Indian markets in trade on November 12, 2021 snapped three day's weakness to end higher with maximum gains in the IT followed by Realty pack.
Nevertheless for gains in the short term, ICICI Direct has given its 'Buy' on two scrips for gains up to 23 percent.
1. Indian Hotels:
The brokerage has a 'Buy' on the hotel stock and has given a target price of Rs. 264 i.e. an upside of 23.36 percent from the last closing price of Rs. 214.3 per share. Note the buy on the scrip has been suggested for 3 months time.
ICICI Direct believes decade long breakout is symbolic of structural turnaround:
Within the hospitality space that witnessed severe disruption owing to the pandemic, Indian Hotels has emerged as the outlier as its showed decade long consolidation owing to strong volumes pointing to structural turnaround that augurs well for multi-year up trend ahead. Currently, stock is sustaining above 50 days EMA which has offered incremental buying opportunity on several occasions, since June 2020. The stock hence as per the brokerage provides fresh entry opportunity with favourable risk-reward as the unlocking of the economy would also support the brokerage's technical rationale.
Fundamental view on Indian Hotels:
The company has a good room inventory and hence commands a diversified standing in the industry with leading brands under its portfolio including Taj, Vivanta, SeleQtions and Ginger brands. Also, the company has select presence in the luxury segment at international locations. Being a strategic business division of the Tata Group, it gets significant support from its promoter company, Tata Sons. Current crisis in terms of restricting overall room availability for the next few years will be positive for Indian Hotels.
Indian Hotels posted impressive Q2FY22 results
Revenue at the company reached 72 percent of the pre-Covid level in the period under discussion,depicting healthy recovery. Domestic segment recovered to 86% of pre-covid revenues while international portfolio reached to 62% of pre-covid levels. "We expect business to recover to 97% of pre-covid levels while EBITDA to surpass pre-covid levels by FY23E; margins seen at over 24% in FY23E which has potential to further expand to 30%+", says the brokerage house.
Company plans fund-raising, divestment etc. to become debt free
The company in order to become debt-free has got the board's nod to raise Rs. 4000 crore. Now, other than improving cash flow situation, equity infusion, divestment of non-crore assets at the firm will also enable the company to become debt-free.
2. IDFC First Bank:
The brokerage firm has suggested to buy the scrip of IDFC First Bank for the target price of Rs. 62 that means an upside of 20 percent from the current price of Rs. 51.65. The brokerage has suggested to place stop loss at Rs. 46.80 and further initiate a buy on the scrip for a 3 month period.
Even after a recovery seen in the mid and small cap space, there is underperformance being seen in the financial space. Now talking in particular about IDFC First Bank it is witnessing buying interest on every decline.
During the August month, OI or open interest in the stock was at a year high. "We expect the stock to witness long additions and see fresh upsides in the coming sessions as midcap banking is in action. In the last two months, noteworthy delivery volumes increased in the stock at Rs. 47-50 levels. We expect these levels to act as important supports for the stock in the short-term. We expect the positive bias to remain intact above the said support levels IDFC First Bank is witnessing consolidation above its long term mean levels. The delivery Z-Score has again started to move into the positive territory since October 2021 as the stock is seeing fresh accumulation in the delivery segment", says the brokerage firm.
The above stocks are picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. 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.