Weekly Stocks Recommendations - Attractive investment opportunities By Choice Broking
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Cipla – Buy, CMP – Rs828
* Cipla net profit jumps 113% YoY to Rs 748 crore ; revenue rises 18% YoY in Q3
* Revenue up by 22% YoY in India and 6% YoY in the US. Cipla also posted strong numbers in emerging markets and Europe.
* Continued measures on cost optimisation boost EBIDTA margin to 24.8% in Q3
* New product launches and gradual shift from the loss making segments include HIV to boost formulations exports.
* At CMP of Rs828, Cipla’s stock is trading at P/E of 17.8x on FY23E basis compared to TTM P/E of 36.3x.
Larsen & Toubro – Buy, CMP – Rs1,335
* L&T received mega orders in infrastructure segment. Order inflow up by 76% YoY at Rs73,233 cr in Q3FY21.
* Execution gradually regaining ground amid economic recovery
* Improving collections aiding working capital, cash flows
* At CMP of Rs1,335, the stock is trading at P/E of 27x on standalone FY23E basis.
Hindalco Industries – Buy CMP – Rs226
* Hindalco posted a healthy set of operation performance in Q2FY21 with above estimate EBIDTA margin and PAT growth
* Hindalco’s wholly-owned subsidiary Novelis is getting strong business traction due to demand recovery key user industries like auto, home beverage consumption, building & construction, etc
* Deleveraging will remain key focus area; FCF generated by the company will be primarily utilised to repay its debt.
ITC – Buy, CMP – Rs203
* ITC reported significant growth in FMCG segment and company expects hygiene product Savlon sales to reach Rs1,000 crore by FY21E.
* During Q2FY21, cigarettes volume declined by 12% YoY due to lockdown disruptions. The mgmt expects cigarettes segment business to improve as economy has largely opened up.
* At CMP of Rs203, the stock is trading at P/E of 14.9x on FY23E basis compared to TTM P/E of 18.2x.
Power Grid – Buy, CMP – Rs184
* Power Grid Corporation is engaged in the power transmission business. Revenue segments include transmission, telecom and consultancy.
* Power grid has strong business pipeline, expect business to post strong growth in FY22. Demand for power will continue to drive the need for transmission works.
* At CMP of Rs184, stock is trading at P/E of 7.7x on FY22E basis v/s TTM P/E of 8.7x.
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