NOCIL, TTK Prestige, Indiamart, Mold-Tek Packaging & Indian Hotels: Here's what analysts said on the 5 stocks
Mold-Tek Packaging should witness some softness in overall growth in Q3FY23 despite the strong growth trajectory of the Food & FMCG (F&F) segment, said Nirmal Bang Institutional Equities
- Dec 20, 2022,
- Updated Dec 20, 2022 8:42 AM IST
A few domestic brokerages have retained their ratings on five stocks namely NOCIL, TTK Prestige, Mold-Tek Packaging, India Hotels and IndiaMART InterMESH. Among them, a brokerage has ‘Accumulate’ rating on Mold-Tek Packaging; rest all stocks have ‘Buy’ ratings. Here are analyst views on business prospects of these companies and their price targets for the five stocks.
NOCIL | Motilal Oswal Securities | Buy | Target Rs 283
Motilal Oswal hosted NOCIL, the largest manufacturer of rubber chemicals in India, for a Non-Deal Roadshow in Chennai.
The brokerage said the management has guided for debottlenecking in its existing units by August-September, even as it evaluates its plans for the next three-to-five years.
At present, specialised products constitute 25 per cent of NOCIL's total revenue, with limited room for expansion (industry standard is less than 10 per cent). Despite a marginal 2 per cent decline in growth in global rubber consumption in 2022 YTD against 2021, NOCIL has been able to maintain its market share during the period, Motilal said. Further, NOCIL's management expects that Europe+1 could play out over the medium term with no likely capacity constraints in near future.
"The stock is trading at 19 times FY24E EPS of Rs 13 and 12 times FY24E EV/Ebitda. We expect the return ratios to be stable at 12-13 per cent in FY23-24. We reiterate our BUY rating on the stock with a target of Rs 283," Motilal Oswal said.
IndiaMART InterMESH | Nuvama | Buy | Target Rs 5,082
Nuvama Institutional Equities said it interacted with IndiaMart’s CFO Prateek Chandra to understand the company’s progress and the current trends. Key takeaways included a guidance of 8,000-9,000 quarterly paid-suppliers addition, high churn in new customers (similar historical trend) and less than 1 per cent churn for gold/platinum customers.
This, Nuvama said, reflects stickiness among top clients and bodes well for IndiaMART's growth trajectory. Nuvama said ARPU to increase at 1-2 per cent YoY and 5 per cent CAGR in the medium-term.
It built in 26.1 per cent revenue CAGR over FY22-25E, supported by 24.4 per cent organic revenue CAGR. With IndiaMART investing in its sales force for accelerated growth, Nuvama expects near-term margins to remain stable and gradually improve from its current 27.9 per cent run rate to 34.4 per cent by FY25E. It expects IndiaMART InterMESH to have a healthy return profile with average RoE of 16 per cent and RoCE of 23 per cent over FY22-FY25E.
"Focus on aggressive growth would arrest meaningful near-term margin expansion. We are, however, confident about the long-term profitability of the business given its strong free-cash-flow profile," it said while retain ‘BUY’ on the stock with a target of Rs 5,082.
Mold-Tek Packaging | Nirmal Bang | Accumulate | Target Rs 1,000
Nirmal Bang Institutional Equities said Mold-Tek Packaging should witness some softness in overall growth in Q3FY23 despite the strong growth trajectory of the Food & FMCG (F&F) segment. Its analysis suggests that the Paints segment’s volume for Mold-Tek Packaging tends to be 10 per cent lower in Q3 compared to average quarterly revenue run-rate. Channel checks, it said, also indicate de-stocking by Paint companies to some extent.
Since the Paints segment contributes significantly to the company’s top line (55 per cent for FY22), it should impact the overall revenue growth for the quarter, Nirmal Bang said.
Volume impact due to delay in the delivery of label machines is expected to continue even in Q3FY23 but the same should be partially offset by strong growth in Lubricants and F&F divisions.
"Within F&F, growth across categories remains solid. We highlight that new orders from FMCG giants are yet to begin and the same could accelerate the growth momentum further from Q4FY23. Most importantly, the rising salience of F&F will have a positive impact on the blended EBITDA/kg. Therefore, despite seasonal weakness in Paints volume, we expect the profitability matrix to be similar to Q2FY23 or a tad better," it said.
