Stock brokerages recently came out with research reports on select stocks namely ICICI Securities, Schaeffler India, Aditya Birla Fashion and Retail, and Engineers India. Barring Schaeffler India, which received a ‘Hold’ rating from Nuvama, the rest stocks received ‘Buy’ ratings from individual brokerages. Here's what broking firms said on the four stocks
Kotak Institutional Equities has a ‘Buy’ rating on Aditya Birla Fashion and Retail (ABFRL). It suggested a fair value of Rs 270 for the stock. That said the brokerage has cut its target fo the stock from Rs 345, thanks to higher expenses, demand slowdown, and higher competition. The near-term stock price may be governed M&A news, it said.
"ABFRL identified ethnic wear as a core area of focus in its March 2021 analyst briefing. Although we believe that the acquisition of Sabyasachi and other smaller brands and the scale-up of its own Tasva brand would suffice to build up this business, it is possible that ABFRL explores the acquisition of TCNS, a women’s ethnic wear player, to achieve its scale ambitions," Kotak said.
Citing inexpensive valuations, brokerage firm Axis Securities has maintained its ‘Buy’ rating on ICICI Securities with a target price of Rs 550. The target, however, is lower than Rs 600 that it suggested for the stock earlier, thanks to cut in earnings estimates.
Even as near-term headwinds for the broking business continue to persist, the brokerage said the company’s efforts to reduce dependence on the cyclical business and diversify revenue streams should lend some stability to overall revenue growth. ICICI Securities’ continued investments towards technology and franchise building will keep cost ratios inflated," said Axis Securities.
Considering its asset-light business model, strong clientele base, foray into newer segments, and healthy execution track record, Reliance Securities has maintained its 'Buy' rating on Engineers India (EIL) with a revised target price of Rs 110, suggesting an upside of around 40%.
"EIL aims to expand into new geographies and strengthen its position in the Middle East. It plans to diversify into strategic crude oil storage, water/waste-water management, non-ferrous metallurgy, ports, and LNG. It was looking for an optimum deployment of its cash for a long time and got the opportunity to diversify and utilise the cash in high-IRR projects," it Reliance.
Nuvama Institutional Equities has retained its ‘Hold’ rating on Schaeffler India, but has trimmed its target price to Rs 2,830 from Rs 2,900 earlier. It said the company is focusing on rising localisation and re-location of products for exports.
"Schaeffler results were below our estimates. Revenue grew 8% YoY, missing our estimate of 25%, because of headwinds in wind energy hurting the domestic industrials business while exports decelerated. Momentum from the automotive sector coupled with healthy order inflows from railway is likely to keep the revenue print strong with better margins in ensuing quarters," said Nuvama.
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