Broking firm, Motilal Oswal has recommended buying the stock of Deepak Nitrate, while Anand Rathi has listed the stock of HPCL in their recent reports. Here are some the reasons according to the two brokerage houses for buying into the stocks.
Buy HPCL for a price target of Rs 306
Anand Rathi remains optimistic on the stock of HPCL and has a target price of Rs 306 on the stock as against Monday's closing price of Rs 245.
HPCL recorded a Profit after Tax of Rs 20.04 billion compared to Rs 22.53 billion lower by 11.0 % for the same quarter last year due to a planned shutdown of the refinery, some on the industrial products which they directly supply from the refineries and an exchange rate loss.
According to Anand Rathi, HPCL commissioned another 142 new retail outlets were opened during the quarter taking the total retail outlet network to 18,776. CNG facilities were added to another 50 retail outlets. "With this, now 724 retail outlets have got CNG facilities. Almost 25% of total network is solarize, it works on solar power now, which is around more than 5,000 retail outlets. In order to provide multiple choices to the customers for their energy needs, HPCL has entered into a strategic partnership with Tata Power, India's largest integrated power company, to provide EV charging at its petrol pumps in various cities and major highways," the brokerage has said.
"We have a positive outlook on HPCL given its earnings growth visibility on the back of its capex plans and improvement marketing margin environment. Company also is doubling its existing capacity at Visakh and Mumbai refinery, this will drive the earnings for its refinery business. We value HPCL at 6X FY23 EPS and maintain our BUY rating on the stock with revised target price of Rs 306," Anand Rathi has added.
Buy Deepak Nitrate, says Motilal Oswal
Motilal Oswal has a buy on the stock of Deepak Nitrite, which is an intermediate chemical company, with a diversified business of Basic Chemicals, Fine and Specialty Chemicals, and Performance Products. It manufactures phenol, acetone and isopropyl alcohol (IPA)
through its subsidiary, Deepak Phenolics (DPL).
According to Motilal Oswal, Deepak Nitrate has the most lucrative profile in the entire Specialty Chemicals space. The management said it would facilitate import substitution, with further integration in current processes. The commissioning of IPA expansion and the captive power plant are expected by the end of 1HFY22.
"The captive power plant would increase competitiveness in this segment. A recovery in demand in OBA and DASDA (i.e. Performance Chemicals) is expected over FY22, while demand for Agrochemical and Personal Care products continue to remain robust.
Despite a capex plan of Rs 18 billion over the next three years, it is expected to turn net cash positive by FY23E, with an FCF generation of Rs 17.4 billion over FY22-24E. We maintain our Buy rating, with one of the best RoE profiles in our coverage universe," the brokerage has said.
Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage houses are not liable for any losses caused as a result of decisions based on the article. The above article is for informational purposes only and is picked from the brokerage reports of Anand Rathi and Motilal Oswal. Be careful while investing as the Sensex has now crossed 55,000 points. Investors can invest small amounts and avoid putting lumpsum.