Bank of Maharashtra (BSE Code 532525)

A septuaganerian stock broker of the erstwhile Pune stock exchange favours investment in Bank of Maharashtra which is available at an attractive price. He expects the Bajaj group, which has earned a very good name in the field of financial services with two leasing firms in the field, viz., Bajaj Finance and Bajaj FinServ, besides its strong presence in automobiles business, to be the ideal suitor to acquire Bank of Maharashtra, as the headquarters of both organisations are in Pune.

Again, the Bajaj group knows that the bank is in a comfortable position on financial parameters. The bank has a loan book of Rs. 1.05 lakh crore, of which the moratorium restructuring book is about Rs 1,300 crore, i.e., almost 1 per cent of the total loan book. The bank has already made a provision of Rs 1,500 crore. This is a floating provision under the Covid-19 impact. The bank is adequately covered for this and total recoveries for the fiscal should be around Rs 1,500 crore, putting it in a comfortable financial position. Besides, the bank’s gross NPAs stand at 7.69 per cent and net NPAs at 2.59 per cent – among the best in the industry at present.

The elderly stock broker feels that the Bajaj group should positively think of acquiring the bank. This will be a win-win situation for all – the bank, employees, customers, the Bajaj group and Maharashtra, he adds.

(CMP Rs. 22.35, 52 week H/L Rs. 28/7, BV Rs. 16.60, FV Rs. 10)

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Prestige Estates Projects (BSE Code 533274)

A research analyst working with a mutual fund and tracking the real estate sector favours investment in Prestige Estate Projects, a Bengaluru-headquartered real estate developer. After completing over 200 landmark projects in Bengaluru, the company has now extended its expertise to major cities across south India, including Chennai, Hyderabad, Kochi, Mysuru, Mangaluru and Goa. During the last one decade, the company has become a name that is synonymous with innovation. It has pioneered many landmark developments and introduced many firsts to south India.

The company is doing very well on the financial front. During Q3 FY2021, it has achieved pre-sales of Rs 2020 crore, suggesting a 55 per cent spurt over that in the same quarter a year ago. Collections are also higher at Rs 1,430 crore, indicating a 26 per cent spurt, and a similar performance is expected in the next couple of quarters. The company has signed a term sheet with BREP Asia II for investment in or acquisition of interest in the identified asset of the company and/or its subsidiaries. This will give a boost to the company’s topline as well as bottomline.

(CMP Rs. 301.30, 52 week H/L Rs. 325/133, BV Rs. 135.20, FV Rs. 10)

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Mahindra CIE Automotive (BSE Code 532756)

A research analyst working with a leading brokerage house is bullish on Mahindra CIE Automotive. The company, a subsidiary of CIE Automotive Group of Spain (which holds 51 per cent stake), with Mahindra holding a 20 per cent stake,is a leading player in the auto ancillary sector globally.

The CIE group of Spain is engaged in supplying automotive components, including crank shafts and stubs excels, ductile, iron castings like housings, manifolds, turbo-chargers and cast crankshafts, stampings, gears and shafts, among others, to the global automotive industry The company is doing very well on the financial front. During the last quarter of calendar year 2020 (OctoberDecember), the company reported a consolidated total income of Rs 1,965.08 crore or over 13 per cent higher as compared to the corresponding quarter last year. It reported a net profit of Rs 111. 67 crore as compared to Rs 12.6 crore in the same quarter a year ago – when it was hit hard by the higher tax outgo.

Prospects for 2021 and ahead are all the more promising as the demand for the company’s products in the Indian market is on the rise. What is more, even the profit margins are getting better.

Shares of the company are available in the range of Rs. 180-190, which is quite an attractive valuation, judging from its prospects.

(CMP Rs. 183.40, 52 week H/L Rs. 235/59, BV Rs. 129.50, FV Rs. 10)

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Linde India (BSE Code 523457)

Last month, a literal storm of buying pushed up the share price of Linde India from the range of Rs 375-385 to the range of Rs 1,640-1,650, reflecting an unprecedented spurt of 341 per cent in the history of the company. The spurt in prices is baffling as no rational reason is forthcoming for the sudden upsurge. However, unmoved by the unusual and sudden jump in prices, an observer insists this is just the beginning. The share price will soon cross the Rs 2,000-mark, he notes.

