Broking firm, Sharekhan is betting on the stocks of Nippon Indian Life Asset Management and Mastek for good gains. The firm sees good upside target in both the stocks.
Buy Mastek for a price target of Rs 3840
The broking firm has set an upside target of Rs 3,840 on the stock of Mastek, as against the current market price of Rs 3,000.
According to Sharekhan, the company has cited that the deal pipeline in the UK public sector remains strong on the back of higher spends on transformation.
"Though the management expects a delay in deal closures in the UK National Health Service, overall order bookings would remain strong given digital adoption in other departments of UK government. Mastek has qualified for seven deals (size in the range of GBP 3- 15 million) in the GBP 800-million digital capability framework by UK National Health Service, some of them can be converted during Q4FY2022," the brokerage has said.
Mastek aims to double its revenue over next three years, implying a strong 26% CAGR, which is ahead of our estimates. Further, the management aspires to achieve $1 billion in revenues by the second half of this decade, versus the current annual revenue run-rate of $281 million.
Sharekhan remains optimistic on Mastek
According to the brokerage, the company is progressing well in terms of deepening its relationship in existing customers in UK public sector, deal sizes and tenure, expanding presence in the US and integrated solutions.
"Over the last two years, there is a significant upward movement in EBITDA margins (to 21.2% in FY2021 from 14.5% in FY2020) and return ratios as well. We expect the US Dollar revenues and earnings to post a CAGR of 22% and 27%, respectively over FY2021-FY2024E. Net cash can be utilised for inorganic expansion. At current market price, the stock trades at a valuation of 26x/21x its FY2023E/FY2024E EPS, justified strong earnings growth potential and higher RoEs. Given a healthy balance sheet and healthy deal pipeline, we maintain a Buy on Mastek with a revised price target of Rs. 3,840," the brokerage has said.
Buy, Nippon Life India Asset Management
Sharekhan is also optimistic on the stock of Nippon Life India Management. "With improved operating performance and stable market share of 7% over the past four quarters, we believe that can clock better earnings growth going ahead. Nippon India Life Management has performed reasonably well after its rebranding in 2019, gaining business traction and profitability, through a strategic focus on retail investors and a strong presence in B-30 cities. It has also reactivated more than 1,000 corporate accounts," the brokerage has said.
Focus on retail investors aided by an extensive branch network bodes well for growth. Besides, the company intends to launch newer and attractive products going ahead, which is a further positive.
"We maintain a Buy rating on the stock of Nippon Life India Management India with a revised price target of Rs. 502. Stock has performed well giving year-to-date returns of 45%," the brokerage has said.
The above stocks are picked from the brokerage report of Sharekhan. 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.