3. 3
1) Ultratech
UltraTech’s parent company, Aditya Birla Group, is in the league of Fortune 500 companies. UltraTech is the largest manufacturer of grey cement, ready mix concrete (RMC), and
white cement in India. It is the third largest cement producer in the world, excluding China.
• We expect UltraTech to report industry-leading volume growth on account of timely capacity expansion (inorganic and organic expansions) and revival in demand (demand pick-
up in infrastructure and urban housing along with continued demand emanating from the rural housing segment). We expect the company to be the biggest beneficiary of
multi-year industry upcycle, being a market leader.
• The stock has corrected by 19% over trailing four months and currently trades at 11.2x EV/EBITDA on FY2024E earnings which is below its historical one year forward EV/EBITDA
average multiple of 11.5x.
• We have Buy rating on the stock with PT of Rs 8600.
2) SRF Ltd
• SRF is a multi-business company with business presence across chemicals, packaging films (BOPET and BOPP) and technical textiles (nylon tyre cord fabric and belting fabric). Its
chemical segment manufactures specialty chemicals for agro/ pharma, leader in fluorine chemistry, refrigerant gas and chloromethane.
• High capex intensity toward fast-growing specialty chemicals business makes it well placed to benefit from strong growth outlook for Indian fluorochemicals market (expected to
double and reach $880 million by 2025). Additionally, improved pricing and demand for from the refrigerants would aid growth in specialty segment (expect 20% p.a. growth).
• Announced foray into the aluminium foil segment at an investment of ~Rs. 425 crore an expects asset turnover o of 1.75x-2x and IRR at 15-17%. This provides synergy benefit of
similar customer segment in packaging segment and tap the upcoming EV opportunities.
• Steep 21% correction in the stock price from 52-week high provides a good entry opportunity for long term investors given capex led strong earnings growth outlook. Favorable
dynamics of Indian specialty chemicals space would support premium valuations (stock is trading at 32x/26x FY23E/FY24E EPS). We have Buy rating on SRF with PT of Rs 2800.
4. 4
3) Titan Company
Titan is one of India’s top retailers with a strong presence in discretionary product categories such as jewellery, watches, and eyewear. It has a retail chain of 2,178 stores across 337
towns with retail area crossing 2.8 million sq. ft. nationally for all its brands.
Titan will be one of the key beneficiaries of consumers’ shift to branded jewellery as it will not only add to topline but will drive margins in the long run. While Jewellery business is
expected to post consistent double digit growth, other businesses (including Watches & eye care) are expected to scale-up fast with revamped strategies.
The company is well poised to achieve strong revenue and PAT CAGR of 19% and 28%, respectively, over FY22-24.
The stock has corrected by 22% in last five months and is trading at attractive valuations of 66.0x/51.6x its FY2023E/24E earnings. Titan remains one of our top picks in the
discretionary space. We retain Buy with PT of Rs 2,900.
4) UPL
• UPL is the 5th largest agro-chemical company in the world with market share of 8% in the global crop protection. It is investing in Natural Plant Protection (NPP) Biosolutions business
and also digital platform (nurture.farm) to plans to transform into agro-solution provider from a product company.
• Multiple triggers for industry leading revenue growth and margin expansion led by focus to high growth differentiated & sustainable solutions (growing at 20% rate) and market share
gain in global crop protection to 9-11% (versus 8% in FY22). Target to increase revenue share of differentiated & sustainable solutions to 50% by FY27 has potential to expand EBITDA
margin to 24-25%.
• UPL’s valuation of 12/10x FY23E/FY23E EPS considering strong earnings growth outlook (expect 22% PAT CAGR over FY22-24E) and improving earnings quality (higher margin/RoCE).
Potential monetisation of digital platform to unlock value.
• We have Buy rating on UPL with PT of Rs 930.
5. 5
5) M&M
M&M is a flagship company of Mahindra Group with its core investments in automotive, tractor and farm equipment manufacturing. The company has investments in IT, hospitality,
financial services, real estates and other diversified sectors, having significant market share in all the verticals. M&M is a leader in tractor segment with ~38% market share, while
have ~15.8% market share in passenger vehicle segment and 36.3% market share in LCV segment.
We maintain our Buy rating on the stock with PT of Rs 1,148, factoring positive outlook for its core businesses, supported by positive rural sentiments on back of expected 4th
consecutive normal monsoon this year. Timely onset of monsoon will revive rural demand in near future. M&M’s strong distribution network in rural and semi urban areas and its
planned new launches would help it increase its market share going forward.
The company plans its farm business to be 10x by FY2027E, while strengthen its UV segment by adding 13 new products by FY2027E. Moreover, M&M continues to benefit from the
turnaround of its loss-making subsidiaries, scaling its digital platforms and strong performance of its listed entities, which would improve the company’s FCF going forward.
