VALUEGUIDE OCTOBER 2020 - SHAREKHAN
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ValueGuide
October 2020
Intelligent Investing Regular Features Products & Services Trader’s Edge
Stock Idea Report Card PMS Technical View
Stock Updates Earnings Guide MF Picks Currencies
Viewpoints Advisory F&O Insights
Sector Updates
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Disclaimer: Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T&C on www.sharekhan.com; Investment in securities market
are subject to market risks, read all the related documents carefully before investing.CONTENTS
From the Editor’s Desk ValueGuide
October 2020
EQUITY
FUNDAMENTALS
In September, the Indian
3R Stock Idea 07 REGULAR FEATURES
equity markets witnessed
Stock Idea 08 Report Card 04
some volatility, tracking
Stock Update 10 Earnings Guide 39
a similar trend in global
Sector Update 25
markets, with the threat of
a second wave of COVID-19 TECHNICALS DERIVATIVES
and uncertainties related to Intelligent Investing Regular Features Products & Services Trader’s Edge
Nifty 29 View 30
Stock Idea Report Card PMS Technical View
Stock Updates Earnings Guide MF Picks Currencies
additional fiscal stimulus in US. ...
Viewpoints Advisory F&O Insights
Sector Updates
06
For Private Circulation only www.sharekhan.com
ADVISORY DESK DERIVATIVES
MID Trades 34 Derivatives Ideas 34
PMS DESK
ProPrime - Prime Picks 33
CURRENCY
FUNDAMENTALS
USD-INR 31 GBP-INR 31
EUR-INR 31 JPY-INR 31
TECHNICALS
MUTUAL FUND DESK 35
USD-INR 32 GBP-INR 32
EUR-INR 32 JPY-INR 32
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June 2017
October 2020 3 Sharekhan ValueGuideREPORT CARD EQUITY FUNDAMENTALS
STOCK IDEAS STANDING (AS ON OCTOBER 05, 2020)
CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
COMPANY
RECO 05-OCT-2020 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
Automobiles
Apollo Tyres Buy 135 160 197 74 13.6 14.5 61.7 -17.9 12.0 7.2 24.7 -20.9
Ashok Leyland Buy 75 98 88 34 8.1 45.2 88.6 16.8 6.5 36.0 45.5 12.5
Bajaj Auto Buy 2953 3500 3315 1793 1.8 1.9 29.6 2.1 0.4 -4.6 0.0 -1.6
New Ide
Balkrishna Industries a
Buy 1451 1770 1515 678 14.6 10.6 76.2 100.1 13.0 3.5 36.0 92.7
Hero MotoCorp Buy 3129 3300 3280 1475 9.4 12.9 76.7 17.0 7.8 5.7 36.3 12.6
M&M Buy 607 750 666 246 -0.6 6.4 88.8 9.8 -2.0 -0.4 45.7 5.8
Maruti Suzuki Buy 6817 8000 7755 4002 -5.5 11.3 49.8 2.8 -6.8 4.2 15.6 -1.0
TVS Motor Buy 473 ** 503 240 7.6 15.9 78.2 19.9 6.1 8.5 37.5 15.5
BSE Auto Index 17979 19057 10141 0.1 10.4 59.9 9.2 -1.3 3.4 23.4 5.2
Banks & Finance
Axis Bank Buy 444 585 766 285 -3.1 2.4 14.2 -34.0 -4.5 -4.2 -11.9 -36.4
Bajaj Finance Buy 3380 3800 4923 1783 -3.6 8.7 50.0 -13.4 -4.9 1.8 15.7 -16.6
Bajaj Finserv Buy 5879 7500 10297 3986 -6.1 -6.4 24.7 -28.5 -7.5 -12.4 -3.8 -31.2
Bank of Baroda Hold 42 56 108 36 -10.2 -19.1 -13.5 -52.2 -11.4 -24.2 -33.3 -54.0
Bank of India Hold 41 53 80 30 -14.9 -18.2 23.7 -31.5 -16.1 -23.4 -4.6 -34.0
Federal Bank Buy 51 60 97 36 -4.0 -5.3 18.8 -40.2 -5.3 -11.4 -8.3 -42.4
HDFC Buy 1785 2113 2500 1473 -0.3 -4.5 14.8 -9.3 -1.7 -10.6 -11.4 -12.7
HDFC Bank Buy 1114 1400 1304 739 0.4 1.0 24.3 -6.2 -1.0 -5.4 -4.1 -9.7
ICICI Bank Buy 373 485 552 269 0.0 3.1 14.4 -10.4 -1.5 -3.4 -11.7 -13.7
LIC Housing Finance Hold 275 345 486 186 -6.5 -0.6 27.3 -26.1 -7.9 -6.9 -1.8 -28.9
Max Financial Buy 612 720 645 280 3.5 9.3 70.5 49.3 2.0 2.3 31.6 43.8
Punjab National Bank Hold 28 40 70 26 -16.3 -23.6 -5.5 -50.5 -17.5 -28.5 -27.1 -52.4
SBI Buy 189 280 351 150 -9.2 0.4 1.3 -24.2 -10.5 -6.0 -21.9 -27.0
BSE Bank Index 25428 37193 18430 -2.4 1.1 16.3 -19.0 -3.8 -5.4 -10.3 -22.0
Consumer goods
Asian Paints New Ide
a Buy 2027 2275 2118 1432 2.3 18.7 24.8 17.7 0.8 11.1 -3.7 13.3
Britannia Buy 3828 4200 4015 2101 2.7 5.7 35.1 29.6 1.2 -1.1 4.2 24.8
Emami Buy 351 440 407 141 -2.3 52.5 68.9 16.8 -3.7 42.8 30.3 12.5
Godrej Consumer Products Buy 753 850 772 425 15.2 6.4 34.7 12.3 13.6 -0.4 3.9 8.2
Hindustan Unilever Buy 2111 2550 2614 1756 -2.4 -2.4 -13.6 8.8 -3.8 -8.6 -33.4 4.8
ITC Buy 169 250 266 135 -10.6 -15.2 -6.7 -32.7 -11.8 -20.7 -28.0 -35.2
Jyothy Laboratories Buy 148 170 185 86 5.8 18.1 53.8 -8.1 4.3 10.6 18.7 -11.5
Marico Buy 377 420 401 234 1.8 7.0 32.8 -0.6 0.4 0.1 2.5 -4.3
New Ide
Nestle India a Buy 16040 19055 18301 12589 -2.2 -4.5 -5.8 17.9 -3.6 -10.6 -27.3 13.6
New Ide
a
Tata Consumer Products Ltd Buy 503 630 592 214 -7.6 24.0 76.8 89.5 -9.0 16.1 36.4 82.5
