Star Health, Coforge, EMIL, Torrent Power, USL & Dixon Tech among 8 stocks that saw brokerage initiations

Select stocks such as Star Health and Allied Insurance, Brigade Enterprises, Coforge, Torrent Power, United Spirits, Dixon Technologies, Electronics Mart India and Rainbow Children's Medicare have seen fresh interest from the various domestic and global brokerage firms, who have recently initiated their coverage on the said companies.

The host of brokerages, including LKP Securities, HSBC Global Services, Phillip Capital, Geojit Financial Services, IDBI Capital, Keynote Financial Services, Anand Rathi Shares and ICICIDirect Research have launched their maiden records recently. Here's why these brokerages are positive on the stocks:

Phillip Capital on Star Health and Allied Insurance
Rating: Buy | Target Price: Rs 675 | Return Potential: 30
Star Health and Allied Insurance (Star Health) is India’s largest standalone health insurer (SAHI) with a market share of 13 per cent as of 9MFY23. It has built a strong virtuous cycle through its market leadership position in agency network, retail health, and by having one of the largest hospital networks, said Phillip Capital in its initiating coverage report.

All these factors feed each other, creating very strong entry barriers for incumbents and new players, based on which we expect Star Health to remain a dominant player in the retail health space. As its loss ratio normalises to pre-covid levels, its combined ratio will improve, driving underwriting performance and profitability, it said with a buy rating and target price of Rs 675.

Geojit Financial Services on Torrent Power
Rating: Accumulate | Target Price: Rs 550 | Return Potential: 8%
Torrent Power is one of the leading power utility companies in India, with functions across generation, transmission, and distribution. It has operations spread across Gujarat, Maharashtra, UP, and Karnataka. The distribution businesses foresee increased productivity as a result of decreased T&D losses and expansion ambitions to boost the top line, said Geojit.

By FY25, we anticipate a 28 per cent rise in renewable capacity, spurred by capacity augmentation. With the expected drop in gas prices, we believe that the gas plants’ efficiency will improve, resulting in increased profitability. The company is expected to maintain a debt-to-equity ratio of 0.7 times in FY25, and an ROE of 16 per cent in FY25, it said with an 'accumulate' rating and a target price of Rs 550.

Keynote Financial Services on United Spirits
Rating: Buy | Target Price: Rs 887 | Return Potential: 20%
United Spirits is India’s biggest alcoholic beverage company. Its operations span from manufacturing Indian Made Foreign Liquor across all price points, from the popular segment to prestige and above division. It also imports and distributes Diageo’s brands as Bottled in India and Bottle in Origin categories that form part of the P&A segment, said Keynote.

Owing to the trend of premiumization, the Company exited a major chunk of the declining Popular segment market by way of a slump sale and franchise agreement. Apart from new initiatives, it has been renovating, innovating, and launching new products to commission the industry growth drivers, it said initiating coverage with a target price of Rs 887 and buy rating.

IDBI Capital on Coforge
Rating: Buy | Target Price: Rs 4,356 | Return Potential: 21%
"We initiate coverage on Coforge with a 'buy' rating and a target price of Rs 4,356. The company’s ability to convert challenges into opportunities will help in defending itself from the macro challenges. We estimate revenue and profits to increase at 16 per cent and 21 per cent CAGR over FY23E-25E," said IDBI Capital in its maiden report.

"The company’s presence in niche sub-verticals of BFS, Insurance & TTH, consistent deal wins, lower attrition and lower client concentration distinguish it from peers. With the advent of the new CEO, its performance has improved significantly registering a revenue CAGR of 17 per cent and 130 bps improvement in EBIT margin during FY18-FY22," IDBI added.

LKP Securities on Electronics Mart India
Rating: Buy | Target Price: Rs 86 | Return Potential: 34%
Electronics Mart India (EMIL) is the largest electronic retailer with a diversified product offering and is strongly placed in the southern region. EMIL has been increasing its market presence and geographic base with cluster-based expansion while its strategically located logistics & warehousing facilities provide swift turnaround. Its expansions in Delhi/NCR offer strong growth potential, said LKP Securities while initiating the coverage.