The brokerage has maintained 'Accumulate' on the stock with an unchanged target of Rs 1,000, valuing the scrip at 25 times on September 2024 earnings.
TTK Prestige | ICICI Securities | Buy | Rs 1,078
Post four M&A activities namely Philips – Preeti, Whirlpool – Elica, Crompton – Butterfly and V Guard – Sunflame, ICICI Securities is expecting the competitive intensity to be higher with more investments by larger players in distribution,
innovation, branding and marketing. ICICI Securities, however, also expects the formalisation of the sector to be faster than earlier decade. Going ahead, it expects branding and innovation to be key for retaining market share and that TTK Prestige could be the net beneficiary due to its 50-plus year old brand ‘Prestige’ and steady 15-20 launches every quarter.
"We model TTK to report revenue and earnings CAGRs of 13.3 per cent and 9 per cent over FY22- FY24E with strong volume growth, distribution expansion and market share gains from unorganised sector. Maintain BUY with DCF-based target price of Rs1,078 (implied P/E 41 times FY24E EPS)," it said.
Indian Hotels | Motial Oswal | Buy | Target Rs 390
Motilal Oswal said Indian Hotel’s new and re-imagined businesses Ama Stays, Qmin, Chambers, and Management contracts are expected to scale up rapidly on the lower base and high growth runway. These businesses are margin accretive with higher margin flowthrough, it said, thereby driving up the RoCE.
The domestic brokerage said the new business is expected to contribute 26 per cent to the company’s operating profits by FY25.
"Amã Stays portfolio is expected to grow 5 times in the next two-three years with robust revenue growth, driven by the thriving industry and synergy with the group businesses. Further, it is aided by the company’s asset light model. The business has higher a flowthrough of 60-65 per cent. Indian Hotels is is establishing its Qmin brand across verticals of food delivery/QSR/ Restaurants. Growing food delivery industry (30 per cent CAGR) and Qminization of Ginger (from 8 to ~90 hotels) is expected to drive the growth ahead," it said.
"While IH’s managed room portfolio stood at 46 per cent (including pipeline) in 1HFY23, it is expected to reach 50 per cent by FY25/26. The increasing inventory under management contract is margin as well as RoCE accretive for the business," Motilal said.
A few domestic brokerages have retained their ratings on five stocks namely NOCIL, TTK Prestige, Mold-Tek Packaging, India Hotels and IndiaMART InterMESH. Among them, a brokerage has ‘Accumulate’ rating on Mold-Tek Packaging; rest all stocks have ‘Buy’ ratings. Here are analyst views on business prospects of these companies and their price targets for the five stocks.
NOCIL | Motilal Oswal Securities | Buy | Target Rs 283
Motilal Oswal hosted NOCIL, the largest manufacturer of rubber chemicals in India, for a Non-Deal Roadshow in Chennai.
The brokerage said the management has guided for debottlenecking in its existing units by August-September, even as it evaluates its plans for the next three-to-five years.
At present, specialised products constitute 25 per cent of NOCIL's total revenue, with limited room for expansion (industry standard is less than 10 per cent). Despite a marginal 2 per cent decline in growth in global rubber consumption in 2022 YTD against 2021, NOCIL has been able to maintain its market share during the period, Motilal said. Further, NOCIL's management expects that Europe+1 could play out over the medium term with no likely capacity constraints in near future.
"The stock is trading at 19 times FY24E EPS of Rs 13 and 12 times FY24E EV/Ebitda. We expect the return ratios to be stable at 12-13 per cent in FY23-24. We reiterate our BUY rating on the stock with a target of Rs 283," Motilal Oswal said.
IndiaMART InterMESH | Nuvama | Buy | Target Rs 5,082
Nuvama Institutional Equities said it interacted with IndiaMart’s CFO Prateek Chandra to understand the company’s progress and the current trends. Key takeaways included a guidance of 8,000-9,000 quarterly paid-suppliers addition, high churn in new customers (similar historical trend) and less than 1 per cent churn for gold/platinum customers.
This, Nuvama said, reflects stickiness among top clients and bodes well for IndiaMART's growth trajectory. Nuvama said ARPU to increase at 1-2 per cent YoY and 5 per cent CAGR in the medium-term.