Zydus Wellness Buy 1831 2300 1950 1070 11.6 30.3 39.1 18.2 10.0 22.0 7.3 13.8
BSE FMCG Index 11148 12378 8491 -2.8 -1.7 3.2 -2.5 -4.2 -7.9 -20.4 -6.2
IT / IT services
HCL Technologies Buy 823 900 879 376 16.1 42.2 82.1 -23.4 14.4 33.1 40.5 -26.2
Infosys Buy 1048 1120 1124 511 13.4 37.2 63.5 32.8 11.7 28.5 26.1 27.8
New Ide
L&T Technology services a
Buy 1590 1825 1780 995 4.6 22.2 43.9 -0.8 3.1 14.4 11.0 -4.5
Persistent Systems Buy 1327 ** 1385 420 35.4 103.7 161.2 129.7 33.4 90.7 101.5 121.2
Tata Consultancy Services Buy 2707 3150 2885 1504 16.3 19.6 52.5 31.9 14.6 12.0 17.6 27.0
New Ide
Tech Mahindra a Buy 841 910 888 470 12.6 44.7 53.9 19.5 11.0 35.4 18.8 15.0
Wipro Hold 334 ** 368 160 19.9 50.0 74.1 40.9 18.2 40.4 34.3 35.6
BSE IT Index 20978 22373 10937 14.8 33.9 65.0 36.4 13.1 25.4 27.3 31.3
Capital goods / Power
CESC Buy 620 825 846 366 1.8 -2.0 37.9 -15.2 0.3 -8.2 6.3 -18.3
Finolex Cable Hold 289 360 430 165 2.4 -2.1 27.9 -21.2 1.0 -8.4 -1.3 -24.1
Greaves Cotton Hold 75 95 148 66 -4.0 -15.8 11.4 -44.7 -5.4 -21.2 -14.0 -46.8
Kalpataru Power Transmission Buy 241 325 476 170 -5.0 -5.5 35.2 -45.5 -6.3 -11.5 4.3 -47.5
KEC International Buy 344 435 359 155 4.5 19.2 117.6 29.9 3.0 11.6 67.8 25.1
Thermax Hold 724 815 1169 644 -7.5 -7.3 -0.4 -34.8 -8.8 -13.2 -23.2 -37.2
Triveni Turbine Hold 71 ** 115 46 -6.2 -17.4 23.7 -30.5 -7.5 -22.7 -4.5 -33.1
October 2020 4 Sharekhan ValueGuideEQUITY FUNDAMENTALS REPORT CARD
STOCK IDEAS STANDING (AS ON OCTOBER 05, 2020)
CURRENT PRICE AS ON PRICE 52 WEEK ABSOLUTE PERFORMANCE RELATIVE TO SENSEX
COMPANY
RECO 05-OCT-2020 TARGET HIGH LOW 1M 3M 6M 12M 1M 3M 6M 12M
V-Guard Industries Buy 168 211 260 149 -0.9 -1.3 6.2 -25.8 -2.3 -7.6 -18.0 -28.5
BSE Power Index 1661 2057 1275 -1.8 1.8 21.0 -11.9 -3.2 -4.7 -6.7 -15.2
BSE Capital Goods Index 13851 18964 9499 -0.5 3.8 26.9 -21.9 -1.9 -2.8 -2.1 -24.8
Infrastructure / Real estate
Larsen & Toubro Buy 897 1250 1491 661 -3.8 -5.7 11.9 -35.8 -5.2 -11.7 -13.7 -38.2
Sadbhav Engineering Buy 53 75 143 23 -3.0 15.8 116.5 -59.6 -4.4 8.4 67.0 -61.1
CNX Infra Index 3085 3392 2073 -2.2 -1.8 26.2 -0.3 -3.6 -8.0 -2.6 -4.0
BSE Real estate Index 1708 2565 1259 -0.6 4.0 21.7 -9.2 -2.0 -2.6 -6.1 -12.6
Oil & gas
Mahanagar Gas New Idea Buy 855 1380 1247 666 -5.6 -20.4 -0.6 -3.9 -6.9 -25.5 -23.3 -7.4
Oil India Ltd Hold 87 106 175 66 -8.9 -12.8 -3.2 -39.7 -10.2 -18.3 -25.3 -42.0
Petronet LNG Buy 226 300 297 171 -4.6 -17.7 12.9 -11.9 -6.0 -22.9 -12.9 -15.1
Reliance Ind Buy 2211 2400 2369 868 6.2 19.4 83.3 68.8 4.7 11.8 41.4 62.6
BSE Oil and gas Index 12251 15772 8724 -4.7 -7.0 14.0 -15.8 -6.1 -12.9 -12.0 -18.9
Pharmaceuticals
Aurobindo Pharma Buy 843 975 968 281 6.2 9.8 89.3 83.9 4.7 2.8 46.1 77.1
Cadila Healthcare Buy 414 500 439 213 11.9 14.2 32.5 81.5 10.3 6.9 2.3 74.8
Cipla Buy 779 875 819 357 8.7 22.8 58.4 90.7 7.2 14.9 22.2 83.6
Divi's Labs Buy 3128 3400 3388 1619 -2.2 44.7 51.5 90.1 -3.6 35.5 16.9 83.0
IPCA Lab Buy 2148 2365 2268 844 5.3 28.1 40.9 145.4 3.8 19.9 8.7 136.3
Lupin Hold 1039 1040 1122 505 12.3 18.6 48.4 55.3 10.7 11.1 14.5 49.6
Sun Pharmaceutical Industries Hold 523 575 565 315 1.9 9.0 25.4 37.7 0.5 2.0 -3.2 32.6
Torrent Pharma Hold 2826 ** 3040 1555 1.5 20.3 19.7 75.1 0.1 12.6 -7.7 68.6
BSE Health Care Index 20172 20689 10948 7.6 23.7 49.4 68.4 6.0 15.8 15.2 62.2
Building materials
Grasim Hold 751 ** 837 380 7.3 17.4 45.3 15.7 5.7 9.9 12.1 11.4
JK Lakshmi Cement New Idea Buy 262 372 389 180 1.0 -8.2 44.0 -9.3 -0.4 -14.1 11.1 -12.7
Pidilite Industries New Idea Buy 1447 1645 1710 1186 0.4 4.1 11.6 5.8 -1.1 -2.5 -13.9 1.9
Shree Cement Buy 20135 23453 25341 15500 1.7 -12.8 21.1 13.1 0.3 -18.4 -6.6 8.9
The Ramco Cements Buy 747 891 883 457 3.6 13.9 53.6 6.7 2.2 6.6 18.5 2.8
UltraTech Cement Buy 4047 5000 4753 2913 5.2 2.9 23.6 4.5 3.6 -3.6 -4.6 0.6
Discretionary consumption
Arvind@ Buy 34 43 56 19 3.3 1.8 53.5 -23.8 1.9 -4.7 18.4 -26.6
Century Plyboards (India) Buy 175 193 192 95 9.5 38.0 66.1 11.5 7.9 29.2 28.1 7.3
Info Edge (India) Buy 3487 3650 3749 1580 5.9 25.3 49.1 49.5 4.4 17.4 15.0 43.9
Inox Leisure Hold 288 ** 511 158 0.1 23.7 20.9 -11.0 -1.3 15.8 -6.7 -14.3
Relaxo Footwear # Buy 674 825 830 482 3.8 3.1 8.5 37.0 2.4 -3.4 -16.3 31.9
Titan Company Limited Buy 1195 ** 1390 720 2.4 17.8 26.2 -5.1 0.9 10.3 -2.7 -8.7
Wonderla Holidays Hold 166 ** 297 105 -8.5 17.7 23.4 -38.8 -9.8 10.2 -4.8 -41.1
Diversified / Miscellaneous
Bajaj Holdings Buy 2429 3345 3949 1472 -2.2 -8.5 22.6 -32.2 -3.6 -14.3 -5.4 -34.7
