ICICI Securities(BSE Code 541179)

A septuagerian, knowledgeable stock broker is bullish on ICICI Securities. He is astonished at the speed at which this subsidiary of ICICI Bank is attracting customers, putting experienced brokers to shame. The technology-based securities firm offers a wide range of financial services, including investment banking, institutional broking, retail broking, private wealth management and financial product distribution. Today, it is the undisputed leader in the broking segment with over around 50 lakh operational accounts. There has been a steady flow of customers to the company, which added 3.5 lakh customers in Q4 of fiscal 2021.

What is more, the company’s performance in the segment of distribution of financial products has also recorded strong growth. During Q4FY21, the distribution revenue shot up by 22 per cent to Rs 141 crore. During Q4FY21, almost all the product lines recorded remarkable growth. In the case of the mutual funds segment, the assets under management (AUM) shot up by 20 per cent to Rs 41,300 crore. The revenue growth in the institutional equity segment jumped up 30 per cent to Rs 48 crore and the revenue from investment banking more than doubled to Rs 53.30 crore. The company has sustained its pace of growth. During the last five years, its revenues have expanded from Rs 1,404 crore in fiscal 2017 to Rs 2,585 crore in fiscal 2021, with the profit at net level spurting from Rs 337.61 crore to Rs 1,067.55 crore during this period.

Prospects ahead are all the more promising as Covid-19 and the resultant lockdowns have spread the equity cult at a fast pace, bringing in a sizeable number of new investors to the stock market.

(CMP Rs 454.00, 52 week H/L Rs 569/343, BV Rs 56.50, FV Rs 05)

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Cyient Ltd (BSE Code 532175)

A research analyst working with a leading brokerage house strongly recommends investment in Cyient, a threedecade-old mid-cap company operating in the IT software sector. The company is doing very well on the financial performance front. During Q4FY21, it registered a revenue growth of 6 per cent qoq in US dollar terms, which was led by a 16.4 per cent spurt in DLM and a 3.7 per cent rise in growth in the services business. Prospects for the current year are all the more optimistic with the management guiding for a double-digit growth in fiscal 2022. What is more, with a modest increase in revenues, the company has recorded a highly satisfactory profit margin during Q4FY21 with its EBIT margin improving by 150 bps qoq to 12.6 per cent – which is incidentally the highest during the last two years. The margins are likely to further improve during fiscal 2022. The company’s strategy for growth is highly positive, imaginative and effective. Its focus is on large deals (during Q4FY21 it has won eight multi-year big deals with a TCV of $ 91 million), client mining, a healthy order book (in Q4FY21 it registered a 22 per cent increase in the order book), and organization restructuring to accelerate growth to a healthy revenue trajectory in the coming years. This, coupled with recovery in aerospace in DLM, bodes well for revenue growth in the coming years.

The stock price has reached near Rs 700 and is expected to move slowly but steadily to the four-figure level in the coming couple of years.

(CMP Rs 749.65, 52 week H/L Rs 774/184, BV Rs 268.70, FV Rs 05)

Bajaj Consumer Care Ltd (BSE Code 533229)

An analyst with a Mumbai-headquartered fund favours investment in Bajaj Consumer Care Ltd. The menace of the pandemic and the resultant lockdowns and curfews have not adversely affected the company’s performance. In fact, during Q4FY21, the company reported a 40 per cent spurt in revenues to Rs 246 crore and the profit at net level shot up 120 per cent to Rs 53.9 crore.

Interestingly, the rural market performed excellently for the company with a 61 per cent growth, while the urban segment has shown recovery with a 23 per cent growth. Almond Drop Hair Oil (ADHO), the flagship product of the Bajaj group beautycare company, continued to put up a heartwarming performance across geographies because of good acceptance of large packs as well as the launch of a new SKU. In fact, ADHO’s marketshare improved from 60.8 per cent in March 2020 to 62.1 per cent in February 2021 in the light hair oil category. A new variant of ‘amla’, styled Bajaj Amla Aloe Vera, relaunched across key markets also gave a good account of itself and the company’s marketshare in the category of ‘amla’ hair oil went up from 1.7 per cent to 2.5 per cent.

The pace of growth of the company has quickened even under the disturbing situation of the pandemic on account of the growth strategy devised by the company’s new managing director, Jaideep Nandi, whose focus is on product refresh, sharper marketing and distribution, visibility in retail and growing a non-ADHO portfolio.

Though during the last five years, the sales turnover has expanded from Rs 790 crore in fiscal 2017 to Rs 898 crore in fiscal 2021, the net profit has risen only marginally from Rs 220 crore to Rs 223 crore. A spurt in the prices of raw materials has contributed in the negligible increase in earnings. But now, under the pro-active policies of the new managing director, the situation will change and the company is now expected to put up numbers. It seems the time has come for rerating the stock, which is available at an attractive price of Rs 280.

