Edelweiss Wealth Research has recommended buying the stock of Tech Mahindra, while Axis Direct is bullish on the stock of Federal Bank for quick returns.
Buy Federal Bank for a price target of Rs 100
Axis Direct has put a price target of Rs 100 on the stock of Federal Bank, as against the current market price of Rs 80.85.
According to Axis Direct, Federal Bank's transformation journey has begun with a steady franchise of granular deposits and a healthy NRI base in place. The brokerage believes that the new initiatives undertaken in the past have been gathering pace in the areas of neo-banking and higher-yielding product segments which will drive margin improvement and lead to better ROAs
"It is gradually adding new avenues viz. FinTech partnerships and high-ROA businesses such as CVs, micro finance institutions and Credit Cards. The bank has invested and revamped its high margin product portfolios such as Business Banking and select Retail lending segments (CVs, Micro Finance, and Credit Cards). Key positives are a) Improved business mix, b) Adequate CAR, c) Granular Liability franchise, and d) Incremental lending to better-rated borrowers. New focus segments will gradually boost margin improvement which will lead to sustainable high returns on assets. We maintain a Buy with a price target of Rs 100 (1.1x FY23E ABV)," the brokerage has said.
Edelweiss Wealth Research sees a target price of Rs 1,670 on the stock of Tech Mahindra as against the current market price of Rs 1515.
"We expect Tech Mahindra to deliver 13% revenue CAGR over FY21-23E. Improved execution engine for managing costs, targeting large deals, talent management, and cash conversion should help margins and further reduce finance cost, resulting in 17% PAT CAGR over the same period," the brokerage has said.
According to Edelweiss Wealth Research tech Mahindra's R&D lab (Makers Lab) along with partners has applied for Covid-19 drug patent, which will undergo trials and development process over the next 1.5 years. If successful, earnings upside may flow in from FY24E.
"Improved execution engine for targeting large deals, managing costs, and receivables should garner 17% PAT CAGR over the same period. Hence, we rate the company ‘Tactical Buy' with target price of Rs 1,670," Edelweiss Wealth Research has said.
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