Bharat Electronics Buy 96 135 122 56 -8.9 -5.9 39.3 -7.9 -10.2 -11.9 7.5 -11.3
Bharti Airtel Buy 424 710 612 326 -17.6 -26.4 -9.7 24.3 -18.8 -31.1 -30.4 19.7
Coromandel International New Idea Buy 766 1000 838 400 4.1 2.2 51.4 87.5 2.7 -4.3 16.8 80.6
Gateway Distriparks Buy 97 110 138 71 4.5 11.1 6.3 -2.2 3.0 4.1 -18.0 -5.8
PI Industries Buy 2017 2250 2154 974 7.6 23.1 53.2 57.7 6.0 15.2 18.2 51.8
Ratnamani Metals and Tubes Buy 1262 ** 1384 716 8.7 20.4 36.8 35.0 7.1 12.7 5.6 30.0
Supreme Industries Limited Buy 1370 1549 1472 791 -3.5 18.1 67.5 15.1 -4.9 10.6 29.3 10.8
UPL Buy 507 632 618 240 2.4 10.9 56.4 -12.8 1.0 3.9 20.7 -16.0
BSE500 Index 15126 16158 9758 1.5 8.3 33.3 5.5 0.1 1.4 2.8 1.6
CNX500 Index 9516 10175 6152 1.5 7.9 33.1 5.3 0.0 1.1 2.7 1.4
CNXMCAP Index 17108 18496 10750 2.0 11.8 43.4 10.2 0.5 4.7 10.6 6.1
** Price under review @ Reco price adjusted for demerger # Reco price adjusted for bonus ^ Reco price adjusted for stock split
* Price targets will be reviewed after we get further clarity on operations from companies post Q4FY2020 result announcements.
New Idea: We have converted the existing Viewpoint under our active coverage into a Stock Idea
October 2020 5 Sharekhan ValueGuideFrom the Editor’s Desk
From the Editor’s Desk Festivities hold key to cheer
In September, the Indian equity markets witnessed some volatility, tracking a similar trend in
global markets, with the threat of a second wave of COVID-19 and uncertainties related to
additional fiscal stimulus in US. Given the global environment, the foreign institutional investors
(FII) turned sellers, offloading shares worth $731.34 million last month, as against buying of $11.14
billion in the previous four months.
Leaving aside the global cues, the month witnessed break through policy reforms along with
surprisingly encouraging economic indicators. To begin with, the government managed to push
through the farm sector bills and labour bill, 2020 in the monsoon session of the parliament.
These much-awaited reforms promise to unleash the potential of India’s agriculture sector and
makes blue-collar hiring easier for businesses.
On the macro front, high frequency data is suggesting a healthy revival in the economy. The
IHS Markit India Manufacturing PMI number rose to 56.8 in September, from 52 in August, while
services PMI data improved to 49.8 in September. The double-digit growth in power usage
and a surge in e-way bill generation and GST collections in September also suggest a healthy
recovery in the economy.
Some of the surge in manufacturing sector could be explained by pent-up demand and efforts
to build inventories for the festive season. Whether the improving trend is sustainable or not
would be tested in the upcoming festive season. Any disappointment on this front would nip the
optimistic expectations that are building up lately. Also, the onus would shift to already cash-
strapped central government to work out an extensive stimulus plan to support the economy.
Before the festive fire, all eyes are on the quarterly result season. All hopes are pinned on a
sequential revival in numbers, given that the lockdowns were eased in phases since July. Even
on an annual comparison basis, aggregate profit growth of Sensex and Nifty companies could
turn positive post the disastrous performance in the previous two quarters. Banks, pharma, IT
services and metals are expected to be the key drivers of profit growth in the second quarter.
Overall, the markets’ valuation isn’t cheap anymore on a P/E basis. However, it is still reasonable
on other parameters such as price/book value (PBV) or market-cap/GDP. Though a decent Q2
result season and a healthy demand revival in the festive season are key to sustainability of
the uptrend in the benchmark indices, there is enough scope for explore value in the broader
market at the current juncture.
Happy Investing!
October 2020 6 Sharekhan ValueGuideEQUITY FUNDAMENTALS STOCK IDEA
Nestle India Limited
Date: September 24, 2020 For every plate and palate
Reco Price
Buy PT : Rs. 19,055 Rs. 15,258
Summary
• We initiate coverage on Nestle India with a Buy rating and price target of Rs. 19,055 as it is the largest food company with strong
growth prospects, steady earning visibility and a sturdy balance sheet.
• With strong portfolio of brands the Company is market leader in seven out of eight food categories and 85% of domestic
product portfolio.