EMIL enjoys superior store metrics than peers, led by higher realizations, higher bill sizes and superior product mix which drive higher store throughputs. Considering the emerging demographics in India backed with rising per capita income, improving power situation, and multiple financing options we believe there is big scope for an organised electronic retail segment to grow, it said with a buy tag and target price of Rs 86.

ICICIDirect Research on Rainbow Children's Medicare
Rating: Buy | Target Price: Rs 840 | Return Potential: 20%
Rainbow Children’s Medicare (RCML) is a leading chain of pediatric multi-specialty and perinatal hospitals in India, operating 16 hospitals and three clinics in six cities, with a total bed capacity of 1,655 beds. Revenue and EBITDA grew at CAGR of 21.5 per cent and 27.1 per cent, respectively, in FY19-22. Healthy return ratios with last three-years' average RoE and RoCE of 15.1 per cent and 15.2 per cent, respectively, said ICICIDirect in its initiating coverage report with a 'buy' tag.

Expertise in the most case-sensitive healthcare cohort that is pediatric and perinatal care encompassing areas. Its efficient synergy across pediatric services and perinatal services makes it a standout player among its peers. RCML plans to add 850 beds across cities like New Delhi, Chennai, Bengaluru, and Hyderabad in the next four to five years, expanding its presence, it added with a target price of Rs 840.

HSBC Global Research on Dixon Technologies
Rating: Hold | Target Price: Rs 537 | Return Potential: 10%
Dixon is India’s largest maker of consumer electronics like TVs, LED lighting, washing machines and security cameras. It is also one of the largest assemblers of mobile phones. Apart from its scale, Dixon’s strengths are its design capabilities, strong relationships with top global and domestic brands, and access to the government’s Production Linked Incentive scheme over five products, said HSBC in its initiating coverage report.

"Weaker-than-expected performance was due to a slowdown in the global and Indian smartphone market, a sharp volume decline for anchor customer Motorola due to end market weakness, and a delay in customer additions. Given the combination of ongoing weak demand, we think the scaling up of the mobile business may continue to be challenging," it said with a hold tag and rating of Rs 3,100.

Anand Rathi Shares on Star Health and Allied Insurance
Rating: Buy | Target Price: Rs 723 | Return Potential: 40%
Star health is a largest private health insurance company in India with leadership in the retail health segment. They have the largest and well spread distribution networks in the health insurance industry and integrated ecosystem. It has a focus on innovative and specialized products, said Anand Rathi Shares with a buy tag and target price of Rs 723.

"We remain optimistic about the overall prospects of Star Health and expect overall gross premiums to grow a healthy CAGR over FY 22-24, led by Retail Health. We expect the claims ratios to normalize. This should enable it to return to profitability over FY23-24E. We remain extremely positive on the business model," it added.

Geojit Financial Services on Brigade Enterprises
Rating: Accumulate | Target Price: Rs 537 | Return Potential: 18%
The Brigade Group's pre-sales grew by 25 per cent YoY to 4 msf with a value of Rs 2,619 crore for 9MFY23. We expect the momentum to continue, aided by a healthy pipeline. The average realization has grown at 6 per cent CAGR for the last 3 years. The realization is expected to impact the next few quarters, said Geojit in its maiden report.

"Robust leasing segment with 7.2msf of leased space. Active pipeline of 1.4 msf. At full occupancy, the annual exit rental for current lease assets will be Rs 800 crore. Hospitality revenue increased 61% YoY to Rs 101 crore for Q3FY23. We have a positive view on Brigade on the back of a robust residential pipeline, healthy cash flows, and the revived hospitality segment," it said with an 'accumulate' rating with a target price of Rs 537.


(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)

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