The stock is trading at comfortable valuations of P/E of 14.6x and EV/EBITDA of 8x its FY24E estimates. Reiterate our buy recommendation on the stock
6) Infosys
• Infosys is the second largest ($16,311 million in FY2022) IT services company in India in terms of export revenue with headcount of 3.1 lakh employees. Being a global leader in next-
generation digital services and consulting, Infosys remains at the forefront of driving digital transformation for clients.
• Infosys' investments in areas such as Cloud, data, experience, and cyber security have been reaping benefits during the strong demand environment, which is being reflected in strong
7.6% CQGR revenue growth in its digital business since Q1FY2018. Further, the company has strengthened its capabilities in the cloud ecosystem via a few smart acquisitions.
• Infosys guided for better-than-expected revenue growth of 13-15% in constant currency terms for FY2023, implying a revenue CQGR of 2.7-3.4%. We believe Infosys is well-equipped to
deliver industry-leading organic growth among the large peers in FY2023E, led by strong digital competencies and strong demand.
• The stock has corrected around 15% over last one month due to weak Q4 and ongoing macro challenges. At CMP, the stock trades at 26x/23x its FY23E/FY24E earnings, which is
justified, given strong growth potential, robust deal pipeline, and market share gains. We have a Buy rating on the stock with a price target (PT) of Rs. 2,150.
6. 6
7) Balrampur Chini Mills
Balrampur Chini Mills Ltd (BCML) will be one of the key beneficiary of reducing cyclicality in the sugar industry. It has 10 sugar factories in UP with a total cane crushing capacity of
76,500 tonnes per day, 4 distillery units with a collective capacity of 560 kilo litre per day and 8 co-generation units with saleable co-generation capacity of 172.2 megawatts.
With doubling of ethanol capacity to 1050 KLPD, the company expects ethanol production of 35 crore litres. A better mix would help OPM improve to reach 17-18%.
Higher salience of ethanol in revenue mix will improve the cash conversion cycle and reduction of debt; Likely to generate cumulative OCF of Rs2000crore over FY2022-24. Its
earnings are expected to grow at CAGR of ~20% over FY2022-24.
The stock has corrected by 20% from its recent high and trading at 13.1x and 11.4x its FY2023 and FY2024 earnings. We have a Buy rating on the stock with PT of Rs 540
8) Symphony Limited
• Symphony is India’s largest maker of air coolers, with 50% value share in the organised market. It boasts of a strong brand equity (commands 10-12% pricing premium over
competitors), superior product portfolio and a pan-India presence with deep distribution network.
• The company would mainly benefit from strong pent-up demand for air coolers in April-June, the best quarter for air cooling products. Moreover, calibrated price hikes (with a lag of a
couple of months) and value engineering to cut costs should help company combat the effect of inflationary pressures on margins to a certain extent.
• Symphony has carved a niche for itself in a highly-fragmented, competitive and seasonal market following ‘single product, many markets’ strategy. Symphony’s asset-light and short
working capital cycle business model has helped it clock superior returns (8-year average ROE and ROCE of ~30%/37%).
• The company has treasury & cash equivalents of ~Rs. 511 crore. We expect revenue/PAT CAGR of ~20%/30% over FY22-24E. The stock has corrected 7-8% from its recent highs and
trades at a P/E of 34xFY24E. We recommend a Buy on the stock with an upside potential of 26-28%, Target price of Rs 1,421.
7. 7
9) KSB Ltd.
KSB is a leading player in the domestic pumps and industrial valves industry and boasts of a strong technological support from its German parent - KSB SE. & Co.
KSB targets order intake of Rs 2,500cr and revenue of Rs 2,000cr by CY24 as it would benefit from demand uptick in Oil & Gas, infrastructure and water & wastewater treatment
sectors.
KSB aims to gain market share and improve margin trajectory by widening product base, pursuing after market and services business through ‘SupremServ’ and focus on improving
exports . Nuclear Power Corporation of India Ltd. (NPCIL)’s bulk tender for pumps and motors is a key long-term growth catalyst.
The company is debt-free and has healthy cash/bank balance (+ Rs 300cr) and a short working capital cycle. We expect revenue/PAT CAGR of ~17%/19% over CY21-23E. The stock
has corrected 7-8% from its recent highs and trades at P/E of 22xCY23E. We recommend buy with an upside potential of 12-14%, Target price Rs 1,443.
10) Mahindra Lifespace Ltd
• Established in 1994, MLDL is the real estate and infrastructure development business of the Mahindra Group in India. The company operates in residential developments under the
‘Mahindra Lifespaces’ and ‘Mahindra Happinest’ brands; and through its integrated cities and industrial clusters under the ‘Mahindra World City’ and ‘Origins by Mahindra World City’
brands.
