Motilal Oswal Institutional Equities is bullish on the stocks of Burger King India, HDFC Bank and L&T Finance Holdings and has recommended to buy the three stocks. However, we wish to inform readers that markets are over priced at this stage on key parameters including 1-year forward p/e multiples for the Nifty, therefore do exercise some caution.
Burger King India
According to Motilal Oswal, Burger King India is one of the youngest and fastest growing players in India's quick service restaurant (QSR) sector. It is focused on establishing and operating Burger King restaurants across India.
"In the post-COVID world, where 30-40% of restaurants are expected to shut down permanently, QSRs are well-placed to grab share from other FSI segments as branded players command greater trust," the broking firm has said.
According to the broking firm, QSRs advantages include high affordability, globally well-known and aspirational brands, different cuisines to cater to evolving taste of the youth that have been adapted to Indian tastes. They also have the benefits of scale and better sourcing.
"The brand is globally popular for its signature product Whopper. Burger King offers its services via four channels - dine-in, takeaway, delivery and drive-thrus. We initiate coverage with a Buy rating and a target price of Rs 210," the broking firm has said.
Shares of Burger King India were last trading at Rs 174 on the National Stock Exchange.
The firm is also bullish on one of India's top private sector banks, HDFC Bank and is looking at an upside target of nearly 20% from the current share price of HDFC Bank, which is Rs 1,478.
According to Motilal Oswal institutional Equities, asset quality deteriorated marginally, with GNPA/NNPA ratio increasing by 15bp/8bp QoQ. Total slippages in 1QFY22 stands elevated Rs 73 billion (2.5% of loans). Also, restructured loans rose to 0.8% of loans (v/s 0.6% in FY21). The bank which declared its quarterly numbers last week saw its share price tumble in trade, and the stock fell as much as 3%.
"The bank continues to make additional contingent provisions to further strengthen its Balance Sheet. Total restructured book increased to 0.8% of loans (v/s 0.6% of loans), however overall stress formation remains under control. In the near term, lifting of RBI restrictions remains a key monitorable. We broadly maintain our earnings estimates and project 18% PAT CAGR over FY21-23E. We maintain our Buy rating with a target price of Rs 1,800 per share (3.5x FY23E ABV)," the broking firm has said.
Shares of HDFC Bank were last trading at Rs 1,478, down 3%.
L&T Finance Holdings
The third stock that Motilal Oswal is bullish on and has a "buy" call on the stock is the NBFC stock of L&T Finance Holdings.
Rural businesses witnessed an improving MoM trend in Jun-Jul'21 in disbursements/collections. LTFH has been consolidating its loan book over the past many quarters, and we expect this to continue over the next 2-3 quarters. We expect disbursements in 2W/ML to pick up as collections improve. Restructured pool (including OTR 2.0) was contained at 2.6%, with a PCR of 14%. Gradual normalization in excess liquidity on the Balance Sheet will reduce the negative carry and support margin. We look to revise our estimates post the analyst call on 19th Jul'21
Investing in stocks is risky and investors need to be cautious. Neither Greynium Information Technologies nor the author, nor the brokerage houses mentioned would be responsible for any losses incurred based on decisions made from the article. Investors are also advised caution as the markets are now at a historic high.