• Maggi quickly bounced back after FSSAI ban, regaining top spot (with a market share of ~60% in H1CY2019), led by re-launch
with innovative media campaigns.
• Sustained new launches (71 new products over CY2016-19), adoption of cluster-based approach and sustained strong demand
for ready-to-cook products to be key revenue drivers in near to medium term.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Nestle-Sept24_2020_3R_Stock_Idea.pdf
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.
October 2020 7 Sharekhan ValueGuideSTOCK IDEA EQUITY FUNDAMENTALS
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Sep 01, 2020 Strides Pharma Sciences Viewpoint POSITIVE - 590 22-23% -
Summary
• We initiate Viewpoint coverage on Strides Pharma Sciences with a positive view & expect an upside of 22-23%.
• Strides is well-positioned to benefit from upcoming opportunities in the US markets, with an exhaustive pipeline of generic
products across varied formats and domains.
• Growth prospects in other regulated markets too are likely to be better led by product launches, increased market share, and
portfolio optimisation.
• Considering strong topline growth and margin expansion (due to a favorable mix, operating leverage), Strides’ earnings are
expected to record phenomenal CAGR growth of 71.6% over FY2020-FY2022.
Read report - https://www.sharekhan.com/MediaGalary/Equity/StridesPharma-Sept01_2020.pdf
Sep 04, 2020 Shilpa Medicare Limited Viewpoint POSITIVE - 511 33-35% -
Summary
• We initiate coverage on Shilpa Medicare Limited (SML) and expect an upside of 33-35%.
• SML is niche API player and an emerging company in formulations. Leveraging its API capabilities, SML has forward integrated
in the high margins formulations segment.
• Favorable outlook for API, SML’s emphasis to grow the formulations segment; backed by strong product pipeline and expanded
capacities would be key growth drivers. SML’s sales and PAT are expected to post 17% and 22% CAGR over FY2020-FY2022.
• Strong growth prospects, earnings visibility, and sturdy balance sheet, reducing proportion of promoters’ pledge are key
positives and could support multiple re-rating.
Read report - https://www.sharekhan.com/MediaGalary/Equity/ShilpaMedicare-Sept04_2020.pdf
Sep 11, 2020 Amber Enterprises Limited Viewpoint POSITIVE - 1,768 28-30% -
Summary
• We initiate Viewpoint coverage on Amber Enterprises with a Positive view; expect upside of 28-30%.
• Leadership position in room air-conditioner (RAC) OEM/ODM, enhanced product offerings, customer penetration to drive
32%/60%/116% CAGR in Revenue/EBITDA/PAT over FY2021E-FY2023E.
• Atmanirbhar Bharat to increase OEM/ODM’s market share. QIP funds likely to be used in de-leveraging and growth capex.
• Backwardly integrated operations through acquisitions increases ODM share. Sidwal acquisition provides diversified sector
opportunities.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Amber-Sept11_2020.pdf
October 2020 8 Sharekhan ValueGuideEQUITY FUNDAMENTALS STOCK IDEA
Recommendation Reco Price Price Target/ Upside (%)
Date Company Report Type
Latest Chg (Rs.) Latest Chg
Sep 11, 2020 Solara Active Pharma Sciences Viewpoint POSITIVE - 978 23-25% -
Summary
• We Initiative viewpoint coverage on Solara Active Pharma Sciences (Solara) with a positive view and upside potential of 23-25%.
• Solara is a leading player in the API’s, which constitute 90% of its sales. It enjoys a leadership position in the top 10 APIs.
• Immense opportunities have emerged in the API space amidst Covid Pandemic as the industry looks for supply reliability over
pricing. Phase I of Vizag greenfield is ready & Phase II expected by FY2022. Commencement of greenfield plant provide ample
visibility for growth going ahead.
• Strong growth prospects, better earning visibility, healthy balance sheet, and improving return ratios would support P/E multiple
expansion.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Solara-Sept11_2020.pdf
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.
October 2020 9 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 01, 2020 Bharti Airtel Stock Update BUY 547 710
Summary
• We maintain to our Buy rating on Bharti Airtel with an unchanged price target (PT) of Rs. 710 as it is a solid play in the Indian
wireless industry..
• Supreme Court directed telcos to pay 10% of AGR dues upfront by March 2021 and the balance over 10 years starting FY2022.
• Bharti Airtel will have to pay ~Rs. 2,600 crore upfront in FY2021 and ~Rs. 3,500 crore annually from FY2022; we believe a price
hike is inevitable to offset the impact of AGR dues.
• We also believe that Bharti Airtel would gain as the market structure moves towards a duopoly. Further, we believe that the
valuation gap with Reliance Jio would narrow further.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/BhartiAirtel-Sept01_2020.pdf
Sep 02, 2020 Jubilant FoodWorks Limited Viewpoint POSITIVE 2,252 13-15%
Summary
• Jubilant Foodworks Limited’s (JFL) Q1FY2021 performance was affected by store closure during the lockdown and restrictions
on the dine-in business. Same-store-sales (SSS; on like-to-like basis) decreased by 47%.
• Delivery and takeaway (~70% of overall sales) businesses fully recovered and registered growth on a y-o-y basis in July and
August. SSS decline moderated to 15% in August.
• Rental savings of ~Rs. 29crore aided the company to post OPM of 6.3%. Delivery charges of Rs. 30, variablisation of employee
cost, and closure of 100 loss-making stores would help margins to remain high in the near term.
• New store additions, market share gains, and scale-up of new ventures will be key growth drivers in the near term. We maintain
our Positive view on the stock with 13-15% upside from the current level.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Jubilant-Sept02_2020.pdf
Sep 03, 2020 Sadbhav Engineering Limited Stock Update BUY 50 75
Summary
• We maintain our Buy rating on Sadbhav Engineering Limited (SEL) with an unchanged PT of Rs. 75, factoring improving
fundamentals and undemanding valuation.
• Project execution was affected severely by COVID-19. However, it improved from July onwards and Sadbhav expects normalcy
from October onwards.
• Management broadly maintained FY2021 and FY2022 revenue guidance. Its order book remains strong at over 4x FY2020
standalone revenue with receipt of new orders worth Rs. 1572 crores.
• The management expects release of promoters’ pledged shares within three months which would remove a key hangover on
the stock.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Sadbhav-Sept03_2020.pdf
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October 2020 10 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 03, 2020 Coal India Limited Viewpoint POSITIVE 136 16-18%
Summary
• We stay Positive view on Coal India and expect a 16-18% upside, as volume/earnings outlook is improving with higher power
demand, valuation of 5.6x FY22E EPS is close to trough level and the stock offers high dividend yield of ~10-12%.
