4 Stocks To Buy As Suggested By ICICI Securities After Q2FY22 Results

IDFC First Bank- Improved performance on most parameters

The brokerage has set a price target of Rs 60 on IDFC First Bank's stock, representing a 22% upside potential over the current market price of Rs 49.

Q2FY22 Results:

• Consistent operational results.
• NII increased by 27.4% year on year to Rs 2272 crore, while NIMs increased by 25 basis points quarter on quarter to 5.76 percent.
• Provisions are down 74 percent year over year. Net profit increased by 49% year on year to $ 151.7 crore.
• GNPA fell 34 basis points from the previous quarter to 4.27 percent, with 2.9 percent of loans restructured.
• Advances are up 3.1 percent quarter over quarter and 9.8 percent year over year, deposits are up 19 percent year over year, and the CASA ratio is at 51.3 percent.

Target and Valuation

"The IDFC First stock has jumped over 65% in the past one year. Gradual improvement in margin, pick up in loan growth, and operational performance is expected to aid return ratios. We retain our BUY rating on the stock Target Price and Valuation: We value IDFC First Bank at ~1.6x FY23E ABV and maintain target price of Rs 60 per share," the brokerage has said.

 

Mahindra Logistics- Expect margin bounce-back in Q3

The brokerage has set a price target of Rs 750 on Mahindra Logistics's stock, representing a 17% upside potential over the current market price of Rs 640.

Q2FY22 Results:

• Profitability was harmed because margins were lower than expected.
• Revenues increased by 22% year on year to Rs 1019 crore, owing to better-than-expected performance in the SCM business.
• EBITDA increased by 34% to 50 crore, with margins of 4.9 percent (vs. expected 5.6 percent )
• PAT, on the other hand, fell 37% YoY to Rs 9 crore, as increased interest and depreciation weighed on operating performance.

Target and Valuation

"While the company has been facing challenges w.r.t. auto sector in the short run (non-passage of crude oil price, optimisation of SCM, etc), the company is adding customers on the 2-W and non-auto segment (more warehousing) and continuously improving its service mix. We remain positive on the long term growth prospects of the stock and maintain our BUY recommendation. Target Price and Valuation: We value the stock at Rs 750 i.e. 49x P/E on FY23E EPS," the brokerage has said.

Key triggers for future price performance:

Increased storage space requirements and 3PL importance due to a shift in buying behaviour (more online shopping).

Customers will benefit from increased investment in technology and a multi-modal transportation option.

Gail (India)- Rebound in gas trading segment drives profitability

The brokerage has set a price target of Rs 180 on Gail's stock, representing a 20% upside potential over the current market price of Rs 150.

Q2FY22 Result

• On the profitability front, Gail's performance were better than predicted.
• Revenue increased by 57.7% year over year to | 21511 crore (our estimate: 21439.2 crore).
• While LPG/LLH performance was below expectations, all other segments-gas transmission and trade, petchem, and LPG-reported higher profits than predicted.
• Following that, EBITDA increased by 159.7% YoY to Rs 3475.1 crore (our estimate: | 2882.9 crore). PAT was reported at Rs 2862.9 crore, increasing 130.9 percent year over year (our estimate was | 2158.2 crore).

Escorts-Robust capital efficiency, healthy b/s merit upgrade

The brokerage has set a price target of Rs 1900 on Escorts's stock, representing a 23% upside potential over the current market price of Rs 1550.

Q2FY22 Results:

• The corporation had a good second quarter of FY22.
• Total operating income was up 1.4 percent year on year at Rs 1,622 crore.
• EBITDA margins fell 131 basis points QoQ to 12.6 percent, which was lower than projected.
• PAT fell by 24.5 percent year on year to Rs 173 crore.

Target and Valuation

"The share price of Escorts has grown ~4x over last five years from ~| 380 levels in October 2016, vastly outperforming Nifty Auto Index. We upgrade Escorts to BUY amid robust capital efficiency, net cash b/s. Target Price and Valuation: We value Escorts at revised SOTP-based TP of | 1,900 (20x P/E on core FY23E EPS, 20% discount on treasury shares; previous TP | 1,325)," the brokerage has said.

Key triggers for future price-performance:

Construction equipment (CE) and railways (RED) growth to be faster amid expected economic activity and positive outlook for mining, construction, road building, and general infra push by government Operating leverage gains to expand EBITDA margins to 14% by FY23E Optimal utilisation of surplus cash on b/s, possible stake increase by Kubota Corporation (currently 10%) could be a large value driver

4 Stocks To Buy As Suggested By ICICI Securities After Q2FY22 Results

Price in Rs. Upside Potential GAIL India 180 20% Mahindra Logistics 750 17% IDFC First Bank 60 22% Escorts 1900 23%

Disclaimer

The above stocks are picked from the brokerage report of ICICI Direct. 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.