Broking firm, Motilal Oswal has listed stocks of Repco Home Finance and Kaveri Seeds to buy for investors. It expects gains of about 44% in Repco, while the gains in the stock of Kaveri Seeds could likely be 16%.
Buy Repco Home Finance for profits of up to 40%
|Current market price||Rs 314|
|Target price Rs||Rs 440|
Motilal Oswal has suggested buying the stock of Repco Home Finance at the current market price of Rs 314 for an upside target of Rs 440.
The brokerage says that the management does not foresee any significant/higher provisioning requirement if there are no new COVID waves/lockdowns in the remainder of FY22. It expects credit costs to be contained at Rs 1 billion in FY22 (with first quarter credit cost already at Rs 783 million).
The management expects 7-8% loan growth in FY22. It looks to grow the loan book to Rs 240 billion (2 times of its current assets under management of Rs 120 billion) by FY26-end.
"We cut our FY22E net profit estimate by 10% to factor in higher credit costs. We estimate a loan growth CAGR of 8% over FY21-24E and model a RoA/RoE of 2.6%/14% over FY23-24E. We have a Buy rating on the stock of Repco Home Finance with a target price of Rs 440 (1 times FY23E price to book value)," the brokerage has said.
|Current market price||Rs 615|
|Target price Rs||Rs 710|
Motilal Oswal has set a price target of Rs 710 on the stock of Kaveri Seeds, implying a 16% upside from the current levels.
"Kaveri Seeds first quarter FY22 revenue fell 12% on account of de-growth in the Cotton and Maize, offset by growth in the Hybrid Rice and Vegetables segments. Cotton seed sales volumes were impacted by lower cotton acreage and the use of herbicide-tolerant Bt (HTBt) seeds, which further impacted branded seed sales. Also, the pandemic affected the supply chain, resulting in the lower absorption of cotton hybrids by dealers and distributors and the consequent unavailability for the farmer," the brokerage has said.
According to it, the operating performance was further impacted by write-offs over government dues and the absence of operating leverage.
"Factoring in the 1QFY22 performance, we lower our earnings estimate for FY22 by 34% as 1Q contributes 70% to annual revenue. We lower our earnings estimate for FY23 by 11%, primarily due to a decrease in cotton seed sales volumes (7 million packets v/s 7.5 million earlier) as well as margin estimates for the segment.
"We value the stock at 13 times FY23E EPS to arrive at a target price of Rs 710. Maintain the stock of Kaveri Seeds," says Motilal Oswal.
The article is informational in nature, which is taken from the brokerage report of Motilal Oswal Institutional Equities. Please do consult a professional advisor before buying into any of these stocks. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and authors do not accept culpability for losses and/or damages arising based on information in the article.