• Q1FY2021 PAT of Rs. 2,080 crore was above our and street estimates due to OBR writeback of Rs. 253 crore and lower other
expenses. EBITDA/tonne above expectations at Rs. 253/tonne versus estimate of Rs. 173/tonne.
• We expect coal off-take to improve in H2FY2021E with higher power demand; blended realisations to improve with likely
restoration of 20% premium for e-auction price from October 2020.
• We expect strong earnings recovery with PAT CAGR of 17% over FY2021E-FY2023E and robust RoE of 41%-43%. Receivables
expected to decline in H2FY2021E as state-owned power gencos would receive dues from discoms.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Coal_India-Sept03_2020.pdf
Sep 03, 2020 Astral Poly Technik Limited Viewpoint POSITIVE 1,256 11-13%
Summary
• We reiterate our Positive view on Astral Poly Technik (Astral) and expect an upside of 11-13%.
• We have introduced FY2023 estimates and believe that the company will be able to deliver healthy revenue and earnings
CAGR of 12.6% and 20.0%, respectively, over FY2020-FY2023E.
• Improved demand environment and an increase in market share to enhance utilisation levels of the expanded capacities in the
piping segment. Also an increase in PVC prices is likely to boost performance in Q2FY2021E owing to inventory gains.
• Adhesive segment is expected to bounce back as strategic changes over the last few quarters having been showing positive
results.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Astral-Sept03_2020.pdf
Sep 04, 2020 Asian Paints Limited Stock Update BUY 1,956 2,275
Summary
• Construction and painting activities have re-gained momentum especially in the tier III/IV towns. Further there is an emerging
trend of consumer shifting to better quality paints (including puttys, distempers and emulsions) in the rural market.
• Asian Paints (APL), a leading player in the decorative paints segment, will benefit from the rural recovery and its volumes are
likely to grow in double digits in the near term. In metros, a gradual recovery is likely from Q3FY2021.
• Benign input prices would continue to support margins; cost savings would help OPM improve q-o-q and stabilise in Q3FY2021.
• A sturdy balance sheet, consistent dividend payouts and focus on becoming a complete home improvement player makes APL
a better pick in consumer goods space. We maintain Buy with revised PT of Rs. 2,275.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/AsianPaints-Sept04_2020.pdf
October 2020 11 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 07, 2020 L&T Finance Holdings Viewpoint POSITIVE 64 12-15%
Summary
• We interacted with the management of L&T Finance Holding (LTFH), which indicated that its retail businesses were witnessing
improving trends (on m-o-m basis) in terms of disbursements and collections.
• LTFH is exploring ways to bolster its balance sheet by various methods, including strategic business re-organization and capital
optimization, which we believe will potentially help improve its leverage position and margins.
• We have introduced FY2023E estimates and believe reasonable valuations and improving asset-quality outlook make risk
reward favorable.
• We upgrade our view to Positive and expect a 12-15% upside from present levels.
Read report - https://www.sharekhan.com/MediaGalary/Equity/L&T_Finance-Sept07_2020.pdf
Sep 08, 2020 Info Edge (India) Stock Update BUY 3,314 3,650
Summary
• We upgrade our rating on Info Edge (India) Limited to Buy from Hold with a revised PT of Rs. 3,650, given potential strong
earnings growth..
• Beat on all fronts; the company reported better-than-expected revenue performance, supported by deferred revenue; EBITDA
margin improvement aided by lower advertisement and administration expenses.
• Overall billings declined by 43.9% y-o-y, which would lead to lower revenue in Q2FY2021; however, management indicated
recovery in billings in the IT and telecom segments, which are major contributors to recruitment billings.
• With the recent fund raised through QIP, Info Edge has cash balance of over Rs. 3,300 crore, which would be largely utilised for
merger and acquisition opportunities in its core areas.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/InfoEdge-Sept08_2020.pdf
Sep 08, 2020 CESC Limited Stock Update BUY 615 825
Summary
• Retain Buy on CESC with an unchanged SoTP-based PT of Rs. 825 as valuation is attractive at 0.7x FY22E P/BV. Standalone
earnings to recover from Q2FY21 as power demand improves; turnaround of subsidiaries to improve consolidated earnings.
• Standalone PAT fell 38.2% y-o-y to Rs. 134 crore, below our estimate due to lower PLF-based incentive income as volumes fell
31% y-o-y. Better performance of subsidiaries stemmed decline in consolidated PAT at 15% to Rs198 crore.
• Performance of Dhariwal Infrastructure improved y-o-y with PAT of Rs. 24 crore versus net loss of Rs. 24 crore in Q1FY20, while
loss at distribution franchisee declined to Rs. 33 crore versus net loss of Rs. 53 crore in Q1FY20.
• Potential singing of medium/long-term PPA in FY2022E for Unit-1 of Dhariwal Infrastructure could act as a key re-rating trigger
for CESC.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/CESC-Sept08_2020.pdf
October 2020 12 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 09, 2020 Tata Consultancy Services Stock Update BUY 2,324 2,600
Summary
• We upgrade TCS to Buy from Hold with a revised PT of Rs. 2,600, given strong earnings growth potential over FY2021-23E.
• Company best-placed to leverage next transformation wave given early investments on tech spend areas, strong delivery
model, client proximity and status as preferred digital partner of large enterprises.
• Deal wins have been consistent despite COVID-led lockdown; deal TCVs at $6.9 billion in Q1FY2021.
• We expect margins to improve in Q2 on the back of possible deferral of variable compensation, continued lower spends on
travel & facilities and cancellation of marketing events.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TCS-Sept09_2020.pdf
Sep 10, 2020 Hindustan Unilever Stock Update BUY 2,135 2,550
Summary
• Hindustan Unilever (HUL) operations restored to 100% from June onwards (from 70-90% in April-May) and the momentum
continued in the subsequent months.
• Company rebuilt supply chain, launched 50 products; rationalised of SKUs to supply relevant products and enhanced capacity
of sanitisers (by 120x) and handwash (by 6x) to capture growing demand.
• HUL focuses on improving profitability through cost-savings; synergistic benefits from integration of GSK Consumer’s nutrition
business would come into play.
