SRF and Bandhan Bank among six buying ideas by various brokerages

Brokerages are betting on these six stocks for an upside upto 52 percent.

February 10, 2021 / 11:45 AM IST
Sensex
On February 9, after hitting fresh record highs in the early trade, Indian indices ended with marginal losses and also snapped 6-day winning streak. We have collated a list of buying ideas from the various broking houses with an upside of up to 52 percent, calculated from the closing of February 9, 2021.
Syngene International | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 584.25 | Target: Rs 700 | Upside: 20 percent. Q3 results were in-line with our estimates on all fronts. The company is currently operating at near normal capacity and is, therefore, back on the growth track. The management has maintained its guidance for double-digit revenue growth on the back of continuous client additions, an extension of existing contracts, increasing manufacturing and biological contributions besides currency tailwinds. Profitability is likely to be muted due to incremental opex and higher depreciation.
Syngene International | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 584.25 | Target: Rs 700 | Upside: 20 percent. Q3 results were in-line with our estimates on all fronts. The company is currently operating at near normal capacity and is, therefore, back on the growth track. The management has maintained its guidance for double-digit revenue growth on the back of continuous client additions, an extension of existing contracts, increasing manufacturing and biological contributions besides currency tailwinds. Profitability is likely to be muted due to incremental opex and higher depreciation.
Mphasis | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 1,649.05 | Target: Rs 1,830 | Upside: 11 percent. The company over the past few quarters has seen healthy deal win traction. This coupled with less exposure to impacted verticals, capability to mine clients effectively, market share gains via vendor consolidation, low legacy exposure, traction in Blackstone portfolio and healthy margins prompt us to be positive on the stock.
Mphasis | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 1,649.05 | Target: Rs 1,830 | Upside: 11 percent. The company over the past few quarters has seen healthy deal win traction. This coupled with less exposure to impacted verticals, capability to mine clients effectively, market share gains via vendor consolidation, low legacy exposure, traction in Blackstone portfolio and healthy margins prompt us to be positive on the stock.
Bandhan Bank | Brokerage: Emkay | Rating: Buy | LTP: Rs 328.15 | Target: Rs 500 | Upside: 52 percent. We believe that the MFI business is inherently prone to disruptions, be it political or natural adverse events. Being well cognizant of these eventualities, the bank has adopted a strategy to diversify geographically in the MFI business and venture into other products, including relatively secured mortgages, gold loans and so on. However, this transition will take time. That said, the bank has been building provisioning buffers on the back of its strong operating profitability to absorb asset quality accidents and reduce earnings volatility.
Bandhan Bank | Brokerage: Emkay | Rating: Buy | LTP: Rs 328.15 | Target: Rs 500 | Upside: 52 percent. We believe that the MFI business is inherently prone to disruptions, be it political or natural adverse events. Being well cognizant of these eventualities, the bank has adopted a strategy to diversify geographically in the MFI business and venture into other products, including relatively secured mortgages, gold loans and so on. However, this transition will take time. That said, the bank has been building provisioning buffers on the back of its strong operating profitability to absorb asset quality accidents and reduce earnings volatility.
Birla Corporation | Brokerage: AnandRathi | Rating: Buy | LTP: Rs 821.40 | Target: Rs 1,039 | Upside: 26 percent. With 15.5m-ton cement capacity across north, central and east India, Birla Corp is aiming at 25m-ton cement capacity by FY25. The ongoing expansion will keep leverage high. We believe, however, that its net debt would be in check with greater profitability on various cost-optimisation steps and greater volume growth on the ramping-up of capacities.
Birla Corporation | Brokerage: AnandRathi | Rating: Buy | LTP: Rs 821.40 | Target: Rs 1,039 | Upside: 26 percent. With 15.5m-ton cement capacity across north, central and east India, Birla Corp is aiming at 25m-ton cement capacity by FY25. The ongoing expansion will keep leverage high. We believe, however, that its net debt would be in check with greater profitability on various cost-optimisation steps and greater volume growth on the ramping-up of capacities.
SRF | Brokerage: Emkay | Rating: Buy | LTP: Rs 5,530.85 | Target: Rs 6,173 | Upside: 11 percent. SRF reported 16% yoy sales growth, missing our estimate by 5%, dragged down by lower-than expected growth in Fluorochemicals while other segments reported solid performance. EBITDA was in line with the expectation on higher-than-anticipated margin expansion in Technical Textiles and Packaging Films. Specialty Chemicals outlook has substantially improved on export demand, while better outlook in R-gas business and overall margin profile lead to an earnings upgrade.
SRF | Brokerage: Emkay | Rating: Buy | LTP: Rs 5,530.85 | Target: Rs 6,173 | Upside: 11 percent. SRF reported 16% yoy sales growth, missing our estimate by 5%, dragged down by lower-than expected growth in Fluorochemicals while other segments reported solid performance. EBITDA was in line with the expectation on higher-than-anticipated margin expansion in Technical Textiles and Packaging Films. Specialty Chemicals outlook has substantially improved on export demand, while better outlook in R-gas business and overall margin profile lead to an earnings upgrade.
Polycab India | Brokerage: AnandRathi | Rating: Buy | LTP: Rs 1,297.60 | Target: Rs 1,539 | Upside: 18 percent. We continue to be positive on Polycab due to long-term prospects in W&C, strong growth in FMEGs and its healthy balance sheet. To its FMEG business we assign a lower multiple than to those of leading players due to its smaller size and weaker operating matrices. However, a strong re-rating is possible if it delivers strong profitable growth in coming years.
Polycab India | Brokerage: AnandRathi | Rating: Buy | LTP: Rs 1,297.60 | Target: Rs 1,539 | Upside: 18 percent. We continue to be positive on Polycab due to long-term prospects in W&C, strong growth in FMEGs and its healthy balance sheet. To its FMEG business we assign a lower multiple than to those of leading players due to its smaller size and weaker operating matrices. However, a strong re-rating is possible if it delivers strong profitable growth in coming years.
Rakesh Patil
first published: Feb 10, 2021 11:45 am

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