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1 Debt Free Gas Stock & 2 High Dividend Yield Bank Stocks To Watch Next Week

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During periods of market volatility, searching for debt-free or high dividend-yielding stocks might help you mitigate risk. As a consequence, we've chosen Gujarat State Petronet, which is a debt-free stock, and Indian Bank, which has a current dividend yield of 4.47 per cent, and Canara Bank, which has a current dividend yield of 3.36 per cent. So, let's take a look at what the brokerages are saying about the stocks and decide whether you should invest next week or not.

 

Gujarat State Petronet Ltd
 

Gujarat State Petronet Ltd

The brokerage firm Sharekhan has said in a report that "Gujarat State Petronet Limited's (GSPL's) Q4FY22 standalone operating profit of Rs. 306 crore (down 11.1% y-o-y and 9% q-o-q) missed our estimates on weaker-than-expected gas transmission volumes of 29 mmscmd (down 13.5% y-o-y; down 8.3% q-o-q) offsetting a 4% beat in the implied net transmission tariff at Rs. 1.39/scm (up 9.2% y-o-y; up 3.8% q-o-q). Weak gas transmission volume was on the account of sharp decline in volume from power/CGD/refinery & petrochem declined by 48%/13%/3% q-o-q to 1.1 mmscmd/11.3 mmscmd/8.2 mmscmd, given lower gas demand on elevated spot LNG price while volume from fertiliser sector increased by 8% q-o-q to 3.4 mmscmd. Adjusted PAT of Rs. 202 crore (down 2.8% y-o-y; down 5.3% q-o-q) was marginally below our estimate of Rs. 210 crore as miss in volume gets offsets by better transmission tariffs, lower interest costs, higher other income and lower tax rate of 22.2% (versus 25.3% in Q3FY22)."

"Regulatory tailwinds, potential higher domestic gas production and proximity to LNG terminals (27.5 MTPA re-gas capacity) make GSPL a strong long-term bet on the robust outlook for gas demand in India. We highlight here that GSPL's core pipeline business is effectively available free to investors, as GSPL's market capitalisation is lower as compared to the market value of its investment in Gujarat Gas (after assuming a 20% holding company discount). Hence, we maintain Buy on GSPL but with a revised SoTP-based price target (PT) of Rs. 328 (reflecting lower value for standalone business and subsidiary Gujarat Gas on account of lower volume growth)," claimed Sharekhan.

Indian Bank (INBK)

Indian Bank (INBK)

For the quarter ended March 31, 2022, state-owned Indian Bank revealed a 42.4 per cent drop in net profit. The net profit for the quarter was Rs 984 crore, down from Rs 1709 crore the year before. PAT increased by 31% to Rs 3,945 crore for the full financial year 2021-22, compared to Rs 3,005 crore in FY21. For FY22, the bank has recommended a dividend of Rs 6.50 per equity share of Rs 10 face value.

Following the result, the brokerage firm Motilal Oswal has said in a report that "INBK reported a steady 4QFY22, with net profit up QoQ, supported by lower provisions and tax reversal, even as the bank provided for the entire pension liability. NIM moderated, while business growth showed a healthy traction, led by Retail and Agri loans. The bank expects loan growth to improve, led by the Retail, Agri, and MSME (RAM) segment. Asset quality improved. However, elevated slippages and a higher restructured book (~4.7% of loans) keep us watchful on asset quality. We cut our FY23/FY24 estimate by ~6% each and estimate credit costs to stay at 2%/1.7%. We expect the bank to deliver a FY24 RoA/RoE at 0.8%/13.6%. We maintain our Buy rating, with a reduced TP of INR185 per share (0.5x FY24E ABV)."

Canara Bank (CBK)

Canara Bank (CBK)

Canara Bank recorded a net profit of Rs 1,666 Cr in Q4 (FY 2021-22), up 64.90 per cent year on year, and an operational profit of Rs 6,202 Cr, up 18.80 per cent year on year. Canara Bank's Net Interest Income (NII) increased by 24.84 per cent year on year to Rs 7,005 crore, while Gross Advances increased by 9.77 per cent to Rs 7,41,147 crore. The bank recorded a CASA of Rs 3,68,732 Cr, up 11.52 per cent year on year. The bank posted a standalone net profit of Rs 5,678.42 crore in FY22, up from Rs 2,557.58 crore in FY21. For the fiscal year 2021-22, the bank's board of directors has recommended a dividend of Rs 6.50 per equity share.

Following the performance of the bank, the brokerage firm Motilal Oswal has said that "CBK reported a stable operating performance supported by healthy margins, modest loan growth and strong asset quality. While corporate book saw a small decline, the bank has continued to grow RAM segment at a steady pace with contribution from all segments. Despite elevated slippages, asset quality ratios improved further underpinned by higher recoveries and upgrades. Declines in SMA overdue and restructured portfolio provide incremental comfort on asset quality trends. We estimate an RoA/RoE of 0.7%/~13% by FY24. We maintain our BUY rating with a TP of INR280 (premised on 0.8x FY24E ABV), implying 28% upside potential."

Disclaimer

Disclaimer

The stocks have been picked from the research report of multiple brokerage companies. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decisions. 

Read more about: stocks to buy
Story first published: Saturday, May 14, 2022, 18:20 [IST]
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