Bandhan Bank, SBI Card, Britannia Industries and Route Mobile are among the stocks which got brokerage upgrades/initiations today. Of these, barring Bandhan Bank, the other three have ‘buy’ ratings from analysts. Bandhan Bank has received ‘Hold’ rating from Motilal Oswal Securities, which believes that downside is limited for the stock following a recent 30 per cent correction.
Bandhan Bank | Motilal Oswal | target Rs 270
Motilal Oswal said Bandhan Bank is taking it on the chin as the bank steadily cleans up its balance sheet with an EEB stress pool of Rs 9,500 crore in Q2FY23 from a peak of Rs 19,500 crore in 2QFY22, while its restructured book is fully has been dissolved. Told. Motilal Oswal said the SMA book though remains high, has come down to 13.1 per cent from the peak of 37.1 per cent in Q1FY22.
“While the bank is taking a healthy coverage which includes potential recoveries, any time mismatch in recoveries could severely impact the credit cost trajectory and provisions could be kept high as a major chunk of recoveries is expected in 4QFY23/1QFY24 is likely to exceed,” it said.
The brokerage has cut its FY23 and FY24 PAT estimates by 18 per cent and 12 per cent, respectively, and revised its target price on the stock to Rs 270. Motilal Oswal said it remains ‘neutral’ on the stock as it awaits greater clarity from Q3FY23 results, even as it believes that after the recent 30 per cent correction, the downside for the stock is limited .
Britannia Industries | Nuwama Institutional Equities | target Rs 5,090
Nuwama Institutional Equities said there is growing appetite for paneer business in Britannia. The company has formed a joint venture with French cheese major Bel SA (Bel), a large global player with presence in more than 120 countries. Bell is already present in India through its marquee brand ‘The Laughing Cow’ (small in size; we assume Rs 15-20 crore). Nuwama said importantly, the joint venture gives Britannia access to technological know-how, innovation and expertise.
“We believe the joint venture fits in well with Britannia’s growth plans. While the company dominates biscuits, its presence in cheese has been sub-scale (through outsourcing). Plus the deal allows Britannia to replicate its biscuits.” template to dominate mid and premium cheese in India and a few more markets. Maintain ‘Buy’ with a target of Rs 5,090,” it said.
SBI Card | MK Global | target Rs 1000
MK Global has initiated coverage on SBI Card with ‘Buy’ rating. MK said India’s credit card-base is set to double to 74 million in March 2022 from 37 million in March 2018, despite Covid-induced disruptions and rising competitive intensity from alternative payment/credit products. It is now at an all time high of 7.9 crore (active base). Cumulative-expenditure (7MFY23) growth stood at 58 per cent YoY, indicating strong underlying growth streams.
“We expect the overall industry cards-in-force (CIF) CAGR to be 17 per cent and spends to post near pre-Covid CAGR of 32 per cent in FY22-25E. SBI Cards is India’s second largest credit Card issuer with 19.1 percent market share of current cards [CIF] as of October 22, and ranks third in terms of spending with 18% market share. We expect SBIC to also register a strong CIF CAGR at 18 per cent, and spend CAGR of 30 per cent in FY 22-25E, thus largely retaining its market share. Beyond FY25, we expect SBI Cards to maintain spend-share at 18 per cent, and FY25-35E CC-spend CAGR in the mid to high teens,” said MK.
MK sees RoE for SBI Card to remain resilient at 25-26 per cent over the course of the cycle, despite a possible softening in interchange fees (ICF). The brokerage has a March 2024 target price of Rs 1,000 per share for the stock.
root mobile | Nuwama Institutional Equities | target Rs 1,769
Nuwama said she spoke with Gautam Badaliya, CSO of Root Mobile (Root), to delve into the company’s key strategies and outlook. It said highlights included revenue growth of over 60 per cent led by geographic, product.
and Wallet-Share expansion in existing territories. Route Mobile said that the omni-channel capabilities and global footprint in CPaaS provide a plethora of cross selling and upselling opportunities. The company may look at bolt-on acquisitions to expand into new solutions.
“The need for enterprises to digitally connect with their customers is greater than ever and Route is a key beneficiary. We expect Route to grow 34.4/36.7 per cent revenue / revenue during FY22-FY25E on the back of strong execution. Earnings will achieve CAGR.” Buy with TP of Rs 1,769”.
