Brokerage firm Sharekhan has a buy call on the stocks of IPCA Laboratories and Petronet LNG. The brokerage sees gains of nearly 23% on the stock of Petronet LNG and around 11% Gains on the stock of IPCA Laboratories.
Stocks to buy from Sharekhan
|Name of the fund||Current market price, Sept 13||Target price||Gains %|
|Petronet LNG||Rs 231||Rs 285||23.39%|
|IPCA Labs||Rs 2,556||Rs 2,850||11.00%|
Why to buy the stock of Petronet LNG?
According to Sharekhan, Petronet LNG's Dahej terminal utilisation is likely to recover to near full utilisation in Q2FY22 as demand for contracted LNG (available at half of spot LNG price) is believed to have picked up and shift of volume from Dabhol LNG during the monsoon.
"Petronet LNG has a strong balance sheet with net cash position of Rs. 5,705 crore (or 16% of current market capitalisation) as on March 31, 2021, and we expect it to generate free cash flow (FCF) of Rs. 3,000 crore (yield of 9%) annually. In the absence of any significant capital expenditure (cumulative capex of Rs. 1,500 crore-1,700 crore over FY2022E-FY2023E), Petronet LNG may reward shareholders with higher dividend (FY2021 dividends per share of Rs. 11.5/share)," the brokerage has said. Hence, we maintain Buy on Petronet LNG with an unchanged price target of Rs. 285," the brokerage has said.
Buy the stock of IPCA Laboratories, says Sharekhan
According to Sharekhan, IPCA laboratories domestic formulations business is on a strong footing and is expected to be a key growth driver with a likely double digit growth for FY22.
"Over the long term, IPCA's API segment growth would be driven by easing capacity constraints due to the commissioning of Dewas greenfield, which would add on 25% of the capacity. The Ratlam expansion is expected to be ready by 2HFY22. IPCA has lined up a capex of Rs. 400 crores over next 2-3 years and this provides comfort on the future growth prospects," the brokerage has said.
"IPCA's presence in the fast growing therapies coupled with positive rub off effect of a strong IPM growth could be the key drivers for domestic formulations business. For the Active Pharma Ingredients segment, completion of Dewas greenfield (expected to add 25% of capacities) by FY2023 and a strong demand outlook would be the key drivers. At the current market price the stock trades at 27.2x /24.1x its FY22E and FY23E EPS. Strong earnings prospects, a sturdy balance sheet, and healthy return ratios augur well for IPCA Laboratories. We maintain Buy recommendation with a revised price target of Rs 2850," Sharekhan has said in its research report.
The article is informational in nature, which is taken from the brokerage report of Sharekhan. Please do consult a professional advisor before you invest in equities. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates, the brokerage house and the author do not accept culpability for losses and/or damages arising based on information in the article. Markets have run-up sharply and hence investors should exercise some caution.