IDFC First Bank | Buy | TP: Rs 77 | We believe efforts to built liability franchise, fresh capital infusion and provision took on the 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.
Galaxy Surfactants | Buy | TP: Rs 3,600 | The company has been increasing its share of high margin speciality care products in its portfolio which now accounts for 40 percent of its revenues while the balance is accounted for by the performance surfactant business. The company has a very strong relationship with MNC clients like Unilever, P&G, Henkel, Colgate-Palmolive and supplies raw materials to them not only in India but also in the US, EU and MENA region.
Escorts | Buy | TP: Rs 1,573 | With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as better than expected Kharif crop in 2020, we expect the tractor industry will continue to outperform the larger automobile space in FY21. The company has also reported strong growth of 25.7 percent YoY in Q3FY21 which is expected to continue into the fourth quarter driven by strong demand.
Federal Bank | Buy | TP: Rs 110 | NPA’s have remained steady for the bank over the past few years with GNPA for Q3FY21 at 3.38 percent while the NNPA ratio stood at 1.14 percent. PCR at the end of Q3FY21 stood at ~67 percent which we believe is adequate. The restructuring book is expected to be at Rs. 1,500-1,600 crore out of which Rs. 1,067 crore has already been restructured. This is against earlier expectations of a total restructuring of Rs. 3,000-3,500 crore.
Shriram City Union Finance | Buy | TP: Rs 2,100 | We are positive on the company as we believe that the worst is over in terms of asset quality which along with positive growth momentum should lead to a rerating for the company.
GNA Axles | Buy | TP: Rs 550 | GNA is expected to be one of the biggest beneficiaries of the strong growth outlook for truck sales in US and Europe markets which are witnessing a strong recovery in demand. The US which accounts for almost 40 percent of the company's revenues has been registering strong class 8 truck sales. At the current level the stock is trading at a P/E multiple of 9xFY23E, given inexpensive valuations, we believe that the stock offers value at current levels.
Crompton Greaves Consumer Electricals | Buy | TP: Rs 480 | The company has over the years been focusing on increasing the contribution from premium products in its portfolio which will lead to better realizations and margins. Given the strong operating performance and expected growth rate, we are positive on Crompton Consumer and rate the stock as a Buy.
Godrej Properties | Accumulate | TP: Rs 1,600 | As Godrej Property having a very robust pipeline of 12.3 msf for upcoming years, further new launches in Mumbai once relaxation in lockdown. We are expecting a strong recovery in the residential market in the 2nd half of 2022, company to get benefit of the shift from an unorganised to organised market as well as company has great brand recognition.
Ashok Leyland | Accumulate | TP: Rs 145 | We believe that the company is ideally placed to capture the growth revival in the CV segment and will be the biggest beneficiary of the Government’s voluntary scrappage policy and hence rate the stock a Buy.
PVR | Accumulate | TP: Rs 1,500 | With a significant decrease in COVID-19 cases over the past few months we believe that it’s a matter of time before we see new releases by production houses post April 2021 which should lead to a significant increase in business for the companies.
Apollo Hospitals | Accumulate | TP: Rs 3,700 | The company having a capacity of 10300+ beds out of which 7500 beds are operational only, we expect these beds to come in operation soon and start contributing in revenue along with this company is not looking for any brownfield expansion in upcoming years.
NRB Bearings | Accumulate | TP: Rs 150 | NRB is one of the leading suppliers of bearings to Auto companies. The company supplies bearings to two-wheelers, PV, CV, Three wheelers and tractors OEMs and has a wide customer base. The company has also been focusing on export markets in order to diversify its revenue base.
Carborundum Universal | Accumulate | TP: Rs 660 | Carborundum Universal is expected to benefit from improving demand scenarios across its end-user industries such as auto, auto components, engineering, basic metals, infrastructure, and power. While demand from the Auto sector has been robust we expect demand from the metal industry picks up given increased economic activity.