1 financial actions and 1 health care actions to “BUY” according to the recommendations of Motilal Oswal
Buy Divi’s Laboratories at a target price of Rs 6,050
The brokerage believes that the action of Divi laboratories could appreciate up to a target price of Rs 6,050 compared to current levels, and forecasts gains of + 16%. The stock was recommended at Rs 5,205 by the brokerage house, but is trading today at Rs 4,812. According to the brokerage house, DIVI’s income increased 14% year-on-year to INR19.9b (INR20.4b est.), and the gross margin remained stable year-on-year at 67.1%. EBITDA margin contracted 180 bps yoy to 41.5% (est. 42.7%) due to higher other charges / personnel costs (up 150 bps / 30 bps in percentage of turnover).
“DIVI’s EBITDA increased 9% yoy to INR8.3b (INR8.7b est.) And PAT increased at a higher rate (15% yoy) to INR6.1b (INR6b est.) due to a tax rate 20.2% lower than 2QQ22. (v / s 25.1% in 2QFY21), “the brokerage said. According to the Motilal Oswal research report,” DIVI stocks stood at INR 26.8 billion at the end of 1HFY22 against INR17b / INR21.5b at the end of 1H / FY21 “.
According to Motilal Oswal, management stated that “DIVI recorded sales of Molnupiravir in fiscal year 2QFY22. Management stated that it may not commit more CAPEX on this product in the short term as it has built a sufficient capacity to meet future demand for this drug The company has started manufacturing the API Molnupiravir on all three production lines The generic sales split at CS was 46:54 in 1HFY22. of nutraceuticals amounted to INR1.6b / INR3.1b at 2Q / 1HFY22. “
“We are reducing our FY22E / FY23E EPS estimate by 5% / 2% to reflect some slowing in Generics segment sales and higher operational costs,” the brokerage firm said. Motilal Oswal said, “We are forecasting a 34% CAGR of profits in fiscal year 21-23E, thanks to the increased business prospects of CS and generics, the benefits of supplying Molnupiravir to the innovative, improved nutraceutical growth, new product additions in the generics segment, as well as approximately 240bp margin expansion on process and productivity improvements. ”The brokerage firm has also stated that “Our TP stands at INR 6,050 based on 36 times anticipated 12 month earnings. The Kakinada project is back on track. We reiterate our buy note.”
Buy IndusInd Bank at a target price of Rs 1400
The brokerage expects IndusInd Bank shares to hit a target price of Rs 1,400 from current levels, implying gains of 18%. The brokerage firm recommended buying the stock at the market price of Rs 1,189, but it is now trading at Rs 1,063.65.
According to the brokerage, “the impact of COVID-19 on asset quality appears to be under control as asset quality ratios have improved, with GNPA / NNPA at 2.8% / 0.8% at 2QFY22. Collection efficiency improved to 98% in September 21.. We expect this to continue to gain traction. The restructuring portfolio remains high at ~ 3.6% v / s. However, a healthy PCR (~ 72%), coupled with a provision cushion of 1.4% of loans, brings comfort. We remain vigilant on asset quality, as slippages could remain high in the short term and moderate after FY22. We estimate that the cost of credit will remain at 2.8% / 2.0% during FY22E / FY23E and moderate at 1.8% during FY24E. The brokerage said that “IndusInd Bank has rolled out its” Planning Cycle 5 “(CY20-23), in which it will focus on strengthening its liabilities, expanding its core businesses and investing in new growth drivers. She expects the loan portfolio to increase by 15-18% during FY2-223E (retail unsecured below 5%), with a CASA ratio above 40% by FY23E. We estimate the loan portfolio will increase by 17% in FY21-24E. “
According to Motilal Oswal, “Management has maintained its forecast for loan growth and credit costs as given in the 2TQF22 results. It forecasts loan growth of 16-18% and a cost of credit of 160-190bp, plus an additional 50bp for Vodafone. Thus, the forecast of the total cost of credit is 240 bp. We estimate a loan growth CAGR of 17% on FY21-24E / cost of credit of 2.8% for FY22E and moderate it to 2.0% / 1.8% for FY23E / FY24E. “
Motilal Oswal in his research report said, “The stock may come under some pressure due to unfavorable press reports and asset quality stress reported by other MFI lenders. Nonetheless, we expect the impact to be controlled. We expect a RoA / RoE of 1.8% / 15.1% in fiscal year 23E. We maintain BUY, with an unchanged TP of INR 1,400 (1.9 x 1HFY24E ABV). “
The above stocks were selected from the Motilal Oswal brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author and the brokerage are not responsible for any losses caused as a result of decisions based on the article.