Broking firm Sharekhan has placed a "buy" call on the stocks of Arvind Ltd and Transport Corporation of India for good returns. The brokerage sees an upside of around 29% in Transport Corporation of India and close to 28% in the stock of Arvind.
Arvind: Strong demand and recovery expected
|Current market price||Rs 96|
|Target price||Rs 128|
Sharekhan has retained a Buy on the stock with a revised price target of Rs 122. "We have reduced our earnings estimates for FY2022 to factor in COVID-led disruptions in the first quarter of FY2022 and broadly maintained it for FY2023 due to strong outlook in the textile business. In a stable business environment, the management is confident of doing sales volume of 90 million metres in the denim segment, 125 million-128 million metres in the woven segment and 48 million-50 million pieces in the garments business," the brokerage has said.
Arvind: Buy the stock with a price target of Rs 128
"Increased revenue, steady improvement in Operating Profit Margins and reduction in debt would result in strong improvement in return ratios. The stock is currently trading at an attractive valuation of 5.7 times its FY2023E EV/EBIDTA. We maintain our Buy recommendation on the stock with a revised price target of Rs 122," Sharekhan has stated.
Financial projections by Sharekhan for Arvind Ltd
|FY 2021-22||FY 2022-23|
|Revenues||Rs 5073 crores||Rs 6788 crores|
|Net profits||Rs -1 crores||Rs 70 crores|
Transport Corporation: Strong start for FY 2022
|Current market price||Rs 421|
|Target price||Rs 541|
According to Sharekhan, Transport Corporation of India is expected to benefit from the logistics sector's growth tailwinds led by GST (business moving towards the organised sector), impact of COVID-19 (increased outsourcing of logistics services to prevent supply chain disruptions in future), government thrust on Atmanirbhar Bharat (PLI incentives to increase domestic manufacturing in turn leading to increased logistics needs), and global supply chain re-alignments (India is expected to be one of the key beneficiaries of China +1 strategy for global manufacturers).
Logistics sector growth to drive Transport Corporation of India shares
"We expect Transport Corporation of India to be on a long-term growth trajectory, driven by positive sectoral fundamentals and its inherent strengths and capabilities. We have revised our net earnings estimates for FY2022E and for FY2024E factoring higher Operating Profit Margins. We retain our Buy rating on the stock with unchanged SOTP based target of Rs. 541 owing to strong growth outlook and its favorable positioning," the brokerage firm has said.
Financial projections by Sharekhan for Transport Corporation of Indoa
|FY 2021-22||FY 2022-23|
|Revenues||Rs 2,802.4||Rs 3,258.4|
|Net profits||Rs 160.2||Rs 202 crores|
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