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Bharti Airtel, ONGC, Birla Corporation, Bandhan Bank: Should you buy, hold or sell?

Bharti Airtel, ONGC, Birla Corporation, Bandhan Bank: Should you buy, hold or sell?

Birla Corporation operates in lucrative Central and Northern regions. Both the regions may witness relatively lower pricing volatility, given favourable demand supply dynamics

Bharti Airtel’s may record a 20% growth in consolidated Ebitda compounded annually over FY2022-25, driven by frequent tariff hikes and market share gains in India wireless, analysts said Bharti Airtel’s may record a 20% growth in consolidated Ebitda compounded annually over FY2022-25, driven by frequent tariff hikes and market share gains in India wireless, analysts said

A host of brokerages have come out with updates on their tracked stocks. Kotak Institutional Equities has cut Bharti Airtel's rating following the recent upmove. The same brokerage sees Bandhan Bank as a re-re-rating candidate.  ONGC is Motilal Oswal Securities' top 2023 idea in the oil & gas sector. Meanwhile, Nirmal Bang has Birla Corporation among its top 2023 picks as it finds prevailing valuations quite attractive at 6.9 times FY24 EV/Ebitda.

Bharti Airtel | Kotak Institutional Equities | Add | Rs 900

Kotak Institutional Equities expects Bharti’s to record 20 per cent CAGR in consolidated Ebitda over FY2022-25, driven by frequent tariff hikes and market share gains in India wireless, continued ramp-up in Homes Broadband, and steady growth in the Enterprise and Africa businesses. Bharti’s free cash flow (FCF) has improved, led by Indian wireless market repair, the brokerage said.

“With the pending call money from rights issue, we believe it is well-placed, despite likely front-loaded 5G capex,” it added. However, after the recent upmove, Kotak has lowered its rating a notch to ADD from BUY), with a revised fair value of Rs 900.

Birla Corporation | Nirmal Bang | Buy | Target Rs 1,295

Birla Corporation is the flagship Company of the MP Birla. The company's core business activity is cement manufacturing but it also has presence in the jute goods industry. Its cement division has 11 plants at eight locations with an installed capacity of 20 MTPA. Nirmal Bang said BCORP is aiming to increase capacity to 30 MTPA by 2030. The company completed its major capacity expansion of 3.9 MTPA greenfield unit at Mukutban in April 2022, which is expected to significantly aid in company’s sales volume and profitability, Nirmal Bang said.

The company further plans to increase the capacity of its Kundanganj Unit in UP to 3 MTPA from the existing 2 MTPA and is also setting up a 1.2 MTPA capacity at Gaya.

"Birla Corp operates in lucrative Central and Northern regions, with some presence in the Eastern region as well. Both Central and Northern region will witness relatively lower pricing volatility, given favourable demand supply dynamics. With assembly elections in UP, we expect good demand from the state which is a key market for BCORP. Valuation: The stock is trading at attractive valuation of 6.9 times FY24 EV/Ebitda. We value BCORP at 7.5 times FY24 EV/Ebitda  with a target price of Rs. 1,295," it said.

Bandhan Bank | Kotak Institutional Equities | Add | Rs 280

In the past month, Bandhan Bank made two key announcements as it works through its impairment portfolio: It received a receipt of Rs 920 crore  from CGFMU. Besides, it transferred Rs 8,900 crore worth of technical written-off portfolio to an ARC for a consideration of Rs 800 crore.  Kotak Institutional Equities said it finds the progress quite comforting, as it helps build confidence in the business. The bank needs more time as it works through the rest, but the macro appears to be comfortable for a favourable re-rating, Kotak Institutional Equities said.

ONGC | Motilal Oswal Securities | buy | Target Rs 198

Motilal Oswal Securities said that since the implementation of the windfall taxes had no fixed expiry, the brokerage had assumed that these would last only until December 2022. However, it looks unlikely that the government is going to unwind it any time sooner, the brokerage said while cutting its EPS forecast by 31 per cent to Rs 44.20 against the consensus EPS estimate of Rs 39.10. The brokerage said the dividend payout of ONGC has stood at 33 per cent of its consolidated PAT in the past three years. Thanks to production growth and better gas segment profitability, it sees a dividend yield of 13.6 epr cent for FY23.

"ONGC trades at 3.3 times FY24E consolidated EPS of Rs 44.20 and 2.2 times consolidated EV/Ebitda. Considering the great conjunction in addition to the cushion provided by the high dividend yield of 13.6 per cent in FY23, we retain our BUY rating on ONGC with a target of Rs 198, making it the top idea for 2023 in the sector,"  Motilal Oswal said.

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Published on: Jan 02, 2023, 9:30 AM IST
Posted by: Priya Raghuvanshi, Jan 02, 2023, 9:25 AM IST