Recommendations Archives - Republic Aeon

Accumulate Hero Motocorp; target of Rs 3535: Prabhudas Lilladher

Akash Jha — Wed, 16 Aug 2023 18:04:51 +0000

We enhance our projections for FY24 and FY25 by c2% each year to account for the positive impact of the margins beat and the rise in other revenue. Hero Motocorp (HMCL) increased its EBITDA margin by c70bps QoQ, mostly due to decreased other expenses (-200bp), despite a decline in gross margins (-140bp) during the same time period. HMCL is planning to grow at a faster rate than the competition thanks to an aggressive model launch cycle across product categories and increased market share. HMCL wants to expand the availability of the Vida (EV 2W) to 100 cities by CY23, and to offer a new product beginning in FY25 and beyond. HMCL will expand its sphere of influence rapidly due to the high demand for the HD X440. We factor in a c220bps rise in margins over FY23-25E as a result of operating leverage, premiumization, cost reductions, and stable commodity costs. Important metrics to track are 1) the success of product rollouts, 2) the growth in EV sales, 3) the intensity of competition in key regions, and 4) the revival of rural markets.

Outlook

Maintain ‘Accumulate’ with a price target of Rs 3,535 (at 16x on Mar-25E standalone EPS, Rs 83 for Fincorp and Rs 78 for Ather).

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Also Read : Cello World files draft IPO papers with Sebi to raise Rs 1,750 crore

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Reduce Infosys; Rs 1,300 is the target: Sharekhan

Akash Jha — Fri, 21 Jul 2023 15:58:16 +0000

Infosys reported sales of $4617 million, an increase of 1% quarter over quarter and 4.2% year over year in CC. This figure is in line with our projections of $4613 million. The Manufacturing, High Technology, and Energy verticals were the primary drivers of sequential increase. The EBIT margins experienced a decline of 20 basis points quarter-on-quarter, landing at 20.8% as predicted. Large transaction TCV wins amounted to $2.3 billion, reflecting an increase of 11% quarter over quarter and 35% year over year. After providing prior forecast of 4-7% for constant currency revenue for FY24, management significantly reduced that guidance to be between 1-3.5%. Despite this, the management has decided to keep the operating margin forecast for FY24 at 20-22%.

Outlook

It is anticipated that Infosys will underperform industry peers like TCS and HCL Tech, which has led to a reduction in target projections. Infosys has a history of disappointing investors by providing significantly reduced revenue guidance for the current fiscal year (FY24). As a result, we are now recommending that investors SELL the stock rather than HOLD it, and we have lowered our price target for the stock to Rs. 1300. The company is currently trading at 25.3x/23.5x the estimated EPS for the fiscal year 24/25 in its CMP.

Also Read : What Is In The Money Call Option?

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Infosys – 21 -07 – 2023

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Buy CDSL with a target of Rs 1470: HDFC Securities

Akash Jha — Fri, 14 Jul 2023 06:00:29 +0000

HDFC Securities’ research report on CDSL

The growth rate of Central Depository Services India Ltd (CDSL) slowed in FY23 after two years of rapid expansion (>50% YoY in FY21-22, driven by 4/4x jump in transaction revenue/Demat accounts). The annuity stream (annual issuer charges, e-voting, and e-CAS) grew by 30% YoY in FY23, offsetting the 17% fall in market-linked revenue (transaction, IPO, and KYC (fetch)). As a result of the aforementioned factors, we anticipate that the company’s growth will pick up speed in FY24E. Specifically, we anticipate that (1) BO account addition will pick up, (2) transaction revenue will increase due to increased delivery volume, and (3) the annuity income stream will continue to rise. With a 73% market share and an 85% incremental share, CDSL remains at the forefront of the BO market. Approximately 2 million new accounts are being added to CDSL each month, increasing 46% year over year but down 36% from the peak. With a 25% market share, the insurance possibility will increase revenue by about 7%. This is an option value (regulatory push). Our revenue, EBITDA, and APAT CAGR estimates for FY23–FY26 have been revised upward to 18%, 21%, and 20%, respectively.

Outlook

We are increasing our recommendation to BUY from ADD and setting our TP at INR 1,470, or 37x June-25E EPS. The average P/E for the next three years and the next five years combined is 42x and 32x, respectively. CDSL has a Return on Equity (ROE) of 24%, Return on Invested Capital (ROIC) of 78%, a Cash Conversion (5Y Avg) of >80%, and Net Cash (INR 10.6bn, or 9% of Market Cap).

Investment gurus, brokerage firms, and rating agencies who contribute to moneypoise.com do so with the understanding that their opinions and recommendations do not reflect those of the website or its administration. Before making any financial commitments, users of Moneypoise.com are urged to seek the advice of qualified professionals.

CDSL – 14 -07 – 2023 – hdfc

Also Read : Utkarsh Small Finance reports an oversubscription due to optimistic growth projections.

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