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6 Stocks To Buy Ahead of Their Q3FY22 Results: HDFC Securities
The brokerage firm HDFC Securities has listed 6 stocks to buy ahead of their Q3FY22 results. In its latest research report published on 11 January 2022, the brokerage has rated 6 stocks from different sectors with a buy rating.
Multi Commodity Exchange of India Limited (MCX)
The brokerage has said that "MCX futures ADTV continued to decline in Q3FY22 (-6.6% QoQ to INR 238bn) due to seasonality and volume decline of 2/12/5% in bullion/energy/metals. Impact of futures decline will be offset by higher index/options volumes (+26/41% QoQ)."
According to HDFC Securities "Revenue is expected to increase 4% QoQ, aided by options revenue (charging from Q3 and realisation is 1/3rd of futures) and margin will expand 51bps QoQ to 41.1%. Continued growth in options volume, recovery in futures ADTV, regulatory tailwind, the launch of new products, and cost savings (change in IT vendor) will lead to revenue growth and margin expansion. Maintain BUY with a TP of INR 2,150, based on 35x Mar24E core EPS."
BSE (Bombay Stock Exchange)
HDFC Securities has highlighted in its research report that "BSE cash volumes declined 7% QoQ and cash/derivative market share for Q3FY22 stood at 7.3/3.3%, -74/-82bps QoQ. Strong growth was witnessed in the exclusive cash segment (+28% QoQ) and StAR MF (+18% QoQ), while INX declined sharply by -67% QoQ. BSE is expected to report 3.3% QoQ growth in revenue and an EBITDA margin of 34.2% (+190 bps QoQ). We increase our core target multiple to 25x (previously 20x) on account of value unlocking in the core business (based on the expected NSE IPO). Our target price of INR 2,150 is based on 25x core Mar-24 PAT + net cash + CDSL stake. Maintain BUY."
Central Depository Services (India) Ltd (CDSL)
HDFC Securities claimed that CDSL continues to add ~3mn BO accounts monthly; the market share increased to 68.2% in Nov-21 (+10.8% YoY) with total BO accounts reaching ~53mn. CDSL is expected to post another strong quarter (+7.5% QoQ), led by transaction (+8.0% QoQ) and IPO/corporate action (+25.0% QoQ) revenue.
"Transaction revenue will be supported by market activity/pledge revenue. IPO/corporate action revenue will benefit from the hot IPO market. Margin will expand in the quarter (+136bps to 69.3%), offset by higher technology investments. We maintain our 45x multiple, based on continued revenue momentum and market share gains. Maintain BUY" said the brokerage in its research report.
Teamlease
According to the brokerage Teamlease is expected to post a strong quarter, driven by high associate headcount and NETAP trainee additions. The rise in economic activities and demand for digital talent are expected to keep the hiring activity robust and thereby benefit the general and specialised staffing business.
"Revenue is expected to grow 7.6% QoQ, and EBITDA margin will increase 4bps QoQ to 2.3%, led by higher margins in the general staffing business, higher productivity, and improving the business mix. Sustained recovery will lead to ~25/40% revenue/EPS CAGRs over FY21-24E. Maintain BUY", claims HDFC Securities.
IndiaMart
According to the brokerage, IndiaMart is expected to post a good quarter on account of economic recovery, improved business sentiment, and easing of mobility restrictions.
HDFC Securities expects a healthy addition of ~5K paid suppliers, with most of them in the monthly package and some of the lost suppliers are expected to return to the platform. And even the brokerage expects revenue to increase by 4.7% QoQ and margin to remain flattish at 45.7% on account of the increase in outsourced sales cost and other expenses.
"We expect revenue/EPS CAGRs of +18/15% over FY21-24E. Maintain BUY with a DCF-based target price of INR 8,860, implying 47x FY24E EBITDA" said the brokerage.
Tanla Platforms Ltd
The brokerage has highlighted in its research report that "Tanla is expected to report a strong quarter, given that Q3 has remained a seasonally driven high growth period. This can be attributed to (1) increased promotional and marketing messages sent by enterprises to customers on account of the festive season and (2) large volumes of OTP-related messages on account of purchase transactions by consumers. Revenue is expected to grow 8.4% QoQ, while EBITDA margin is likely to remain flat at 21.1%. We increase our target multiple to 35x (previously 30x) and assign a TP of INR 1,880, based on 35x FY24E EPS."
Disclaimer
The above stock has been picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.