According to him, the stock was terribly under rated. This is even after a four- to five-fold spurt quoted at a P/E ratio of just 13.7 per cent, that too at a time when almost half the number of companies quoted on recognized stock exchanges have P/E ratios above 19 times and several companies are quoted at a P/E ratio of above 42x.

According to this observer, the company, earlier known as Indian Oxygen and subsequently renamed BOC India Ltd., was then renamed Linde India after the Linde group took over BOC UK. It is doing very well as a leading manufacturer and supplier of gases. During Q4 of calendar year 2020, its net sales amounted to Rs 475.43 crore, suggesting a rise of over 15 per cent as compared to the corresponding quarter of the last year. The net profit has however slumped from Rs 634.60 crore to Rs 62.29 crore on account of the tax issue. The board of directors has however proposed an equity dividend of 30 per cent.

The company is doing extremely well on the oxygen supply front. The corona vaccines transactions has also given a big boost to Linde. Some observers point out that having failed in its attempt to delist in the past, the company may once again go for delisting.

(CMP Rs. 1730.00, 52 week H/L Rs. 1835/378, BV Rs. 262.00, FV Rs. 10)

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Sanofi India (BSE Code 500674)

An equity research analyst tracking the pharmaceutical sector favours investment in Sanofi India. He maintains that there is a rebound in India’s pharmaceutical growth, which bodes well for Indian subsidiaries of multinationals — and Sanofi is one of them. Sanofi’s products in categories like pain relief (Combiflam), anti-allergic (Allegra and Avil), cardiology (Cardace) and diabetes management (Lantus, Amaryl M, Toujeo) have been strong growth drivers. At least four, Lantus, Amaryl, Allegra and Combiflam, feature among India’s top 100 pharma brands, say analysts. The power brands and their line extensions coupled with price hikes are expected to help growth prospects. The key growth drivers include its insulin portfolio (led by Lantus), Allegra and the recently launched Combiflam topical pain relief gel/spray. The diabetic portfolio remains strong and is expected to grow, as the segment remains under-penetrated and is also growing at a fast pace. The company’s focus on the chronic segment is positive, say analysts, as chronic medicines tend to have consistent long-term demand, better margins and provide visibility for better growth.

Sanofi saw some impact on margins during Q4. This was the fourth quarter for Sanofi, which follows a January-December financial year. Analysts feel that as business activities resumed with the easing of lockdown curbs, there was a jump in other expenses. This is expected to normalize as revenue growth picks up pace.

The company has produced encouraging numbers despite Covid-19. Though the sales turnover during the year ended December 2020 degrew 5.5 per cent yoy to Rs 2,902 crore — mainly due to divestiture of a few products to Zentiva (Ankleshwar slump sale) and the Covid19 impact — EBITDA margins improved 29 bps yoy to 24.8 per cent, mainly due to lower other expenditure and slightly better gross margins. Subsequently, EBITDA grew 7.2 per cent to Rs 713 crore and the net profit grew 9.7 per cent to Rs 519 crore. The company declared an a dividend of Rs 125 per share and a one-time special dividend of Rs 240 per share due to the sale of the Ankleshwar facility. Shareholders of the company are upbeat on account of a bumper dividend and promising prospects ahead.

(CMP Rs. 8325.00, 52 week H/L Rs. 8999/5900, BV Rs. 920.10, FV Rs. 10)

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Dabur India (BSE Code 500096)

A small but visionary endeavor of far-sighted Dr SK Burman to provide effective and affordable, mainly ayurvedic, cures for ordinary people in rural areas has grown to become a banyan tree with changing times and demands. The Burman family has strived hard to maintain quality at every stage and meet the changing demands of the growing business. The company has made rapid strides, consumers have accepted its products, and rating agencies have given it attractive credit ratings. The company is doing very well on the financial front.

During Q3FY21, its domestic volumes grew by a healthy 18 per cent. Health supplements OTC and ethicals, shampoos and oral care posted healthy growth between 28 per cent and 34 per cent. If the current trends are any indication, healthcare and oral care products are expected to do very well going ahead. A leading stock brokerage house has predicted that during the next three years, revenues and net earnings are likely to clock 14 per cent and 16 per cent. Many analysts see the stock price crossing Rs 600 in the coming quarters.

(CMP Rs. 526.40, 52 week H/L Rs. 553/385, BV Rs. 40.30, FV Re. 01)

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