Brokerage - Motilal Oswal | Rating - Buy | Target - Rs 157
Motilal Oswal has initiated coverage with 'Buy' rating on Sanghi Industries and set a target price of Rs 157, implying a potential upside of 23 percent from Monday's closing price.
Sanghi Industries is one of the lowest cost cement producers due to its quality limestone, locational advantage and strong integration across the manufacturing value chain. Its strength lies in its access to 1b tonne of quality marine limestone reserves.
The research house expects Sanghi's margins to expand by 8.4 percentaget points over FY17-20 led by commissioning of a waste heat recovery system (WHRS), focusing on coastal mode of transportation by way of acquisition of ships and favorable revenue mix with higher proportion of Portland Pozzolana Cement (PPC).
According to Motilal Oswal, Sanghi Industries is a strong re-rating candidate led by expected increase in its capacity from 4.1mt now to 8.2mt over the next 30 months and anticipated scale benefits led by diversification into new higher-priced markets.
The research house expects operating income CAGR of 33 percent over FY17-20, with improved pricing and positive operating leverage leading to 26 percent CAGR in EBITDA per tonne.
It also expects return on equity to increase by 11 percentage points to 16.8 percent in FY20, led by a sharp uptick in profitability.
Brokerage - Citi | Rating - Buy | Target - Rs 270
Citi has maintained its Buy rating on NBCC with a target price of Rs 270 per share as long-term structural advantages remain intact.
Current orderbook provides many years of revenue visibility for the company, the research house feels.
Brokerage - Edelweiss Securities | Rating - Buy | Target - Rs 1,205
Edelweiss Securities has upgraded its rating on Kotak Mahindra Bank to buy from hold with increased target price at Rs 1,205 per share (from Rs 1,056), given improved visibility on transitioning to steady-state returns profile in the near term.
"We have been positive on Kotak Mahindra Bank directional and long-term potential. And, our recent interaction with management instils confidence in the bank’s short-term prospects as well given: a) culmination of integration pangs (opex & cost); b) crystalisation of revenue synergies around the corner (loan growth likely to perk up); and c) building blocks in place for profitable scale," the research house said.
Moreover, strong tailwinds buoying financial savings businesses are icing on the cake, it added.
Edelweiss said the merger of ING Vysya Bank, though optically seemed to be inexpensive, did entail challenges including HR-related issues and stress recognition in ING's book. However, merger pangs were lower than estimated on operating expenses and asset quality fronts.
It believes integration challenges are now over and expect cost synergies to play through.
Gas companies
Citi said it has maintained Indraprastha Gas as its preferred long-term pick and Gujarat State Petronet remained its preferred near-term pick while it stayed constructive on Gujarat Gas & Petronet LNG. However, it has a sell call on Mahanagar Gas.
The research house sees material upside potential in GAIL from implementation of unified tariffs. It has retained neutral rating on GAIL on a riskier commodity-linked business profile.
Assuming 18 percent tariff hike, Citi has set a target price for the stock at Rs 510 per share while in bull case scenario, the target price is Rs 609 per share on assumption that there could be 54 percent tariff hike.
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