It built in 26.1 per cent revenue CAGR over FY22-25E, supported by 24.4 per cent organic revenue CAGR. With IndiaMART investing in its sales force for accelerated growth, Nuvama expects near-term margins to remain stable and gradually improve from its current 27.9 per cent run rate to 34.4 per cent by FY25E. It expects IndiaMART InterMESH to have a healthy return profile with average RoE of 16 per cent and RoCE of 23 per cent over FY22-FY25E.
"Focus on aggressive growth would arrest meaningful near-term margin expansion. We are, however, confident about the long-term profitability of the business given its strong free-cash-flow profile," it said while retain ‘BUY’ on the stock with a target of Rs 5,082.
Mold-Tek Packaging | Nirmal Bang | Accumulate | Target Rs 1,000
Nirmal Bang Institutional Equities said Mold-Tek Packaging should witness some softness in overall growth in Q3FY23 despite the strong growth trajectory of the Food & FMCG (F&F) segment. Its analysis suggests that the Paints segment’s volume for Mold-Tek Packaging tends to be 10 per cent lower in Q3 compared to average quarterly revenue run-rate. Channel checks, it said, also indicate de-stocking by Paint companies to some extent.
Since the Paints segment contributes significantly to the company’s top line (55 per cent for FY22), it should impact the overall revenue growth for the quarter, Nirmal Bang said.
Volume impact due to delay in the delivery of label machines is expected to continue even in Q3FY23 but the same should be partially offset by strong growth in Lubricants and F&F divisions.
"Within F&F, growth across categories remains solid. We highlight that new orders from FMCG giants are yet to begin and the same could accelerate the growth momentum further from Q4FY23. Most importantly, the rising salience of F&F will have a positive impact on the blended EBITDA/kg. Therefore, despite seasonal weakness in Paints volume, we expect the profitability matrix to be similar to Q2FY23 or a tad better," it said.
The brokerage has maintained 'Accumulate' on the stock with an unchanged target of Rs 1,000, valuing the scrip at 25 times on September 2024 earnings.
TTK Prestige | ICICI Securities | Buy | Rs 1,078
Post four M&A activities namely Philips – Preeti, Whirlpool – Elica, Crompton – Butterfly and V Guard – Sunflame, ICICI Securities is expecting the competitive intensity to be higher with more investments by larger players in distribution,
innovation, branding and marketing. ICICI Securities, however, also expects the formalisation of the sector to be faster than earlier decade. Going ahead, it expects branding and innovation to be key for retaining market share and that TTK Prestige could be the net beneficiary due to its 50-plus year old brand ‘Prestige’ and steady 15-20 launches every quarter.
"We model TTK to report revenue and earnings CAGRs of 13.3 per cent and 9 per cent over FY22- FY24E with strong volume growth, distribution expansion and market share gains from unorganised sector. Maintain BUY with DCF-based target price of Rs1,078 (implied P/E 41 times FY24E EPS)," it said.
Indian Hotels | Motial Oswal | Buy | Target Rs 390
Motilal Oswal said Indian Hotel’s new and re-imagined businesses Ama Stays, Qmin, Chambers, and Management contracts are expected to scale up rapidly on the lower base and high growth runway. These businesses are margin accretive with higher margin flowthrough, it said, thereby driving up the RoCE.
The domestic brokerage said the new business is expected to contribute 26 per cent to the company’s operating profits by FY25.
"Amã Stays portfolio is expected to grow 5 times in the next two-three years with robust revenue growth, driven by the thriving industry and synergy with the group businesses. Further, it is aided by the company’s asset light model. The business has higher a flowthrough of 60-65 per cent. Indian Hotels is is establishing its Qmin brand across verticals of food delivery/QSR/ Restaurants. Growing food delivery industry (30 per cent CAGR) and Qminization of Ginger (from 8 to ~90 hotels) is expected to drive the growth ahead," it said.
"While IH’s managed room portfolio stood at 46 per cent (including pipeline) in 1HFY23, it is expected to reach 50 per cent by FY25/26. The increasing inventory under management contract is margin as well as RoCE accretive for the business," Motilal said.