Brokerage House Emkay Global has recommended buying the stock of NHPC, while Motilal Oswal is betting on the stock of Aditya Birla Fashion and Retail for good gains.
Buy NHPC for an upside of 31%
Emkay Global sees an of nearly 31% on the stock of NHPC from the current levels. "In the past few years, the company has increased its dividend payout, and the yield stands at 6% currently. With a strong balance sheet (D/E of 0.7x and Rs 22.5 billion of cash on books), NHPC can increase its capex, especially on Solar assets. The company has emerged as the winner of a 1,000MW Solar project under CPSU Scheme II.
We assume coverage on NHPC with a Buy rating and a target price (Sept'22E) of Rs 34, based on SoTP. We expect its RoE to touch 12/13% by FY26E from 9.3% in FY22E and 8% in FY15. Our target price implies 0.9 times Sept'23E BVPS. We believe that improving RoE profile is one of the most important factors for re-rating in Utilities," the brokerage has said.
Buy Aditya Birla Fashion and Retail, says Motilal Oswal
According to Motilal Oswal, the year FY21, proved to be a tumultuous year for the Apparel business, impacted Aditya Birla Fashion and Retail even more adversely. "High leverage and squeezed working capital led to a strain on liquidity which was responded well through equity infusion and unwinding of working capital. According to Motilal Oswal, the rejig in product categories to adjust to the changing consumer demands, coupled with steady store addition across formats (Lifestyle/Pantaloons target to add 250/60 stores each annually) is expected to drive healthy growth.
"With leverage reaching comfortable levels and return ratios/cash flows expected to improve, we believe the stock yet does not fully capture the growth potential even after factoring in the losses in Ethnic Wear for couple of years. Maintain Buy," the brokerage has said.
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