Federal Bank: Buy with a target price of Rs 590
Federal BankBSE 0.21 % is an old private bank with a network of over 1,000 branches and a dominant presence in south India. Under the new management, the bank is working on a strategy to gain pan-Indian presence, shift the loan book to better-rated corporates, increase the fee income, become more efficient and improve the asset quality.
The asset quality of the bank has remained steady after showing some strain initially. The slippages from the SME and retail accounts have declined substantially while the slippages from the corporate accounts remain stable.
Going forward, with the initiatives undertaken the recoveries could pick up and the NPAs may decline. The brokerage firm expects RoE of 16 per cent and RoA of around 1.2 per cent by FY2015, led by a 17 per cent CAGR in the earnings. The brokerage firm has revised the price target to Rs590 (1.4x FY2014E book value [BV]) and maintained its 'buy' rating on the stock.
Godrej Consumer Products Ltd (GCPL): Buy with a target price of Rs811
The company is a major player in the Indian fast-moving consumer goods (FMCG) market with a strong presence in the personal care, hair care and home care segments in India. The recent acquisitions (in line with the 3x3 strategy) have immensely improved the long-term growth prospects of the company.
On the back of a strong distribution network and advertising and promotional support, Sharekhan expects GCPL to sustain the market share in its core categories of soap and hair colour in the domestic market. On the other hand, continuing its strong growth momentum, the household insecticide business is expected to grow by 20% YoY.
In the international markets, the Indonesian and Argentine businesses are expected to achieve a revenue growth of around 25% and 35% CAGR respectively over FY2012-15. This along with the recently acquired Darling Group would help GCPL to post a top line CAGR of 24% over FY2012-15.
At the current market price, the stock trades at 36.1x FY2013E EPS of Rs19.7 and 26.3x FY2014E EPS of Rs27.0 and the brokerage firm has a target price of Rs 811.
ICICI bank: Buy with a target price of Rs 1320
The private bank continues to report a strong growth in advances with stable margins of 3 per cent. The brokerage firm expects the advances of the bank to grow by 20 per cent CAGR over FY2012-15. This should lead to a 21 per cent CAGR growth in the net interest income in the same period.
ICICIBSE -1.23 % Bank's asset quality has shown a turnaround as its NPAs have continued to decline over the last eleven quarters led by contraction in slippages. This has led to a sharp reduction in the provisions and an increase in the profitability. Going forward, Sharekhan expects the NPAs to decline further which will lead to lower NPA provisions and hence aid the profit growth.
The stock trades at 1.9x FY2014E BV, and Sharekhan recommends a 'buy' with a price target of Rs 1,320
Federal BankBSE 0.21 % is an old private bank with a network of over 1,000 branches and a dominant presence in south India. Under the new management, the bank is working on a strategy to gain pan-Indian presence, shift the loan book to better-rated corporates, increase the fee income, become more efficient and improve the asset quality.
The asset quality of the bank has remained steady after showing some strain initially. The slippages from the SME and retail accounts have declined substantially while the slippages from the corporate accounts remain stable.
Going forward, with the initiatives undertaken the recoveries could pick up and the NPAs may decline. The brokerage firm expects RoE of 16 per cent and RoA of around 1.2 per cent by FY2015, led by a 17 per cent CAGR in the earnings. The brokerage firm has revised the price target to Rs590 (1.4x FY2014E book value [BV]) and maintained its 'buy' rating on the stock.
Godrej Consumer Products Ltd (GCPL): Buy with a target price of Rs811
The company is a major player in the Indian fast-moving consumer goods (FMCG) market with a strong presence in the personal care, hair care and home care segments in India. The recent acquisitions (in line with the 3x3 strategy) have immensely improved the long-term growth prospects of the company.
On the back of a strong distribution network and advertising and promotional support, Sharekhan expects GCPL to sustain the market share in its core categories of soap and hair colour in the domestic market. On the other hand, continuing its strong growth momentum, the household insecticide business is expected to grow by 20% YoY.
In the international markets, the Indonesian and Argentine businesses are expected to achieve a revenue growth of around 25% and 35% CAGR respectively over FY2012-15. This along with the recently acquired Darling Group would help GCPL to post a top line CAGR of 24% over FY2012-15.
At the current market price, the stock trades at 36.1x FY2013E EPS of Rs19.7 and 26.3x FY2014E EPS of Rs27.0 and the brokerage firm has a target price of Rs 811.
ICICI bank: Buy with a target price of Rs 1320
The private bank continues to report a strong growth in advances with stable margins of 3 per cent. The brokerage firm expects the advances of the bank to grow by 20 per cent CAGR over FY2012-15. This should lead to a 21 per cent CAGR growth in the net interest income in the same period.
ICICIBSE -1.23 % Bank's asset quality has shown a turnaround as its NPAs have continued to decline over the last eleven quarters led by contraction in slippages. This has led to a sharp reduction in the provisions and an increase in the profitability. Going forward, Sharekhan expects the NPAs to decline further which will lead to lower NPA provisions and hence aid the profit growth.
The stock trades at 1.9x FY2014E BV, and Sharekhan recommends a 'buy' with a price target of Rs 1,320
Leave a Reply
Note: only a member of this blog may post a comment.