• Stock has correct ~9% in recent times and is trading at 46.7x is FY22E (discount to its last three-year average multiples of ~53x);
we maintain a Buy recommendation on the stock with an unchanged PT of Rs. 2,550.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HUL-Sept10_2020.pdf
Sep 10, 2020 Maruti Suzuki India Stock Update BUY 7,230 8,000
Summary
• Our channel checks indicate improving demand for Maruti Suzuki India Ltd (Maruti) with retail sales drop narrowing to 5% yoy
as compared to 20% yoy drop in July. Government unlock measures, increased preference for personal transport is leading to
improved volumes.
• With completion of inauspicious Shraddh period in mid-September, dealers expect further pick up in sales. We expect Maruti to
report positive growth on yoy basis starting with the festive season.
• Wholesale sales are expected to be better than retails due to channel inventory filling. FY22 likely to witness double-digit
growth due to normalisation of economic activity; margins to improve on operating leverage and lower discounts.
• We rollover our target multiple on FY23 earnings to arrive at PT of Rs 8,000. We retain Buy rating on the stock.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Maruti-Sept10_2020.pdf
October 2020 13 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 10, 2020 ICICI Lombard General Insurance Viewpoint POSITIVE 1,253 18-20%
Summary
• ICICI Lombard General Insurance (ICICI Lombard) outperformed peers with gross direct premium income (GDPI) growth of 11.8%
y-o-y in August 2020 (much improved from July) despite negligible contribution from crop insurance.
• ICICI Lombard outperformed the overall industry’s growth, and our interactions with management indicated that traction has
improved in Health and Auto segment, and claims ratio continues to be sub-normal, which augurs well for medium term.
• We continue to be positive on the insurance business as a sector and believe the sector has a long runway for growth.
• We maintain our Positive view on ICICI Lombard and see 18-20% upside potential.
Read report - https://www.sharekhan.com/MediaGalary/Equity/ICICI_Lombard-Sep10_2020.pdf
Sep 11, 2020 Shree Cement Stock Update BUY 19,502 23,453
Summary
• We upgrade Shree Cement Limited (Shree Cement) to Buy with anunchanged PT of Rs. 23,453,owing to a steep correction in
the stock and healthy outlook.
• Shree Cement has witnessed healthy volume growth during July and August versus industry’s production declining by double
digits during July and expected to be weak due to the dual impact of monsoon and Covid.
• We expect Shree Cement to outpace industry volume growth over FY2021E-FY2023E led by increasing capacity utilization and
addition of new capacities.
• The Pune and Cuttack grinding unit are expected to be completed by Q3FY2021. Capex for FY2021 to be Rs. 1000 crores while
new capex to be firmed up by Q3FY2021.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Shree_Cement-Sep11_2020.pdf
Sep 11, 2020 Mastek Limited Viewpoint POSITIVE 799 20%
Summary
• We stay Positive on Mastek Limited and expect a 20% upside from current levels, given strong earnings growth potential over
FY2020-FY2023E.
• Given strong growth in Oracle’s cloud applications businesses, we have increased our growth estimates for Evosys business
to 25% from 18% earlier for FY2021E.
• We see a multiplier effect in new customer acquisition, annuity type of deals, and increasing deal sizes (from $750,000-$1.5
million ticket size to $4 million-$5 million ticket size), given strong cross-sell opportunities of the combined entity.
• We expect margins to remain flat with an upward bias in Q2FY2021E, given continued lower travelling and administration
expenses and higher contribution from Evosys revenue.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Mastek-Sep11_2020.pdf
October 2020 14 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 14, 2020 Marico Stock Update BUY 370 420
Summary
• Revenue is expected to recover to mid-to-high single digits in Q2FY2021 from 3% in May-June (and an 11% decline in Q1FY2021).
• Core brands Parachute coconut oil have recovered and registered sales that is better than pre-COVID levels (in July-August);
Saffola edible oil continues to get good demand and is expected to register an 8-12% volume growth.
• Conservative ad-spends and stringent cost-saving measures would help company save Rs. 150 crore in FY2021; consolidated
OPM to remain at over 20%.
• Stock is trading at 36x its FY2022E earnings, which is at discount to large-cap stocks. We maintain our Buy recommendation
on the stock with unchanged PT of Rs. 420.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Marico-Sept14_2020.pdf
Sep 14, 2020 APL Apollo Tubes Limited Viewpoint POSITIVE - 2,677 25% -
Summary
• We initiate viewpoint on APL Apollo Tubes Limited (APL), market leader in structural steel tubes space, with a Positive view and
expect 25% upside potential.
• Demand for structural steel tubes in India to clock 10% CAGR over FY21E-FY24E, benefiting APL with potential market share
gain to 47/50% by FY23E/FY24E..
• Rising share of premium products and cost cuts to drive up EBITDA margin. Better WC management to aid FCF of Rs. 510 crore
in FY21E and make APL net cash positive by FY22E.
• APL is a strong re-rating candidate given it has branded itself as a specialty structural steel tubes manufacturer with a track
record of market share gains and robust earnings outlook (43% PAT CAGR over FY21E-FY23E, RoE of 21-24%).
Read report - https://www.sharekhan.com/MediaGalary/Equity/APL-Sept14_2020.pdf
Sep 14, 2020 Spandana Sphoorty Financial Limited Viewpoint POSITIVE 557 12-15%
Summary
• Spandana Sphoorty Financial Limited (SSFL) reported mixed results for Q1FY2021, as its operations were impacted by the
lockdown and subsequent business disruption leading to both disbursements and collections getting impacted.
• Collection efficiencies picking up on m-o-m basis are positive indicators. Collection efficiency (including moratorium) reached
92% by August 30, 2020; and ~13% of the borrowers are under moratorium.
• Factors such as well-capitalised balance sheet (53% CRAR), stable ratings, and improving collection efficiencies are positives.
Valuations at 0.9x its FY2023E BVPS are reasonable.
• We maintain our Positive view on the stock and expect 12-15% upside potential on the stock.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Spandana-Sept14_2020.pdf
October 2020 15 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 15, 2020 Godrej Consumer Products Stock Update BUY 706 850
Summary
• Reiterate Buy on Godrej Consumer Products (GCPL) with a revised price target of Rs. 850. Discounted valuations of 37x/32x
FY2022E/23E EPS to large peers, long-term growth prospects and focus on strengthening balance sheet make it a better play
in the FMCG space.
• Household Insecticides will maintain good run in domestic market led by share gains and better penetration in rural markets;
soaps regained growth momentum on improved supply and strong traction in key brands.
