Bandhan Bank, SBI Card, Britannia Industries and Route Mobile are among stocks which have see brokerage upgrades/ initiation today. Among them, except for Bandhan Bank, other three stocks have received ‘buy’ rating from analysts. Bandhan Bank has received a ‘Hold ‘ rating from Motilal Oswal Securities that feels the downside is limited for the stock post recent 30 per cent correction.
Bandhan Bank | Motilal Oswal | Target Rs 270
Motilal Oswal said Bandhan Bank has been taking it on the chin as the bank continuously cleanses its balance sheet with EEB stress pool moderating to Rs 9,500 crore in Q2FY23 from a peak of Rs 19,500 crore in 2QFY22, while its restructured book has dissolved completely, it said. SMA book though remains elevated, has moderated to 13.1 per cent from a peak of 37.1 per cent in Q1FY22, Motilal Oswal said.
“While the bank is carrying a healthy coverage that includes potential recoveries, any timing mismatch in recoveries may severely impact the credit cost trajectory and keep provisions elevated as a bulk of recoveries is likely over 4QFY23/1QFY24,” it said.
The brokerage has cut its FY23 and FY24 PAT estimates by 18 per cent and 12 per cent and revise its target to Rs 270 on the stock. Motilal Oswal said it stays ‘Neutral’ on the stock as it awaits more clarity from Q3FY23 results even as it believes that post recent 30 per cent correction, the downside is limited for the stock.
Britannia Industries | Nuvama Institutional Equities | Target Rs 5,090
Britannia’s hunger for its cheese business is growing, said Nuvama Institutional Equities. The company has formed a JV with French cheese major BEL SA (Bel), a large global player with a presence in 120-plus countries. Bel already has a presence in India via its marquee brand ‘The Laughing Cow’ (small in size; we reckon Rs 15–20 crore). Importantly, the JV gives Britannia access to technical knowhow, innovation and expertise, among others, Nuvama said.
“We believe the JV fits in nicely with Britannia’s growth plans. While the company dominates biscuits, its presence in cheese has been sub-scale (via outsourcing). This deal with a 20-year lock-in allows Britannia to replicate its biscuits’ template to dominate mid and premium cheese in India—and some more markets. Retain ‘BUY’ with a target of Rs 5,090,” it said.
SBI Card | Emkay Global | Target Rs 1,000
Emkay Global has initiated coverage on SBI Card with a ‘Buy’ rating. Notwithstanding Covid-induced disruptions and rising competitive intensity from alternate payment/credit products, Emkay said India’s credit card -base doubled to 7.4 crore in March 2022 from 3.7 crore in March 2018. It now stands at a high 7.9 crore(active base). Cumulative-spends (7MFY23) growth stood at 58 per cent YoY, indicating strong underlying growth currents.
“We expect overall industry cards-in-force (CIF) CAGR of 17 per cent and spends to post a near pre-Covid CAGR of 32 per cent in FY22-25E. SBI Card is India’s 2nd-largest credit-card issuer, with 19.1 per cent market share of active cards-in-force [CIF] as of Oct-22, and ranks 3rd in terms of spends, with 18% market share. We expect SBIC to log a strong CIF CAGR too, at 18 per cent, and spends CAGR of 30 per cent in FY22-25E, thus largely upholding its market share. Beyond FY25, we expect SBI Card to maintain spends-share at 18 per cent, and clock FY25-35E CC-spends CAGR in the mid-to-high teens,” Emkay said.
Despite the likely continued moderation in interchange fees (ICF), Emkay sees RoE staying resilient for SBI Card at 25-26 per cent over the cycle. The brokerage has a March 2024 target of Rs 1,000 per share for the stock.
Route Mobile | Nuvama Institutional Equities | Target Rs 1,769
Nuvama said it interacted with Gautam Badalia, CSO of Route Mobile (Route) to delve into the company’s key strategies and o1utlook. The key takeaways, it said, included revenue growth pegged at above 60 per cent–led by geographic, product
and wallet-share expansions in existing areas. Route Mobile said omni-channel capabilities in CPaaS and global footprint provide a plethora of cross selling and upselling opportunities. The company may consider bolt-on acquisitions to expand into new solutions.
“The need for enterprises to digitally engage with their customers is greater than ever before and Route is a key beneficiary. We expect Route to clock 34.4/36.7 per cent revenue/earnings CAGR over FY22-FY25E on the back of strong execution. Retain ‘BUY’ with a TP of Rs 1,769,” it said.