Titan, Tata Motors, Canara Bank, Escorts & KVB: Brokerages’ view on these 5 Jhunjhunwala stocks

Late ace investor Rakesh Jhunjhunwala’s select picks including Titan Company, Tata Motors, Canara Bank, Escorts Kubota and Karur Vysya Bank continue to draw analysts’ attention who remain positive on these counters. The Dalal Street legend, even after his demise, has a cult following among investors and his portfolio stocks are widely followed by the investors.

Here is what various brokerage firms said about these five Jhunjhunwala portfolio stocks after the recent quarterly results:

Titan Company
Long-term drivers, including increasing consumer shift to organized jewelry, as unorganized jewelers find it difficult to operate due to increasing cost of compliance in an industry where margins are wafer-thin; aggression in the highly lucrative wedding jewelry market; increasing traction on the revised gold exchange programme for Titan’s Golden Harvest Scheme; and stringent cost efficiency program remain intact, said Phillip Capital.

“We have cut our FY24-25 EPS estimates by 7-10 per cent to account for weak 3Q results, increased competitive intensity and higher volatility in the gold price which will eventually lead to deferment of demand and continue to maintain buy with a target of Rs 2,700,” it said.

“Titan’s 3QFY23 result was in line on the sales front but lower-than-estimated EBITDA margin meant that EBITDA missed our estimate by about 11 per cent. Base quarter EBITDA margin was the highest since 2QFY06 and hence, there was an unusually unfavorable base, which will not be the case going forward though,” said Motilal Oswal.

The ongoing urban discretionary slowdown does not seem to have hit the company’s customer base. Titan has the best-in-class track record, and better near-term growth visibility than peers and the longer-term growth opportunity is also the best of breed, thus deserving high multiples, it said maintaining its buy rating with a target price of Rs 3,070.

Tata Motors
Tata Motors reported a strong performance in the December 2022 quarter, said Julius Bar. “Despite the recent economic uncertainties, the auto industry, both domestically and globally, is expected to see gradually improving trends with new product launches, pick-up in demand and better chip availability,” it said.

Tata Motors is expected to see improved performance over the period in both JLR and SA, driven by cyclical recovery, new launches including, a better mix, cost-cutting initiatives, and deleveraging. The recent deal for PV EV has also created significant incremental value for it added with a buy rating and a target price of Rs 525.

Prabhudas Lilladher has also maintained a positive stance on Tata Motors’ volume ramp-up at JLR is expected to help revenues, and profitability and drive FCF generation aided by a strong order book. The brokerage firm has a buy rating and a target price of Rs 520 on the stock.

“Domestic traction looks good led by CV segment benefits from ongoing upcycle, operating leverage and tailwinds from lower commodity costs and discounting; and Strong momentum in market share in the PV segment driven by revamped portfolio, customer preference for SUVs and rising EV penetration,” it said.

Karur Vysya Bank
Karur Vysya Bank’s (KVB) Q3FY23 net profit of Rs 290 crore was in line with expectations. With slippages expected to be in control in the coming quarters, a strong capital position and adequate provisions being made, the bank is in a good position now to focus back on growth, said Quantum Securities.

“The bank has initiated several cost measures to bring down on-business-related expenditure and focus on productivity improvement. Valuing KVB at 1.1x its FY24E ABV we revise our price target to Rs 124 from Rs 122 earlier. We revise our rating from an accumulate to buy,” said the brokerage firm.

KVB’s Q3 FY23 profitability improved and its RoA rose 40 bps QoQ at 1.32 per cent on account of a strong operating performance, said Anand Rathi Stocks and Shares which has a buy rating on the private lender with a target price of Rs 135.

The brokerage sees improving asset quality, credit growth in the mid-teens, expanded margins and strong liquidity and capitalization as the key positives. “With credit growth expected to be in the mid-teens and moderating credit costs, earnings are expected to be strong,” it said.

Escorts Kubota
Escorts Kubota’s 3QFY23 results were weak with EBITDA and Adjusted PAT miss to street estimates. The quarter continued to witness a dual impact of RM and non-RM inflation under recoveries resulting in EBITDA margins at 8.4 per cent. Weak margins explained by production/sales timing mismatch between 2Q/3Q impacting operating leverage, lag impact of November 2022 price hikes leading to unabsorbed under recoveries of 1-1.5% and RM decline in castings/tyres were lower versus steel, said YES Securities.

“We believe it is more vulnerable v/s peers as it derives less than 80 per cent of its revenues from FES segment and aggressive expansion plans by Sonalika, TAFE, John Deere, and more to keep a tight balance between market share and margins priorities. We believe, the benefits arising out of Kubota JV to start reflecting meaningfully only over 2-3 years. We largely maintain Neutral on the stock with a target price of Rs 1,996,” said the brokerage.

Canara Bank
Canara Bank has been reporting consistent growth in net profit since the previous ten quarters. In 3QFY23, the profitability increased by 92 per cent YoY and 14 per cent sequentially on the back of lower provisioning expenses. A bulky provision made in 4QFY20, continued to safeguard the balance sheet from delinquencies out of restructuring with PCR of 68.2 per cent and PCR of 86.3 per cent, said LKP Securities.

On the asset quality front, the GNPA and NNPA ratio improved by 47 bps and 23bps respectively on the back of lower NPA addition. The bank’s recoveries are in line with the guidance and expect the credit cost to be below 2 per cent for FY23. We believe the bank is growing the balance sheet with well-adjusted margins and it is expected to bode well in the near term. Hurdles are long behind us and the bank shall witness gradual improvement in profitability, it said with a target price of Rs 349.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)
 

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