Given the fundamentals, financial results, earnings visibility and various other parameters, brokerage houses from time to time may downgrade or upgrade a given scrip. Now, as the first quarter of the FY22 has passed there are other aspects such as MF buying or reducing their stake in the given scrip, FIIs also similarly influencing these scrips, considering these and other factors, here are listed few scrips which have seen an upgrade together with target price revision.
3 Shares to Buy now that have been recently upgraded with their price targets
|Scrip||Brokerage||Upgrade||LTP||Target price||Price at the time of Reco|
|SAIL||ICICI Securities||Buy||Rs. 126||Rs. 160||Rs. 130|
|ONGC||Geojit Paribas||Buy||Rs. 119.65||Rs. 145||Rs. 118.45|
|Balaji Amines||CD EquiSearch||Buy||Rs. 2821.15||Rs. 3613||Rs. 2670.25|
1. Steel Authority of India:
ICICI Securities has placed a 'Buy' call on the scrip of Steel Authority of India at a price of Rs. 130 ( the price at the time of recommendation). The brokerage sees the target for the scrip at Rs. 160 i.e. an upside of over 28% from the last traded price of Rs. 124.8.
"SAIL has adopted a focused approach on improving its volume, improving its operational efficiencies, operating the facilities at optimum levels, deleveraging its balance-sheet, etc.
In line with its focus on reducing the borrowings. SAIL has reduced its net debt by Rs. 16200 crore in FY21. Going forward also, we expect SAIL's net debt to further reduce by Rs. 6800 crore, over the next couple of years. We model sales volume of 17 MT for FY22E and 19 MT for FY23E. We value the stock at 5.5x FY23E EV/EBITDA and arrive at a target price of Rs. 160 (earlier Rs. 130). We maintain our BUY recommendation on the stock", said the brokerage firm in its report.
SAIL has been among the top companies which have reduced debt substantially by as much as Rs. 18,551 crore in the FY 2020-21 and this has been aided by increase in steel prices.
The scrip of SAIL last traded at a price of Rs. 126 per share on the NSE.
Geojit Paribas has given a 20.88% upside for the stock of ONGC i.e. a key oil drilling and exploration company of India. The target price seen for the scrip is Rs. 145 and at the time of stock recommendation, the stock quoted at a price of Rs. 118.45.
Rationale for the Buy on ONGC as suggested by Geojit Paribas:
With sharp recovery in crude oil prices in FY21, we expect the segment to witness further growth in coming quarters. Upward revision in Gas prices and any improvement in demand scenario should boost the performance further. Therefore, we reiterate our BUY rating on the stock with a revised TP of Rs. 145 based on SOTP valuation, said the brokerage in its report dated June 29, 2021.
"Considering the full recovery in crude volumes and realization, ONGC's topline performance now largely depends on movement in gas prices and its offtake. Revenue growth from Natural gas and Value-Added products is expected to improve as the impact from partial lockdowns mitigates. Also, possible hike in natural gas prices could drive the performance further", added the brokerage.
The company's standalone revenue registered a decline of 1.2 percent YoY to Rs. 21,189 crore owing to lower realization as well as weak demand. Nonetheless, EBITDA improved owing to lowering of material costs as well as other expenses. PAT also registered a 144.6% YoY increase.
3. Balaji Amines:
CD Equisearch has given a Buy recommendation for this specialty chemicals company scrip of Balaji Amines At the time of recommendation, the price of the scrip was at Rs. 2670.25, while the suggested upside is Rs. 3613, an upside of over 28%.
The company is a specialist in the manufacturing of Methylamines, Ethylamines, Derivatives of Specialty Chemicals and Pharma Excipients. Also the company is into manufacturing of derivatives that are downstream products for various Pharma /Pesticide industries apart from user specific requirements.
"The stock currently trades at 25.5x FY22e EPS of Rs. FY23e EPS of Rs. 105.4and 22.3 xFy 23e EPS of Rs. 120.44. ROE would improve to 32.7% in FY22 and 28% in FY23. Growth in the coming years would barely stymie not least due o planned debottlenecking of acetonitrile plant, increased capacity utilizations of both DMF and newly unveiled ethylamine plant. The strong demand for EDA shall also have a larger role to play. Better negotiating power and economies of scale arising out of future investments will improvise the company's cost structure and provide it with necessary economic moat. Free cash flows would rise not unremarkably this fiscal largely due to record profits. we retain our buy rating on the stock with revise target of Rs 3613 (previous target: Rs 1104) based on 30x FY23 earnings", said the brokerage report.
The scrip of Balaji Amines last quoted at a price of Rs. 2821.15.
4. Vardhman Special Steels
ICICI Securities has set out a target price of Rs. 300 for this medium and small steel entity, i.e. sees a potential upside of over 19 percent.
VSSL is currently in a sweet spot on the back of a) recent price hike received from OEMs, b) receipt of the long-awaited environmental clearance (EC),which has cleared the pathway for expansion plans, c) good demand from the user industry segment. On the back of healthy operating environment,we remain positive on the stock. On the back of recent price hike received by the company from OEMs, we upward revise our estimates both for FY22Eand FY23E. We value the stock at 7.5x FY23E EV/EBITDA and arrive at a target price of Rs. 300 (earlier Rs. 240). We maintaining BUY recommendation on the stock, said the brokerage in its report.
5. Indian Hotels
Ever since the economy has again opened up after the second wave it is expected that the hospitality industry shall rebound. Furthermore, to give a boost to the ailing sector, Sitharaman as part of the stimulus has extended credit support for the beleaguered sector.
Indian Hotels that in Friday's trade has been trading at Rs. 148.2 has been given a buy recommendation by Motilal Oswal in its report dated July 7, 2021. Target price set out by the firm is Rs. 180 i.e. an almost over 18 percent upside.
"IH recorded the highest number of new Hotel signings and openings in the industry during CY20, with 17 signings and seven new Hotel openings. It generated a revenue of INR2.2b from management contracts, which it intends to take to INR3.5b. It is to be noted that EBITDA flow through in management contract income is 70-80% and that too without deploying capital, thus the said initiative is RoCE
accretive, said the report.
"While FY21 earnings are weak, we expect a sharp recovery in FY22E/FY23E on: a) a low base, b) improvement in ARRs once things normalize, c) improved occupancies, d) positivity in cost rationalization efforts in FY21, e) an increase inF&B income as banqueting/conferences resume, and f) higher income from management contracts. The company is in the right direction in growing its EBITDA as new revenuegenerating avenues are having a higher EBITDA margin, and this is done withoutdeploying capital or with very minimal capital, which bodes well for RoCE. We value the stock at 19x Jun'23E EV/EBITDA and arrive at a SoTP-based TP of INR180. We maintain our Buy rating"Disclaimer:The stocks listed in the story are taken from different brokerage reports. Investing in stocks is risky and investors should do their own research. The author, the brokerage firm or Greynium Information Technologies Pvt Ltd is not responsible for any losses incurred due to a decision based on the above article.