Domestic brokerages have come up with updates on a handful of stocks such as Page Industries Axis Bank, Punjab National Bank (PNB) and Suven Pharmaceuticals. Two of these stocks namely PNB and Page Industries have seen some correction of late and analysts find them attractively valued. Elara is positive on Suven Pharmaceuticals, as the entry of Advent raises the possibility of a professional team managing the business. Axis Bank, on the other hand, is Motilal Oswal’s top 2023 pick. Here’s what analysts said on the four stocks:
Page Industries | Emkay Global | Target Rs 50,500
Emkay Global said Page Industries stock has corrected 20 per cent from its October peak, likely led by expected moderation in growth in Q3 vis-a-vis recent quarters. Emkay said the moderation is partly owing to inflation-led slowdown in consumption and partly due to a high base (pent-up demand and channel filling on impending GST hike last year).
“Top line growth in Q4 should come back strongly, with reversal of the high base, delayed winters and better supply-chain management. Beyond near-term challenges, business fundamentals are relatively in a much better shape, with investments in capacity/distribution expansion, product innovations and backward integration (in-house manufacturing for Elastics and Cups for Women/Premium innerwear),” it said.
Emkay said Page’s operational efficiencies should also improve, with better fill rates on new supply-chain solution and ARS implementation. The same is also reflected in retention of the medium-term outlook by Page Industries, despite near-term headwinds, it said.
The brokerage has BUY rating for the stock with a target of Rs 50,500.
Axis Bank | Motilal Oswal |Target Rs 1,130
Motilal Oswal said Axis Bank has progressed well over the past few years and has strengthened its balance sheet by making it granular, increasing the mix of retail loans and improving its PCR. As a result, its key metrics such as loan growth, margins and profitability have improved, it said.
Loan growth is witnessing a healthy recovery with 14-18 per cent growth over the past four quarters against 13 epr cent CAGR over FY19-22, driven by retail loans (18 per cent CAGR).
“Axis Bank remains focused on building a stronger, consistent, and sustainable franchise. Since asset quality issues are behind, slippages and credit cost will be under control. While the bank will continue to make investments, it expects to bring down the cost-to-assets ratio to 2 per cent by FY25-end. The bank achieved its target of a consolidated RoE of 18 per cent in Q2FY23 and remains on track to deliver a sustainable RoE of 18 per cent in the medium term. We estimate Axis Bank to deliver FY25 RoA/RoE of 1.8 per cent/16.9 per cent. Axis Bank is our top pick for 2023,” it said.
PNB | Sharekhan | Buy| Target Rs 64
Sharekhan said Punjab National Bank (PNB) is likely to deliver strong earnings driven by healthy pre-provision operating profit (PPoP) growth and normalisation of credit costs. It expects RoAs of 0.7 per cent for FY24E and 0.8 per cent for FY25E, driving RoEs of 10 per cent and 12 per cent for the respective years going ahead.
“Strong recoveries which have started to outpace slippages and lower fresh slippages formation going ahead would help to normalise credit costs. Overall, the SMA-2 book stands at 0.3 per cent of loans. Improvement in corporate credit cycle along with the fact that trailing loan growth in corporate segment has been muted in the past few years should moderate NPL formation further,” it said.
Sharekhan said the bank’s provisions are largely related to back book and, thus, the market may look through one-time book value adjustment. It said the recent correction in the stock provides good opportunity to add it due to improved business outlook.
Suven Pharmaceuticals | Elara Securities | Accumulate | Target Rs 515
Advent International Corporation is buying Suven Pharma promoter’s 50 per cent stake for Rs 6,300 crore (Rs 495 per share) at a premium of 5 per cent over the prevailing market price at a valuation of 15.6 times FY24E EV/Ebitda and 21.4 times FY24 P/E. Post the deal, promoter Venkat Jasti will continue to hold a 10 per cent stake. Advent will launch an open offer to acquire an additional 26 per cent stake in next couple of months, post which it might merge its privately held entity, Cohance Lifesciences, with Suven. Upon completion of the merger, Elara said, the combined entity would have had FY22 revenue of Rs 2,600 crore. The merger is expected to double top line and Ebitda will be higher by 63 per cent, Elara said.
