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Alembic Pharmaceuticals Ltd.

Valuation and Recommendation

* The total envisaged multi-year capex outlay of ~Rs 2000cr (large part in the final stage of completion) will give it a foothold in niche capabilities such as oncology injectables, ophthalmology, dermatology, etc. Heavy capex phase is likely to peak out in FY21 with a large part of commercial upside starting from H2FY22. We expect R&D and capacity scale-up to spur growth post FY22. We estimate 16% revenue CAGR on the back of strong 17.5% growth from US business while domestic business may see 9% CAGR over FY20-22E. We believe that margins may remain around 25-27% post FY21, given the higher base in FY20 and H1FY21 and competitive environment in some of the products in US. We project 14% PAT CAGR over FY20-22. This is on the back of subdued operating performance (on a high base) mainly on account of elevated other expenses (Rs. 450Cr related to preoperative expenses for new facilities) and higher depreciation expenses in FY22. Limited competition ANDA approvals and continuing shortages in Sartans remain the key near term triggers. We recommend buy on Alembic Pharma at CMP and add on dips to Rs 877-885 (16x FY22E EPS) with Target Price of Rs 1148 based upon 21.5x FY22E EPS.

Bharti Airtel Ltd.

Valuation and Recommendation

* Price competition with Reliance Jio, regulatory and technological changes, large capex and regulatory payments and adverse currency movements are key risk. However, we remain optimistic on its revenue and profitability trajectory as well as cost rationalisation efforts going forward. We feel Investors can buy the stock at CMP and add on dips to Rs. 400-403 band (6.0xFY22E EV/EBITDA) for a target of Rs. 597 (8.0xFY22E EV/EBITDA). At a CMP of Rs 452.7 stock trades at 6.5x FY22EEV/EBITDA.

Cadila Healthcare Ltd.

Valuation and Recommendations

Domestic and Wellness businesses should grow in high single digits and low-mid teens, respectively. The stabilization in the price erosion in the US generics business coupled with a strong pipeline would drive growth in the US business. It has reduced net debt by Rs 2700cr to Rs 4030cr through fund raising of Rs 1000cr (at the Zydus Wellness level) and a better working capital cycle in H1FY21. We estimate revenue CAGR of 8% over FY20-22E led by strong growth from wellness business, US market and domestic formulations. We project 150bps margin expansion led by gross margin expansion and operational efficiencies over FY20-22E. Healthy revenues, better operating performance and lower interest expenses could drive 16% PAT CAGR over the same period. At CMP, the stock trades at 22x of its FY22E EPS and ~14x EV/EBITDA. The near term uncertainties and the US FDA issues at Moraiya plant would be an overhang on the stock, until successfully resolved. We recommend buy on Cadila Healthcare at CMP and add on dips to Rs 385-393 (19.5x FY22E EPS) with Target Price of Rs 508 based upon 25.5x FY22E EPS.

Credit Access Grameen Ltd.

Valuation and Recommendations

We have envisaged growth of 31% CAGR in NII, 33% CAGR in Per Provisioning Operating Profit and 22% in Net Profit over FY20-22E on the back of fast growing nature of the company and synergy benefits from merger with Madura Micro Finance. Advance growth is estimated at ~18% CAGR over the same period. Asset Quality might deteriorate in FY21E but we feel that the situation will start normalizing from FY22E. The company is currently trading at 2.5x FY 22E P/ABV, which looking at the growth potential has room for decent upside. At the target price of Rs.797, it would quote at 3.2xFY22E P/ABV.

Gujarat Gas Ltd.

Valuation and Recommendations

Sharp rise in LNG price, changes in the regulations and marketing exclusivity are key risks. However Company plans to expand the network within existing geographical areas and is expected to report high volume growth going forward. We feel Investors can buy the stock at CMP and add on dips to Rs. 270-273 band (15.25xFY22E EPS) for a target of Rs 356 (20.0xFY22E EPS). At the CMP of Rs. 296.20 the stock trades at 16.6xFY22EE EPS.

ICICI Bank Ltd.

Valuation and Recommendations

Despite such challenging environment, we think ICICI Bank can deliver up to 11% CAGR growth in NII and 50% in net profit (due to lower base) over FY20- 22E. Margins and asset quality may remain stable over same time frame. After stake sales and QIP, capital positioning of the bank will improve significantly. ROAA is expected to improve to 1.4% in FY22E from current 0.8%. ICICI Bank will gain market share over the medium term at the cost of PSU Banks and weaker private Banks. ICICI Bank quotes at a very large discount to the largest private sector Bank. We see a scope of narrowing the difference. We have valued ICICI Bank on SoTP basis to arrive Target price of Rs.503 (1.77x FY22E core ABV of Rs.214 + Rs.124 subsidiaries value after giving 20% holding company discount).

Infosys Ltd.

Valuation and Recommendations

Taking into the consideration INR appreciation against the USD, pricing pressure, retention of the skilled headcounts, strict immigration norms and rise in visa costs concern, we remain optimistic on its revenue and profitability trajectory as well as cost rationalisation efforts with robust execution capabilities, robust balance sheet, steady growth momentum going forward. We feel Investors can buy the stock at CMP and add on dips to Rs. 1002- 1006 band (20.0xFY22E EPS) for a target of Rs 1205 (24.0xFY22E EPS). At a CMP of Rs 1094, stock trades at Rs 21.8xFY22E EPS.

Mphasis Ltd.

Valuation and Recommendations

Foreign currency fluctuation, pricing pressure and strict US immigration norms and rise in visa cost are key concerns. Its strong deal wins, healthy balance sheet and expectation of inorganic growth could bring earning visibility in medium to long term. We feel Investors can buy the stock at CMP and add on dips to Rs. 1234- 1238 band (18.0xFY22E EPS) for a target of Rs 1511(22.0xFY22E EPS). At the CMP of Rs. 1371.5 the stock trades at 20.0xFY22E EPS.

Radico Khaitan Ltd.

Valuation and Recommendations:

Radico is best placed as an attractive value play in the overall IMFL industry in India with presence in several popular and Semi premium categories. The company has consistently outperformed peers in terms of volume growth and as per management guidance - it should be net debt free by FY22. As margins improve in the future on the back of higher penetration, market share gain, premiumization and upselling of brands, we believe the company can see significant upside and recommend a buy at CMP for a target of Rs.545 valuing the company at 24xFY22E earnings.

United Spirits Ltd.

Valuation and Recommendations:

UNSP has been severely impacted by the pandemic due to the government restrictions. UNSP being the market leader is expected to recover faster than peers on the back of recovery in trade business, increase in at home consumption, festive season sales, resumption in duty free sales and benign commodity inflation. We recommend a buy on the stock at CMP and add on declines to Rs510-491 for a target of Rs645 valuing the company at 52xFY22 EPS

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