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2 Shares To Buy From ICICI Securities For Upto 19% Gains

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Weak sentiments across the globe have led the indices lower for the second day in a row. At the time of writing this copy, Nifty was hovering near 15,600 mark, a significant drop of another 1 percent in trade today. Other than the weak global cues, metal, auto and IT pack dragged the markets lower.

 

Now as markets have corrected a substantial bit, here are 2 stock picks by ICICI Securities from IT and metal space which are to shine further in future course:

1. Larsen and Toubro Infotech:
 

1. Larsen and Toubro Infotech:

The software major L&T Infotech is into offering application development, IMS, digital solution services to BFSI, retail, health, media & hi-tech verticals. The company in its clientele list has 71 Fortune-500 clients with presence in North America & Europe. LTI has grown at 14% CAGR over FY18-21 with robust margins ~19%.

Robust financials for the first quarter of FY22

- Dollar revenues increased 5.1% QoQ to US$470.2 million

- EBITDA margin declined 318 bps QoQ to 18.7%

- Declared a dividend of Rs. 10/share

ICICI Direct Report recommends investors to do this on L&T Infotech scrip

LTI share price has grown by ~6x over the past five years (from ~Rs. 692 in July 2016 to ~Rs. 4288 levels in July 2021).

We remain further positive and retain our BUY rating on the stock

Target Price and Valuation: We value LTI at Rs. 5065 i.e. 35x P/E on FY23E EPS

Digital Prowess, Fortune 500 clients in its kitty a big positive for the company

- LTI's ability to deliver end-to-end solutions to help in registering industry leading growth.

- Ability to win large deals, presence in niche verticals, effectively mineclients, adding Fortune 500 clients, and digital prowess other key drivers. We expect LTI to• register 18% CAGR in FY21-23E, said the research report.

ParticularsAmount
Market Capitalisation (in crore) 75279
Debt in Rs crore (FY21) 41
Cash & Cash Eq. in crore (FY21) Rs. 4388 crore
EV (in crore) 70933
52 Week H / L 4600/ 2199
Equity Capital ( crore) 18
Face Value 1

2. Tata Metaliks

2. Tata Metaliks

Tata Metaliks (TML) is a subsidiary of Tata Steel, which was established in 1990. TML has manufacturing facilities at Kharagpur, West Bengal.

Net cash position in its balance sheet

India which produces pig iron and ductile iron (DI) pipes.By Q4FY23, TML would double its DI pipe capacity to 4 lakh tonnes. TML has healthy cash flow and strong balance-sheet. It is one of the few players in the steel pipe sector having net cash position in its balance sheet.Q1FY22

Results: TML reported a healthy operational performance in Q1FY22 wherein it reported its best ever quarterly profits.

- Reported revenue of Rs 603 crore, up 187% YoY but down 9% QoQ.

-EBITDA was at of Rs. 154 crore (vs. Rs. 143 crore in Q4FY21, Rs. 10 crore inQ1FY21). EBITDA margin was at 25.5%, up 380 bps QoQ, 2060 bps YoY. Ensuing PAT was at Rs. 95 crore (up 26% QoQ)

What should investors do?

Tata Metaliks share price has grown by ~3.7x over the past five years (from ~Rs. 340 in July 2016 to ~| 1265 levels in July 2021).

- We continue to remain positive and retain our BUY rating on the stock

Target Price and Valuation: We value TML at | 1475 i.e. 7x FY23E EV/EBITDA

Jal Jeevan Expansion, work to expand capacity will boost future price performance

The first phase of DI pipe capacity expansion (of ~1 lakh tonne) is likely to be commissioned in Q4FY22. Second phase is likely to be commissioned in Q4FY23 (of ~1 lakh tonne). Post commissioning of both phases, TML would double its DI capacity from 2 lakh tonnes currently to 4 lakh tonnes

One of the key beneficiaries of Jal Jeevan mission

In the next few years, TML would reap benefits of capacity expansion, which would result in healthy cash flows for the company

ParticularsAmount
Market Capitalisation (in crore) 4004
Debt in | crore (FY21) 10
Cash & Cash Eq. in crore (FY21) 192
EV (in crore) 3822
52 Week H / L 1374 / 462
Equity Capital ( crore) 32
Face Value 10

Disclaimer:

Disclaimer:

These 2 stock picks are from ICICI Direct Research report, investors need to do their own analysis and research before betting on any of the stock. Herein the brokerage recommendation should not be construed for investment advice.

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