SBI Card, KPIT Technologies, JK Cement and ITD Cementation: Brokerages’ Hot Stock Picks
We have collated a list of recommendations from top brokerage firms from ETNow and other sources:
InCred on SBI Card: Reduce| Target Rs 600
InCred downgraded SBI Card to reduce from ADD earlier and has also slashed the target price to Rs 600 from Rs 1000 earlier.
The Reserve Bank of India (RBI) increased the risk weight on credit card receivables and SBI Card is the worst-hit.
“We moderate our growth and margin assumptions for SBI Cards. We assume 4.1% capital consumption on an immediate basis for SBI Card,” said the note.
The global investment bank expects a gradual rise in the cost of funds to hurt margins. It has slashed EPS estimates by 12.8%/17.2% for FY25F/26F.
Kotak Institutional Equities on KPIT Technologies: Sell| Target Rs 940
Kotak Institutional Equities maintained a sell rating on KPIT Technologies with a target price of Rs 940.
KPIT has rallied 36% over the past month without any commensurate fundamental catalyst.
“We note that automotive clients’ ERD spends are likely to remain elevated in the near term but believe a more nuanced understanding is required to forecast the evolution of the addressable market over the long term,” said the note.
Valuations are excessive at 59X FY2025E, extrapolating recent robust performance. CMP implies 20% US$ revenue CAGR over FY2023-33E (US$2.6 bn absolute revenue size by FY2033E) at ~20% average EBIT margin (current EBIT margin stands at 16%) over this period.
Axis Securities on JK Cements: Buy| Target Rs 3860
Axis Securities maintained a buy rating on JK Cements (JKCL) with a target price of Rs 3860. JKCL is currently expanding its Grey Cement capacity by 3.5 mtpa (1.5 mtpa & 2 mtpa) in the Central region which will get commissioned in Q3FY24-Q2FY25 taking the total Grey Cement capacity to 24.2 mtpa.
With the coming up of new capacities, the company has the opportunity to capture further market share in the demand accretive Central India market with less volatile pricing trajectory.
“We expect volume CAGR of 13% over FY23-25E which is significantly higher than the estimated industry growth of 10% CAGR over the same period,” said the note.
Nuvama on ITD Cementation: Buy| Target Rs 340
Nuvama maintained a buy rating on ITC Cementation with a target price of Rs 340. ITD Cementation (ITCE) posted a robust consolidated operating profit of INR158cr in Q2FY24 (in line), led by a 100bp QoQ expansion in operating profit margin to 9.8%.
Revenue rose 56% YoY, but fell 12% QoQ, to INR1,610cr (est. INR1,730cr). Heavy rains in July impacted revenues.
“We expect OPM to expand by 60bp/40bp to 9.8%/10% in FY24/FY25 (as against earlier estimated) on the back of a robust margin in Q2FY24 which the management feels is sustainable,” said the note. The stock is trading at 21x/13x revised FY24E/FY25E EPS.
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(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)