• Africa has recovered from lows with the region quickly exiting the pandemic situation; operational performance to be better in
Q2.
• New leadership’s focus on driving growth through faster innovations, cross pollination and shortening working capital cycle
augurs well.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/GCPL-Sep15_2020.pdf
Sep 15, 2020 V-Guard Industries Stock Update BUY 176 211
Summary
• We retain Buy on V-Guard Industries Limited (V-Guard) with a revised PT of Rs. 211, considering its reasonable valuations and
improving business operations. We have introduced FY2023E earnings.
• Market demand at 80-85% of normal in August-September, while factories are currently operating at 70-80%. The company is
set to increase inventory to cater to demand surge in the festive season.
• Launch of e-commerce exclusive products. Expect scale up in appliance revenue with key role played by the e-commerce
segment.
• Targeting acquisitions with appetite for Rs. 500 crore-600 crore acquisition size to build scale in allied products. We expect
organised players such as itself to benefit in the current tough environment.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/V-Guard-Sept15_2020.pdf
Sep 15, 2020 Cummins India Viewpoint POSITIVE - 484 23-25% -
Summary
• We initiate Viewpoint coverage on Cummins with a Positive view and expect an upside of 23-25%, given high net earnings
growth trajectory over FY2021E-FY2023E and discounted valuations.
• Strong parentage provides an edge with access to next-generation products at marginal royalties. India to remain key market
for global parent.
• Expect revenue/EBITDA/PAT to clock CAGRs of 12%/24%/23% over FY2021E-FY2023E. Average free cash flow generation of
~Rs. 400 crore per annum with strong OCF & limited capex. Return ratios to materially improve.
• National Infrastructure Pipeline investments, rising power generation requirements across sectors, onset of stricter emission
norms to create sustainable long-term growth opportunities.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Cummins-Sep15_2020.pdf
October 2020 16 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 15, 2020 Asian Oilfield Services Limited Viewpoint POSITIVE 109 25%
Summary
• Asian Oilfield Services Ltd’s (AOSL’s) PAT of Rs. 5.1 crore (versus net loss of Rs. 5.2 crore in Q1FY20) reflects execution of
overseas order in Nigeria, while contribution from domestic seismic activities was low (as expected) given monsoons.
• H1 is normally weak (Q2 being the weakest) but post monsoons, seismic activities pick up with a majority of full year’s earnings
from the segment to come in H2FY21. Hence, we expect a PAT of Rs. 36 crore (growth of 23% y-o-y) in FY21E.
• A strong order book position (seismic – Rs. 500-550 crore, Rs. 210 crore for O&M and $20 million for construction of oil & gas
facility) provide earnings visibility over FY21E-FY23E. AOSL’s bid for 6-7 seismic orders and any win could boost order book.
• Robust earnings growth outlook (expect PAT CAGR of 35% over FY21E-FY23E), strong balance sheet (NIL debt) and RoE of 22%
makes valuation attractive at 6.3x its FY23E EPS. Hence, we stay Positive on AOSL and expect a 25% upside.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Asian-Sept15_2020.pdf
Sep 16, 2020 Affle (India) Limited Viewpoint POSITIVE 3,012 18%
Summary
• We stay Positive on Affle (India) Limited (Affle) and expect an 18% upside in the next 10-12 months, given strong earnings growth
potential.
• Affle is expected to deliver strong revenue growth over the next couple of quarters, led by sharp recovery in advertisement
spends, presence in the resilient category, and continued growth in the non-CPCU business.
• Enhanced capabilities around the mobile ecosystem through acquisitions and strategic investments would help Affle to derive
benefits from higher mobile ad spends.
• Given increased spend on mobile advertising and presence in high-growth verticals, Affle is well positioned to deliver strong
26% revenue CAGR over FY2020-FY2023E.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Affle-Sept16_2020.pdf
Sep 16, 2020 Kajaria Ceramics Limited Viewpoint NEUTRAL 523 5-7%
Summary
• We stay Neutral on Kajaria Ceramics as we believe that the recent run-up in stock price factors in most recent positive
developments. Hence, we await a better entry point.
• Demand in July and August reached 80-90% of levels same period last year, as almost all dealers resumed business.
• Reduction in gas prices by Gujarat would benefit the Morbi cluster improving export competitiveness and maintaining discipline
in domestic pricing. Effect of gas price cut would be completely visible with a three month lag.
• Key overhead costs have been reduced temporarily. Receivables are improving, creditors are being paid early, while inventory
is building up with commencement of production.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Kajaria-Sept16_2020.pdf
October 2020 17 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 17, 2020 Ashok Leyland Ltd. Stock Update BUY 78 98
Summary
• Ashok Leyland Ltd (ALL) is witnessing month on month improvement in MHCV sales as economic activities pick up with the
Government opening the economy.
• We expect MHCV industry to witness stronger recovery cycle from FY22 driven by normalisation of economic activity and pent
up demand.
• With the launch of a new LCV platform, ALL has closed an important gap in its product portfolio and is expecting to double its
addressable market size.
• We expect strong 56% earnings CAGR over FY20-23 period driven by healthy volume growth and margin expansion due to
operating leverage. We retain Buy rating on ALL with revised TP of Rs 98 as we rollover to FY23 earnings.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/AshokLeyland-Sept17_2020.pdf
Sep 17, 2020 KEC International Limited Stock Update BUY 347 435
Summary
• We retain Buy on KEC International Limited (KEC) with a revised PT of Rs. 435, taking into account improving operations and
reasonable valuations..
• Execution run-rate and labour availability pick-up to ensure higher y-o-y revenue for Q2FY2021 and FY2021. Strong order
inflows YTD along with Rs. 30,000 crore-35,000 crore bidding pipeline visibility over the next three months.
• Expect 1.2x and 2.5x y-o-y rise in revenue for rail and civil in FY2021. Rail division continues faster execution, while order
tendering is likely to gain traction. YTD collections better than last year. Interest outgo contained with lower rate debt.
• Dubai unit to commence fully from Q3FY2021, ability to supply Rs. 400 crore-500 crore order p.a. Provides edge in international
orders with benefit of freight and exemption of customs duty.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/KEC-Sept17_2020.pdf
Sep 17, 2020 IndusInd Bank Viewpoint POSITIVE 617 12-15%
Summary
• We interacted with the management of IndusInd Bank (IIB) and we believe the bank is now better placed in terms of balance
sheet strength and asset-quality outlook, which is encouraging.