• MLDL is scaling up its land acquisitions and approvals pipeline with a strong core management team across key functions. The company is gearing up to clock pre-sales of over Rs. 2,000
crore per annum in the residential division in 2-3 years. The company’s gearing can support aggressive land acquisitions.
• The company is witnessing strong demand for built-to-suit factories, warehouses, and data centers for its IC&IC business. The company has benefits of China plus one apart from
government’s increasing focus on attracting manufacturing investment in the country led by AtmaNirbhar Abhiyan, production-linked incentive schemes for its IC&IC vertical.
• The stock has risen 34% over tailing four months led by strong performance in sales, collections and new project additions. We have Buy rating on the stock with PT of Rs 450.
8. 8
For Internal Circulation
Disclaimer: This document has been prepared by Sharekhan Ltd. (SHAREKHAN) and is intended for use only by the person or entity to which it is addressed to. This Document may contain confidential and/or privileged
material and is not for any type of circulation and any review, retransmission, or any other use is strictly prohibited. This Document is subject to changes without prior notice. This document does not constitute an offer to sell
or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Though disseminated to all customers who are due to receive the same, not all customers may receive this
report at the same time. SHAREKHAN will not treat recipients as customers by virtue of their receiving this report. The information contained herein is obtained from publicly available data or other sources believed to be
reliable and SHAREKHAN has not independently verified the accuracy and completeness of the said data and hence it should not be relied upon as such. While we would endeavour to update the information herein on
reasonable basis, SHAREKHAN, its subsidiaries and associated companies, their directors and employees (“SHAREKHAN and affiliates”) are under no obligation to update or keep the information current. Also, there may be
regulatory, compliance, or other reasons that may prevent SHAREKHAN and affiliates from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an
investment decision. Recipients of this report should also be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The user assumes the entire risk of
any use made of this information. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in
this document (including the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all
investors. We do not undertake to advise you as to any change of our views. Affiliates of Sharekhan may have issued other reports that are inconsistent with and reach different conclusions from the information presented in
this report. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,
publication, availability or use would be contrary to law, regulation or which would subject SHAREKHAN and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may
or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. The analyst
certifies that the analyst has not dealt or traded directly or indirectly in securities of the company and that all of the views expressed in this document accurately reflect his or her personal views about the subject company or
companies and its or their securities and do not necessarily reflect those of SHAREKHAN. The analyst and SHAREKHAN further certifies that neither he or his relatives or Sharekhan associates has any direct or indirect financial
interest nor have actual or beneficial ownership of 1% or more in the securities of the company at the end of the month immediately preceding the date of publication of the research report nor have any material conflict of
interest nor has served as officer, director or employee or engaged in market making activity of the company. Further, the analyst has also not been a part of the team which has managed or co-managed the public offerings
of the company and no part of the analyst’s compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this document. Sharekhan Limited or its associates or analysts have
not received any compensation for investment banking, merchant banking, brokerage services or any compensation or other benefits from the subject company or from third party in the past twelve months in connection
with the research report. Either, SHAREKHAN or its affiliates or its directors or employees / representatives / clients or their relatives may have position(s), make market, act as principal or engage in transactions of purchase
or sell of securities, from time to time or may be materially interested in any of the securities or related securities referred to in this report and they may have used the information set forth herein before publication.
SHAREKHAN may from time to time solicit from, or perform investment banking, or other services for, any company mentioned herein. Without limiting any of the foregoing, in no event shall SHAREKHAN, any of its affiliates
or any third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind.
Compliance Officer: Mr. Joby John Meledan; Tel: 022-61150000; email id: compliance@sharekhan.com;
For any queries or grievances kindly email igc@sharekhan.com or contact: myaccount@sharekhan.com
Registered Office: Sharekhan Limited, 10th Floor, Beta Building, Lodha iThink Techno Campus, Off. JVLR, Opp. Kanjurmarg Railway Station, Kanjurmarg (East), Mumbai – 400042, Maharashtra. Tel: 022 - 61150000. Sharekhan
Ltd.: SEBI Regn. Nos.: BSE / NSE / MSEI (CASH / F&O / CD) / MCX - Commodity: INZ000171337; DP: NSDL/CDSL-IN-DP-365-2018; PMS: INP000005786; Mutual Fund: ARN 20669; Research Analyst: INH000006183; Disclaimer:
Client should read the Risk Disclosure Document issued by SEBI & relevant exchanges and the T&C on www.sharekhan.com; Investment in securities market are subject to market risks, read all the related documents carefully
before investing.
