Select popular stocks such as Mphasis, Dalmia Bharat, Royal Orchid Hotels, Metro Brands, PNC Infratech, KPR Mill, NCC, Vedant Fashions and CCL Products have seen fresh interest from the various domestic brokerage firms, who have recently initiated their coverage on the said companies.
The host of brokerages, including HDFC Securities, IDBI Capital, Phillip Capital, Nuvama Institutional Equities, IDBI Capital, Nirmal Bang Institutional Equities, Motilal Oswal Finance Services and Equirus Securities have launched their maiden records recently. Here’s why these brokerages are positive on the stocks:
Nuvama Institutional Equities on Royal Orchid Hotels
Rating: Buy | Target Price: Rs 433 | Upside Potential: 60%
Nuvama initiated coverage on Royal Orchid Hotels citing its favorable demand-supply of rooms led by 7.8 per cent CAGR in travel and tourism over FY22–32E against a supply of 4.6 per cent. It is likely to outclass peers, clocking a revenue CAGR of 45.9 per cent over FY22–25E led by additional rooms, strong and consistent occupancy, and robust ARR.
“We see growth, via an asset-light model, which will help maintain Balance Sheet health and improve net debt-to-equity ratio to -0.35 times in FY25E from 0.27 times in FY22; and reckon operating cash flow would treble to Rs 98 crore in FY25E from Rs 39 crore in FY22,” said Nuvama with a buy rating and a target price of Rs 433.
Motilal Oswal Financial Services on Vedant Fashions
Rating: Buy | Target Price: Rs 1,400 | Upside Potential: 24%
Vedant Fashions, with a pan-India presence covering 250 cities and 640 stores, has strong design capabilities with data-driven decision making; tech-driven supply chain and auto-replenishment model; exclusive vendor ecosystem; and franchise-based EBO expansion have helped scale up its business and achieve superior margins, said Motilal Oswal.
“The company’s minimal capex requirements, attributed to the franchise-funded growth and its strong profitability, are likely to translate into a healthy cash conversion cycle and an ROIC of 58 per cent. We ascribe a forward P/E of 55x, at a 10 per cent premium to our average retail coverage multiple,” it said in IC report on the stock with a ‘buy’ tag and target price of Rs 1,400.
IDBI Capital on NCC
Rating: Buy | Target Price: Rs 146 | Upside Potential: 39%
“We initiate coverage on NCC with a ‘Buy’ rating, and the base case, see a target price of Rs 146. NCC has the pedigree of executing infrastructure projects and has seen multiple capex cycles in India. We expect an upcycle in its order inflow in FY23E to continue, given a continued push for infra spend by the government,” said IDBI Capital.
Commodities have weekends off-late and this could upkeep its EBITDA margins in FY24E. Balance sheet largely has working capital debt and NDER at 0.2x could support execution of its order book of Rs 41,900 crore. Stock trades at 7x FY25E EPS. Risk is slow-down in government capital outlay, it said in its maiden report on the counter.
HDFC Securities on PNC Infratech
Rating: Buy | Target Price: Rs 352 | Upside Potential: 23%
PNC is one of the key beneficiaries of increasing government focus on the greenfield expressway projects that NHAI is focusing on by implementation of both EPC and HAM modes and Government’s initiatives such as Bharatmala Pariyojana, Sagarmala, Atal Mission for Rejuvenation &Urban Transformation over next few years, HDFC Securities.
Its focus on margins and cash flow generation augurs well from a long-term perspective. Over the years, the company has transformed itself into one of the leading EPC contractors and has grown its order book and revenue at a healthy rate with good margins, it said with buy rating and a target price of Rs 352 in a bull case scenario.
Equirus Securities on KRP Mill
Rating: Add | Target Price: Rs 651 | Upside Potential: 13%
KPR Mill is amongst India’s largest, fully integrated knitted RMG exporters. Despite operating in a highly cyclical industry, it has clocked an impressive revenue and PAT CAGR over FY13-FY23E. The company has rightfully migrated from a commoditized yarn business to garment exports, said Equirus Securities.
“Besides consistent capacity additions in the core textiles business, strategic investments in the sugar/ethanol business will help sustain the growth momentum. But demand uncertainties in key export markets and rich valuations 14x) keep us on the side-lines,” it said while initiating coverage with an ‘Add’ rating and a target price of Rs 651.
Phillip Capital on CCL Products (India)
Rating: Buy | Target Price: Rs 680 | Upside Potential: 20%
CCL Products is one of the largest manufacturers & exporter of instant coffee globally. CCL’s ability to create custom blends as per the client requirements has led to an extremely sticky customer base which has created a niche for itself, said Phillip Capital with a ‘Buy’ rating on the stock in its initiating coverage report with a target price of Rs 680.
“It is successfully leveraging its rich experience of coffee processing, diversified sourcing capabilities, strong technology support, innovative blends and global manufacturing presence to gain market share and grow faster than industry. We remain positive about company’s future growth led by strong underlying demand momentum, new client additions, aggressive capex plan, scale benefit and gradual focus towards the B2C segment,” it said.
Nuvama Institutional Equities on Metro Brands
Rating: Buy | Target Price: Rs 909 | Upside Potential: 14%
Metro Brands offers a wide range of brands and products across age groups and market segments. It operates nationwide stores of its own. Given its strong focus on the mid and premium segments, it has been outgrowing the overall footwear market. After it ventured into e-commerce, which has grown 4 times over FY20, Nuvama said in its IC report.
We expect the growth momentum to continue, driven by the steady pace of store additions and recent acquisitions, premiumisation, and robust SSSG. With accelerated store additions, industry-leading margins, and an asset-light model, it is poised for aggressive growth going forward, it said with a ‘Buy’ rating and a target price of Rs 909.
Nirmal Bang Institutional Equities on Dalmia Bharat
Rating: Buy | Target Price: Rs 2,510 | Upside Potential: 26%
“We initiate coverage on Dalmia Bharat Ltd. with a strong ‘buy’ rating”, said Nirmal Bang. “With a current cement capacity of 37 MTPA and a power capacity of 195MW, the company is the fourth largest cement producer in India. In addition, DBL is in the midst of increasing its current capacity to 49MTPA by FY24E and 130 MTPA by FY31E.”
It has grown to become one of the most trusted brands in the building materials industry. It has been producing decent cash flows, enabling it to reduce debt besides executing acquisitions and expansions. Given the company’s strong growth visibility, improved balance sheet and attractive value, it anticipates a re-rating in its initiating report.
Hem Securities on Mphasis
Rating: Buy | Target Price: Rs 2,032 | Upside Potential: 14%
Company’s revenue growth was weaker, led by furloughs, delayed ramp-up in deals and a fall in mortgage business. But the TCV deal wins are healthy and management is confident of improving margins and achieving good revenue growth in medium to long term. It continued to share gains with key clients, said Hem Securities.
“Ongoing utilization & capacity management aligns with demand visibility and is in line with the company’s strategy of continued supply-side transformation. Recent correction gives a very good opportunity to add the stock for attractive gains. We initiate a ‘buy’ rating on the stock and value it at 20x FY24E earnings to arrive at the target of Rs 2,032,” it said.
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