This tariff increase undertaken by GPPL is much more comprehensive vis-e-vis only specific increases undertaken in the last 2 revisions.
For container cargo, the blended tariff hike is likely to be 6-7 per cent factoring some impact of discounts/rebates etc. likely to be negotiated by customers. Port this increase, headline container tariffs at GPPL would still remain at 15-20 per cent discount to that of Mundra.
GPPL’s recent decision to invest in growth capex (subject to clarity on extension of the concession period) reflects a renewed commitment of the parent in the asset. We maintain our Buy rating on GPPL with a revised price target of Rs96.
Dr. Reddy’s Ltd — Hold
Recommendation by Emkay Global Financial Services
DRRD’s settlement terms for Revlimid look better than Alvogen but lag Natco’s terms, in our view. However, with volume caps in place, the market opportunity will remain lucrative for all settled players with very limited price erosion.
With strong near-term drivers, DRRD’s outperformance should continue. We raise our TP to Rs 5,325, valuing the stock at 25x Sept’22E EPS (vs 25x Jun’22E EPS earlier) and adding another Rs333 NPV. Move to OW in EAP from EW earlier.
Amber Enterprises India Ltd-Hold
Recommendation by Emkay Global Financial Services
Amber recently concluded a QIP of Rs 4 billion to fund its expansion plans, including two greenfield plants for components (both AC and non-AC) and finished goods. The purchase of the residual stake (20 per cent) in Sidwal Refrigeration will also be funded from this.
Government’s increased focus on self-reliance and potential import duty increase through a phased manufacturing program, should benefit domestic firms. Despite healthy RAC volume growth over the years, the component manufacturing ecosystem is a missing link.
We bake in capacity expansion benefits from FY23 with optimistic revenue assumptions. We value Amber 25x on FY23E EPS to arrive at a revised TP of Rs2,140 and retain Hold rating. RAC industry growth trends and timely execution will be the key monitorables.
Hindustan Unilever-Buy
Recommendation by Motilal Oswal Institutional equities
There is no change in our forecasts. Staples appears to have remained resilient, and demand in the Discretionary category seems to be recovering.
The company’s earnings growth has gained further momentum in recent years (17 per cent EPS CAGR in the past three years v/s 12% CAGR over 10 years). This is particularly impressive given the weak mid-single-digit earnings growth posted by (much smaller) peers in recent years. HUVR’s best-of-breed analytics and execution ability (exhibited by the successful implementation of the WIMI strategy, cost-saving plans, herbals, etc.) are key factors driving the pace of earnings growth.
We remain positive on HUVR from a medium-term perspective, encouraged by: (a) robust earnings growth potential beyond the near term owing to its portfolio and execution strengths and (b) significant synergies in FY22E as a result of GSKCH. These factors suggest premium multiples are likely to sustain. Valuing the company at 55x Sep’22 merged EPS, we arrive at TP of Rs 2,670, implying 25 per cent upside.
Credit Access Grameen Limited (CAGL)-Buy
Recommendation by Geojit Financial Services Ltd
Credit Access Grameen Limited (CAGL) is one of the leading Microfinance NBFCs in India with high focus on Group lending and Retail finance with majority of its operation in South India. The growth of the microfinance industry in India is a huge opportunity for NBFC MFIs as 41 per cent of households in the country do not avail any banking services.
We expect Net Interest Income to grow at 33 per cent CAGR over FY19-FY22E driven by acquisition of Madura microfinance. Acquisition of Madura microfinance will strengthen the market leadership position of CAGL and diversify its geographic presence. Although 100 per cent customers took moratorium for three months, 75 per cent to 80 per cent have started repayments, as rural areas were less impacted by lockdown.
We expect PAT to grow to Rs 745 crore in FY22E at 32 per cent CAGR over FY19 to FY22E. We value CAGL at 2.9x on FY22E Adj. BVPS and arrive at a target price of Rs 824 crore and recommend ‘Buy’ rating.
ABFRL — Buy
Recommendation by Motilal Oswal Financial Services Ltd
ABFRL’s execution over the last few years has been outstanding. Furthermore, management has shown remarkable efforts toward cost control at a time when earnings are muted.
JK Cements — Buy
Recommendation by Motilal Oswal Financial Services Ltd
JKCE is best placed in the industry to benefit from the robust north India market as it is the only company with a new integrated capacity in the region. The expansion improves its regional mix in favour of north/central India as well as helps it move down the cost curve.
Tata Power-Buy
Recommendation by Motilal Oswal Financial Services Ltd
Divestment-related measures and the infusion of INR26b from promoters would continue to aid debt reduction.The approval of a tariff hike at Mundra, possible benefits from the merger of CGPL & Tata Power Solar with TPWR, and favorable InvIT valuations provide upsides
Ashok Leyland-Buy
Recommendation by Motilal Oswal Financial Services Ltd
Unlike the previous cycles, AL is on strong footing with lean cost structure and negligible debt. AL seems to be in a better position to emerge stronger and grow faster than the industry over the next 2-3 years.
Dr. Lal Pathlabs-Buy
Recommendation by Motilal Oswal Financial Services Ltd
Dr. Lal PathLabs is a provider of diagnostic and related healthcare tests and services in India. DLPL remains confident of its brand power, service quality, high-end test capability, network of collection centers and ability to drive volume growth and profitability.
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