(CMP Rs 279.65, 52 week H/L Rs 324/129, BV Rs 51.30, FV Re 01)

GTPL Hathway (BSE Code 540602)

An equity research outfit of a leading bank is bullish on GTPL Hathway, an Indian cable television service operator, which was the first company to provide internet using the CATV network in India and also the first cable operator to launch a digital platform. The company is doing very well and has put up a robust performance in Q4FY21, with net sales during the January-March 2021 period growing 14.19 per cent to Rs 748.72 crore as compared to Rs 655.65 crore in the same quarter a year ago, and the net profit taking a long jump of 517.5 per cent – from Rs 13.63 crore in March 2020 to Rs 56.90 crore. This strong operational performance is attributed to a remarkable growth in the broadband segment. During Q4FY21, the company recorded a 77 per cent yoy spurt in its consolidated broadband revenue, with revenue touching Rs 81.7 crore. During fiscal 2021, the company added 230,000 broadband users with as many as 45,000 net additions recorded in Q4.

The highlight of fiscal 2021 was the growth in subscription revenues for both CATV and the broadband business, strong profitability, a net debt-free status, geographical expansion, a healthy balance sheet and improved return ratios. Future prospects are all the more promising as the company has maintained a target of 50 per cent growth in cable TV subscribers over the next three years on the back of expansion in newer markets, and through the inorganic route. The company also sees growth opportunities in the wireline broadband segment which has the potential to turn into a growth driver for the company. Today, wireline broadband has a 6% penetration in India as against 80 per cent in Japan, 70 per cent in the Eurozone and 55 per cent in China.

(CMP Rs 132.65, 52 week H/L Rs 163/40, BV Rs 78.30, FV Rs 10)

Swaraj Engines (BSE Code 500407)

An independent market research analyst tracking agribusiness, among other things, strongly believes that there is an excellent growth potential in Swaraj Engines, a leading manufacturer of tractor engines. The company has come out with excellent numbers for Q4FY21 with the engine sales volume shooting up 62 per cent yoy to 33.83 lakh units. This led to an all-time high sales volume at 113,269 units in the full fiscal year 2021.

With sales expanding from Rs 773 crore in fiscal 2020 to Rs 987 crore in fiscal 2021, the profit at net level has jumped from Rs 71 crore to Rs 93 crore.

Prospects for the company going ahead are highly encouraging as the tractor industry has been at the forefront of farm mechanization in India. The segment was the clear outlier in fiscal 2021 with industry volume growing by 20 per cent yoy against a decline for other segments in the automobile space. With expectations of normal rainfall in the upcoming monsoon season (IMD forecast pegged at 98 per cent of LPA), the tractor industry is poised to grow in fiscal 2022 also. This bodes well for engine manufacturers like Swaraj. Gauging long-term sustainable demand prospects, the company is expanding its manufacturing capacity from 1.35 lakh units to 1.5 lakh units through internal accruals. The company has declared a handsome dividend of Rs 69 per share for fiscal 2021, pushing up the dividend payout ratio to 90 per cent vs. 70-80 per cent in the past. This will give a boost to return ratios with ROCE inching up to 45 per cent in fiscal 2022.

(CMP Rs 1436.30, 52 week H/L Rs 1709/938, BV Rs 231/10, FV Rs 10)

Shriram Transport Finance (BSE Code 511218)

An investor manager of a commercial bank favours investment in Shriram group non-banking finance company which predeominantly financer used and new commercial vehicles. Despite the Pandemic Covid-19, the company put up an exceedingly encouraging show for the Q4 FY2021 with net interest income rising 9.65 per cent to Rs. 2151.12 crore from Rs. 9161.74 crore in the corresponding quarter of the last year and the profit at net level shooting up by 238 per cent to Rs. 754.93 crore as against Rs. 223.38 crore in the same period a year ago. The company has declared a final dividend at Rs. 6 per share of Rs. 10 each (60 per cent) which will take the total dividend for the fiscal 2021 to Rs. 18 per share (180 per cent). The company has recorded an improvement in the asset quality with its gross NPA and net NPA as on March 31, 2021 standing at 7.06 per cent and 4.22 per cent respectively against 8.36 per cent and 5.62 per cent by the same period a year ago. Prospects for the company going ahead are highly promising as it has emerged as the largest asset financial NBFC in the country with total assets under management spurting to Rs. 1.17 trillion as on March 31, 2021.

(CMP Rs 1299.15, 52 week H/L Rs 1535/514, BV Rs 717.90, FV Rs 10)

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