• Factors such as the bank’s willingness to recognise stress upfront in any loan segment before it becomes challenging to
manage and its strategy to build adequate provisions or counter cyclical buffers will be cushions and long-term positives.
• IIB currently trades at 0.9x its FY2023E book value, which is reasonable.
• We maintain our Positive view and expect an upside of 12-15%.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Indusind-Sept17_2020.pdf
October 2020 18 Sharekhan ValueGuideEQUITY FUNDAMENTALS Stock Update
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 17, 2020 Granules India Limited Viewpoint POSITIVE 364 15-18%
Summary
• We retain our Positive View on Granules India and expect an upside of 15-18%.
• Granules is witnessing strong demand traction across segments, which is expected to sustain going ahead as well.
• Revenue share of the high margin Finished Dosage (FD) segment is expected to increase to 60% over the next 2-3 years from
52% (FY2020)..
• Tapping new geographies for growth, strong product pipeline, growth in existing core molecules & capacity expansion to drive
sales growth. Favorable mix, benefits of operating efficiencies accruing would lead to OPM expansion. Granules Sales and PAT
are expected to grow at 18% / 25% CAGR respectively over FY2020-FY2023.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Granules-Sept17_2020.pdf
Sep 18, 2020 Tata Elxsi Limited Viewpoint POSITIVE 1,271 18%
Summary
• We stay Positive on Tata Elxsi Limited (TEL) and expect an 18% upside, given strong growth acceleration in Q2FY2021E.
• Though demand from the auto segment has recovered during Q2FY2021, earlier than our expectations, pricing remains muted.
• TEL’s diversification strategy is yielding results with rebalancing of revenue mix among verticals, de-risking revenue dependency
from top clients, and expansion into new geographies and vertical.
• We expect revenue growth in H2FY2021E would be better as compared to H1FY2021, led by new deal wins, addition of new
logos, anticipated recovery in the auto segment, and continued growth in the medical devices vertical.
Read report - https://www.sharekhan.com/MediaGalary/Equity/TataElxsi-Sept18_2020.pdf
Sep 21, 2020 HCL Technologies Stock Update BUY 802 900
Summary
• We maintain our Buy rating on HCL Technologies (HCL Tech) with a revised PT of Rs. 900.
• Mid-quarter update raises revenue and margin guidance for Q2FY2021, driven by better-than-expected execution, pick-up in
discretionary spends that were held up, and return of normalcy in certain pockets.
• Given strong capabilities in IMS, HCL Tech would continue to win consolidation deals with application components; The
acquisition of DWS would further expand its digital offerings, especially in the APAC region.
• With no pending IBM-IP acquisition-related payments along with limited capex obligations, we expect free cash flow generation
to improve going forward, which could lead to improvement in payout ratio.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/HCL_Tech-Sept21_2020.pdf
Sep 22, 2020 Aurobindo Pharma Stock Update BUY 799 975
Summary
• We upgrade our recommendation on Aurobindo Pharma (Aurobindo) to Buy from Hold and retain our PT of Rs. 975.
• Aurobindo is witnessing improved traction in its US business, which constitutes around half of overall sales.
• A sturdy new product pipeline, easing of pricing pressures, opportunities arising from shortage of products in the US, and
expected recovery in the injectable business would be key drivers for US business.
• Improving growth prospects, strengthening balance sheet, attractive valuations are the key positive and would support P/E
multiple expansion. A 16% correction in stock price in little over a month provides investors a good entry point.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/Aurobindo-Sep22_2020.pdf
October 2020 19 Sharekhan ValueGuideStock Update EQUITY FUNDAMENTALS
Price Target/ Upside
Recommendation Reco Price
Date Company Report Type (%)
(Rs.)
Latest Chg Latest Chg
Sep 22, 2020 Colgate Palmolive (India) Viewpoint POSITIVE 1,343 23-25%
Summary
• We re-iterate our Positive stance on Colgate Palmolive (India) and expect an upside of 23-25% in view of its leadership positioning
in toothpaste category, strong balance sheet and discounted valuation of ~41x FY2022E EPS to large FMCG companies.
• Company has maintained leadership positioning in toothpaste category with a 52% market share. It believes that it has gain
market share amid the pandemic due to a better supply chain.
• Q2FY2021 will be better than Q1 as base product (white toothpaste) is see strong recovery, while naturals category grows in
high single-digits. Toothbrushes have seen month-on-month recovery but yet to get into positive growth trajectory.
• Strong tractions to new launches including Naturals, Sensitive and Kid’s toothpaste and a sharp increase in distribution reach
(direct distribution has gone up by 30%) will help in share gains and achieve good sales volume in the medium term.
Read report - https://www.sharekhan.com/MediaGalary/Equity/Colgate-Sept22_2020.pdf
Sep 23, 2020 Tech Mahindra Limited Stock Update BUY 793 910
Summary
• We maintain our Buy rating on Tech Mahindra (TechM) with a revised PT of Rs. 910, given it is trading at a sharp discount to its
large peers.
• Revenue growth in Q2 would be driven by strong recovery in BPO business, stability around network services revenue and
growth in BFSI, healthcare, and technology verticals.
• We expect margin improvement going ahead, led by higher offshoring, reduction in subcontractor expenses, improvement in
margin profile of two large deals, and better profitability of acquired entities.
• Tech M is well placed to benefit from the expansion of 5G value chain across networks and IT services, when there is pick up
in investments by CSPs and higher 5G adoption by enterprise would happen.
Read report - https://www.sharekhan.com/MediaGalary/StockIdea/TechM-Sept23_2020.pdf
Sep 23, 2020 Alicon Castalloy Viewpoint POSITIVE 325 28-30%
Summary
• Domestic Automotive OEM volumes (75% of revenues) of Alicon is witnessing an improvement on mom basis driven by opening
up of the economy, increased preference for personal transportation. Festive outlook is positive as OEM would resort to
channel filling given low inventory.
• We expect a strong recovery from FY22 driven by normalization of economic activities and pent up demand. Execution of
recent incremental order wins from FY22 would also aid growth.
• Healthy topline growth and margin expansion due to operating leverage, better mix would result in strong 43% earnings CAGR
over FY20-23.
• We rollover our multiple on FY23 earnings. We retain positive view and expect 28-30% upside. P/E of 8.7x FY23 earnings is
lower than long-term historical average.
Read report -https://www.sharekhan.com/MediaGalary/Equity/Alicon-Sept23_2020.pdf
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