The BSE Sensex rose 593.31 points, or 1.08 percent, to 55,437.29, while the Nifty50 rose 164.70 points, or 1.01 percent, to 16,529.10, forming a bullish candle. On a weekly scale, the index gained 1.79 percent during the week and created a bullish candle. ICICI Securities anticipates increases of up to 38 percent in Lemon Tree Hotels shares, around 20 percent in Tata Steel, and eClerx Services is expected to gain up to 22%. Investors are also advised to exercise care, as Sensex has reached a new high of 55,000 points.
Buy eClerx Services stock for a potential upside of 22%
ICICI Securities sees an upside in the stock of eClerx Services to Rs 2650, from the current market price of Rs 2172.
According to the brokerage firm, margins are expected to expand 138 basis points to 25.9%, owing to higher revenue growth offset by Personiv acquisition-related costs. Due to the return of travel and an increase in facility costs, we project FY23E margins to fall off to 24.8 percent.
"eClerx' share price has grown by ~1.4x over the past five years. We continue to remain positive and retain our BUY rating on the stock Target Price and Valuation: We value eClerx at Rs 2,650 i.e. 21x P/E on FY23E EPS." the broking firm said.
Future price-performance triggers include:
- To drive growth, get traction in customer service, RPA, analytics, content generation, and cross-sell and upsell to Personiv clients.
- Revenues are likely to be driven by lower roll offs from one-time client-specific events, improved deal wins, and a resurgence in growth.
- In FY21-23E, expect dollar revenues to expand at a 19.7% CAGR.
Buy Lemon Tree Hotels stock for a potential upside of 38%
Lemon Tree (LTHL) is India's largest hotel brand in the mid-priced market, promoted by Patanjali Keswani. ICICI Securities sees an upside in the stock of Lemon Tree Hotels to Rs 40, from the current market price of Rs 55
According to ICICI Securities, LTHL is in capex mode, it has a lot of debt on its books. In FY21, it raised money from APG to deal with the Covid-induced issue. We believe the firm is now in a better position to manage liquidity without further dilution, thanks to improved demand visibility and a lower debt repayment schedule (Rs 115 crore for FY22 and Rs 140 crore for FY23E).
"The company remains a key branded player in the high growing mid-scale segment. We retain BUY rating on the stock Target Price and Valuation: We value the stock at Rs 55 on a SOTP basis i.e. 23x FY23E EV/EBITDA," the brokerage said.
Key triggers for future price-performance:
- With the economy opening up, performance is expected to improve dramatically starting in H2FY22E.
- Due to an anticipated, 15- 18 percent decline in room supply as a result of continued stress and increased desire for branded players, the company is well-positioned to acquire the unorganized market share.
- If a new requirement occurs, the company's broad asset base, strategic alliance, and financial flexibility will continue to sustain its liquidity profile.
Buy Tata Steel stock for a potential upside of 20%
Tata Steel (TSL) is one of the most geographically diverse steelmakers in the world, with operations and commercial presence all over the globe. ICICI Securities sees an upside in Tata Steel's stock to Rs 1461, from the current market price of Rs 1750.
ICICI Securities believes that working capital, which increased in Q1FY22, is likely to decrease in the coming quarters. Indian operations steel volumes are predicted to be 1 million tonnes (MT) higher in FY22E than in FY21 (Indian operations steel sales volume was 17.3 MT in FY21).
"Tata Steel share price has grown by ~3.5x over the last 12 months. We maintain our BUY rating on the stock Target Price and Valuation: We value TSL at | 1750, based on SoTP valuation", the brokerage has said.
Key triggers for future price-performance:
- Tata Steel plans to increase its steel production capacity in India to 40 million tonnes (MT) by 2030. Both organic and inorganic approaches would be used to double domestic manufacturing capacity.
- India's share of Tata Steel's overall consolidated production capacity has climbed from 29 percent in 2010 to 57 percent in 2020 and is expected to reach 73 percent by 2030.
- Tata Steel's gross debt reduction objective for FY22E is over US$2 billion, with offshore debt payback taking priority.
Investors should certainly not take any trading and investment decision based only on information discussed in this article. We are not a qualified financial advisors and any information herein is not investment advice. It is informational in nature, which is taken from the brokerage report of Khambatta Securities. Please do consult a professional advisor. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates, author and the brokerage house do not accept culpability for losses and/or damages arising based on information in the article.