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A' Buy' For 2 Small Cap and 2 Banks From A Leading Brokerage House

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A leading brokerage house, Anand Rathi has suggested a buy on Chennai Petroleum Corporation, Sharda Cropchem, Indian Bank and South India Bank. Here are the details for it.

 

Chennai Petroleum Corporation – A buy at TP of Rs 355

Chennai Petroleum Corporation – A buy at TP of Rs 355

According to Anand Rathi this company, Chennai Petroleum Corporation is poised to increase shareholders' wealth on stronger gross refining margins. It has set a price target of Rs 355, which is an upside of 46.91% from current levels of Rs 241.65.

"With operational synergies with parent Indian Oil Corp, the 10.5mtpa Chennai Petro is a pure play on refining. It includes pooled sourcing of crude oil and bulk purchases through the latter (IOC purchases over 90% of its output). The high refining-margin context and robust demand would support Chennai Petroleum's de-levering to augment shareholder wealth. The company has one of the best core performances in Indian refiners, which has a Nelson complexity of ~10. Falling crude prices and discounted crude sourcing have reduced working capital and eased debt. We initiate coverage with a Buy rating at a target price of Rs355," Anand Rathi has said in its report.

 Sharda Cropchem – A buy at TP of Rs 635
 

Sharda Cropchem – A buy at TP of Rs 635

Another small cap 'buy' suggested by Anand Rathi, Sharda Cropchem for price target of Rs 635, which is an upside of 28.59% from the current market price of Rs 493.80. This stock recently declared an interim dividend at the rate of Rs 3 per equity share of a face value of Rs 10 each for the financial year 2022-23.

According to Anand Rathi report, the margins recovered due to the favourable currency movement. "Considering the strong growth momentum, sturdy business model, healthy pipeline of formulations, active-ingredient registrations, a better revenue mix across regions and consistent RoEs & RoCEs, we are upbeat about Sharda's mid-to long-term prospects. Further, it is expanding its range of products in each region, exploring newer markets and penetrating deeper into existing ones. Thus, we maintain our Buy rating, with a higher TP of Rs635, valuing it at 13x FY25 EPS."

Indian Bank – A buy at TP of Rs 334

Indian Bank – A buy at TP of Rs 334

Indian Bank is recommended 'buy' from the leading broker firm at a price target of Rs 334, an upside of 18% from the current market price of Rs 283.

As per Anand Rathi report, the net interest margins of this bank were up and its earnings will improve further. "Core operating profits for Indian Bank were up 24.2% on a steep rise in NIM and good other income growth. Higher provisions, however, (~2.2%) kept RoA under 1%. Asset quality

South Indian Bank – A buy at TP of Rs 233

South Indian Bank – A buy at TP of Rs 233

South Indian Bank is another 'buy' recommendation from Anand Rathi at a target price of Rs 23 per share, which is an upside of 36.09% from current market price of Rs 16.90.

In it's report the brokerage house highlights key growth factors for the bank, after it has restructured the pandemic induced stress. "A ~3.1bn Security Receipts (SR) write-down hit the bank's earnings hard during the quarter. Excluding this, RoAs would have been 0.82%, vs. 0.56% reported now. With most of the pandemic-related stress already recognised/re-structured, the focus now shifts towards growth. Key positives were 1) a pick-up in loan growth, 2) moderation of slippages and 3) strong improvement in margins. With credit growth picking up and moderating credit costs, earnings are expected to normalise in the medium term. We retain our Buy rating, with a TP of Rs 23, valuing the stock at 0.6x P/ABV on its FY25e book.

Disclaimer

Disclaimer

The stocks have been picked from the brokerage report of Anand Rathi, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.

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