Mumbai, Aug 30 (IANS): 1. Canfin Homes-BUY

Recommendation by Centrum Broking

Can Fin Homes (Canfin) overall earnings were slightly better than our estimates. AUM growth was 9.7 per cent YoY, while NIM at 3.8 per cent was better due to lower cost of funds.

Provisions remained elevated at Rs441mn and total Covid-19 provisions stand at Rs0.73bn (2.5 per cent of unpaid EMI book). Twenty-eight per cent of the loans are under moratorium (SENP:salaried mix is 55:45), while 14 per cent of the book has paid no instalments

We have maintained our FY21/22 estimates though self-employed portfolio behaviour that is under moratorium, is the key. We like Canfin for its asset quality, sovereign backing and affordable housing focus. Maintain multiple at 2.2x FY22 ABV and TP of Rs 437. Reiterate BUY. Risks: higher stress from SENP; rise in funding cost due to Canara Bank stake sale.

2. Lupin-Add

We are hopeful on September 20 launch of Pro-air and better pickup in Levo post 2H. The injectable portfolio launch may also be slightly gradual. In FY21E, bEtanercept launch and gFostair launch to add to earnings in EU. While the impact of Metformin on 1H has driven a 10% cut in our FY21E earnings while we have increased FY22E earnings by 7 per cent. We value the stock in line with its peers at 23x FY22E EPS of Rs 46.4, with target price of Rs 1,070 and maintain our ADD rating.

3. CreditAcess Grameen—BUY

Recommendation by HDFC Securities

Despite this challenging environment, the company, in Q1FY21, has reported a strong operating performance. The Covid-19 related challenges also seem to be easing out as the collection efficiency of the company has improved and the loan book under moratorium has declined. Stringent rules will help company in maintaining its asset quality.

CreditAccess Grameen is uniquely positioned to capitalize on the highly underpenetrated rural credit segment with one of the lowest lending rates and one of the best operating cost efficiencies.

4. LIC Housing Finance—BUY

Recommendation by Geojit Financial Services

LIC Housing Finance (LICHF) is one of the largest housing finance companies in India. It provides long-term finance to individuals, professionals and builders of residential flats and houses. The company has a wide distribution network of 282 marketing offices.

For Q1FY21, loans portfolio increased 6.1 per cent YoY driven by Individual loan portfolio (+6.0 per cent YoY) and Project loan (+7.5 per cent YoY). Total disbursements stood at Rs 3,561 crore (-65.3 per cent YoY).

The expectation of economy to improve post lockdown, strong fundamentals, and new products will boost performance in near future. Hence, we reiterate our BUY rating on the stock with a revised target price of Rs 353 based on 0.8x FY22E BVPS.

5. Minda Industries—BUY

Recommendation by Axis Securities

Axis Securities

Minda Industries Ltd. (MIL) has reported better results for Q1FY21 against our expectations; company reported Net Sales of Rs 417 crore (our expectations Rs 302 crore), an EBIDTA loss of Rs 71.5 crore (our expectations: loss of Rs 197 crore) and Loss after tax of Rs 118.7 crore

(against our expectations of loss of Rs 299.4 crore).

The degrowth in the revenues was seen on all the verticals in more or less the same proportion as seen in overall revenues. The management has undertaken a pro-active cost reduction programme which included wage cuts (which would be temporary and would be reinstated shortly)

and lease rent re-negotiation (which would be sustainable and have lasting impact on costs).

Given the change in automobile demand outlook, we have reworked our FY21, FY22 estimates and have introduced FY23 estimates; we estimate Minda Industries to report Revenues/PAT to grow at CAGR of 11 per cent/31 per cent over FY20-23E on back of improving demand and capacity utilization.

We retain BUY with a target price of Rs 413 (21 per cent upside) on back of expected recovery in the automobile sector and outperformance of MIL over industry growth. Resurfacing of Covid cases and extended lockdown remain key risk to our assumptions.

6. Godfrey Phillips India –BUY

Godfrey Phillips has been the worst affected cigarette player during the lock down period, due to closure of factories and distribution points as per state directives. Revenue slid by 49.4 per cent to Rs 4.0bn. Tobacco segment revenue declined 52.3 per cent led by 47 per cent decline in cigarette volume. Moreover, postponement in passing on NCCD has led to a gross margins contraction of 4.87pp (to 49.3 per cent).

The channel partners suggest pick up for value-for-money cigarettes, could unfold big opportunity for GPIL as its major portfolio is skewed towards RSFT/DSFT segment. We maintain our estimates and reiterate DCF-based TP of Rs 1,320, implying 17x FY22E EPS.

Increase in NCCD yet to be passed on to consumers, affects margins in Q1

7. Swaraj Engines—BUY

Recommendation by Angel Broking

Swaraj Engines is engaged in the business of manufacturing diesel engines and hi-tech engine components. Diesel Engines are specifically designed for tractor application. Going forward, we expect recovery in the tractor industry (due to robust Rabi crop production, hike in MSP and the forecast of a normal monsoon) will benefit players like Swaraj Engines.

8. JK Lakshmi Cement—BUY

Recommendation by Angel Broking

JK Lakshmi is a predominantly north India cement company with capacity of 13.3 Mn Mt. Currently, north India is favourable location for the cement industry as it is consolidated to a large extent as well as demand and supply outlook is better compared to other locations. Q1FY21 numbers of the Company were better compared to its peers due to favourable regional presence. It is also trading at a significant discount compared to other north based cement company such as JK Cement as well as historical valuation.

9. Persistent Systems—BUY

Recommendation by Angel Broking

Company has won a large deal during the quarter which will ramp up over the next few quarters. We expect the company to post revenue/EBITDA/PAT growth of 11.6 per cent/21.4 per cent/19.7 per cent between FY20-FY22 given negligible impact of Covid-19 on FY21 numbers strong deal wins, ramp up of existing projects along with margins expansion.

10. Gujarat Gas—Reiterate Buy

Recommendation by Motilal Oswal Financial Services

Since NGT's April 2019 order banning coal gasifiers at Morbi, we have seen gas consumption at Morbi rising to the peak of 6.2–6.4 mmsmcd from an erstwhile ~2.4mmscmd. Gujarat is home to five critically polluted industrial clusters. NGT's orders may prove to be a boon in these

areas.

Gujarat was awarded six new geographical areas during the recently concluded 10th CGD bidding round. These would aid volume growth for the company in the longer run. Additionally, the regulatory board (PNGRB) ruled that GAIL stop supply to consumers designated for CGD at

Tarapur and Thane. This could add ~0.3mmscmd of volumes in the short term. Similar rulings are expected at Dahej as well.

GUJGA is trading at 20x FY22 EPS of INR16.4 and 11.5x FY22 EV/EBITDA. We value GUJGA at 22x FY22. With target price of INR360, we reiterate Buy on the stock.

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