating performance. We assume coverage on the stock with Buy and a TP of Rs1,360 at 25x Sept’22E earnings.

Radico Khaitan Ltd-BUY

Recommendation by Emkay Global Financial Services

We expect continued improvement in cash flows and ROCE (net cash position by FY22, increase in dividend payouts and ROCE to increase to 20 per cent+ by FY23). We believe that strong earnings visibility and improved balance sheet should lead to a re-rating. At 18x FY22E, valuations are still close to a 10-year mean. We retain Buy and increase the TP to Rs600, valuing it at 25x Sep’22E (vs. 20x earlier).

Wipro-Buy

Recommendation by Centrum Broking

We see probability of Wipro seeing gradual turnaround and delivering 7-8 per cent USD revenue growth in FY22E. Led by second consecutive quarter of margin execution, we raise consolidated EBIT margin assumptions to 17.7/17.4 per cent for FY21/FY22E (vs 16.3/16.3% for FY21/FY22E earlier). While Stock has already re-rated sharply (Wipro stock up 43% over last three months), we believe buyback will keep P/E multiples inflated in medium term. Our target multiple for Wipro is 35 per cent discount to TCS. Concentrated share float (74 per cent promoter holding and 4.7 per cent held by LIC) and low institutional ownership could also lead to disproportionate movement in stock. While medium term upsides could be muted, we believe pace of gradual turnaround in growth profile and margin trajectory can drive upgrades over next twelve months. We have upgraded Wipro in June 2020 and possible growth turnaround and buyback trigger. We continue to maintain stance. Retain BUY.

Cholamandalam Inv & Fin Comp-Buy

Recommendation by Angel Broking

The Cholaman.Inv.&Fn has diversified product mix which helps them to capture growth in tractor and 2 W segment. Adequate capital adequacy (20%+) and declined trend in Cost of fund and strong parentage provide comfort.

Zensar Technologies-Buy

Recommendation by Angel Broking

Company was adversely impacted in FY2020 due to ramp down in the retail and consumer group segment. However, the company has won deals worth USD 150mn during the quarter and management has said that the deal pipeline is very strong at USD 1.5bn as compared to USD 1.0bn a quarter ago. We expect the company to post revenue/EBITDA/PAT growth of 4.5 per cent/17.8 per cent/19.7 per cent between FY20-FY22 given that the worst is over for the company in terms of client ramp downs.

Persistent Systems-Accumulate

Recommendation by Angel Broking

Company has won a large deal during the quarter which will ramp up over the next few quarters. We expect the company to post revenue/EBITDA/PAT growth of 11.6 per cent/21.4 per cent/19.7 per cent between FY20-FY22 given negligible impact of Covid-19 on FY21 numbers strong deal wins, ramp up of existing projects along with margins expansion.

Endurance Tech-Buy

Recommendation by Angel Broking

Post Covid19, evolving consumer preference for lower ticket priced means of private transport amid pressurized incomes & awareness around social distancing are expected to act as tailwinds for domestic 2-Ws in India, 4-Ws across developed nations.

IDFC First Bank-Buy

Recommendation by Angel Broking

We believe efforts to build liability franchise, fresh capital infusion and provision taken on wholesale book will help to tide over this difficult time. The IDFC First Bank is trading ( 0.7 x FY22ABV) at a significant discount to historical average valuations.

Hawkins Cooker-Buy

Recommendation by Angel Broking

Gaining market share with peer, strong demand post Covid-19 and increase in penetration of cooking gas to drive higher growth.

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.

Source: IANS

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