Monthly Stock Recommendation – October, 2022

Consider the prices as on 4^th  October 2022 at 10am

ICICI Bank Ltd:

ICICI Bank is a publicly held banking company engaged in providing a wide range of banking and financial services including commercial banking and treasury operations. On consolidated front, the bank has reported 49.6% growth in the Net Profit to Rs 6,905 crore for the quarter ended June 2022, up from Rs 4,616 crore in the quarter ended June 2021. Net Interest Income increased 20.8% to Rs 13,210 crore, while other income moved up 24.9% to Rs 4629 crore. The operating profit improved 19% to Rs 10,273 crore in the quarter ended June 2022. Provisions and contingencies have moved down 60% to Rs 1,144 crore. Net Interest Margin grew to 4.01% (QoQ) in Q1FY23 from 4.00% in Q4FY22. The CASA ratio of the bank stood at 45.8% and the cost of liability is one of the lowest among its peers at 3.32%.

 

Ultratech Cement Ltd:

UltraTech Cement is engaged in the manufacture and sale of Cement and Cement related products. It is the largest cement manufacturer in India with domestic grey cement capacity of 114.6 million tonnes per annum (consolidated grey cement capacity of 120 mtpa) as of FY22. It is also engaged in white cement, wall care putty and ready mix concrete business segments. Company’s capacity utilization is at 83% up 11% Year on Year. On consolidated front, Ultratech reported 27% growth in the Revenue to Rs 15,273 crore for the quarter ended June 2022, up from Rs 12.035 crore in the quarter ended June 2021. Net Profit decreased because of rising power & fuel cost and logistics cost, stood at Rs 1,584 crore for the quarter ended June 2022. The company has announced robust expansion plan of 22.6 million tonnes per annum and expects capacity of 153.85 mtpa by FY25; post which expansion is planned to take capacity to ~200mtpa by FY30.

ITC Ltd:

ITC is one of India’s foremost multi-business enterprises. Its diversified portfolio of businesses is spanning in FMCG, Paperboards & Packaging, Agri Business, Hotels and Information Technology. It delivered robust performance across all segments in the June 2022 quarter. Revenue of the company increased 39% to Rs 18,353 crore in the June 2022 quarter, up from Rs 13,183 crore in the June 2021 quarter. Its Net profit also rose to 34% (YoY) to Rs 4,389 crore in the quarter ended June, 2022. The company’s cigarette business grew by 29% to Rs 7464 crore during the quarter, while FMCG-others business, which includes packaged food and personal care products, grew 19% to Rs 4,458 crore; the segment’s EBITDA Sustained at 7.8% to Rs 347 crore. ITC reported a healthy performance across segments despite a challenging operating environment driven by COVID-19 induced uncertainty and volatility as well as due to historically high inflation, geopolitical tensions, and supply chain disruptions. Also foreign portfolio investors have been increasing their positions in ITC for the last three quarters.

Reliance Industries Ltd:

Reliance Industries is engaged in activities spanning across hydrocarbon exploration and production, Oil to chemicals, retail, digital services and financial services. It delivered strong O2C earnings with firm demand and extraordinary dislocation in energy markets causing supply constraints. Consolidated revenue of the company rose 57% YoY to Rs. 2,19,304 crore in the June 2022 quarter compared to 1,39,949 crore in the previous year same quarter and Net Profit increased 46% YoY to Rs. 17,955 crore for the Q1 FY23. Oil and Gas business of Reliance benefited from higher production in KGD6 and improved realizations. Reliance Jio net subscriber addition shows a strong rebound to 9.7 Million because of traction in FTTH and improved ARPU. In the latest AGM held in the August, company announced the launch of 5G services from this Diwali in major metro cities while retail business expansion through launching its own FMCG product is noteworthy.

 

Tata Chemicals Ltd:

 

Tata Chemicals Limited is in the manufacturer of soda ash and sodium bicarbonate for diverse industries, such as glass, detergents, silicates, textiles, food, pharmaceuticals, animal feed, mining and chemical processing. Tata Chemicals reported 34% increase in its consolidated net sales for the quarter ended June 2022 to Rs 3,995 crore compared to corresponding previous year period because of robust soda ash demand. Net profit of the company was up 104% to Rs.589 crore compared to Q1FY’22 while operating margin of the company rose 350 bps to 27.2% for the same quarter. Specialty products sales grew 17% YoY for the June quarter.

Mahindra & Mahindra Ltd:

Mahindra & Mahindra is the flagship Company of the Mahindra Group. The core business is mobility products and farm solutions. The company offers a wide range of products and solutions ranging from SUVs, pickups, commercial vehicles and tractors, to electric vehicles, two-wheelers, gensets and construction equipment. Total Revenue of the company increased 48% to Rs 28,412 crore in the June 2022 quarter, up from Rs 19,172 crore in the June 2021 quarter. Its Net profit grew robustly by 418% (YoY) to Rs 2,196 crore in the quarter ended June, 2022. M&M’ auto sales for the September 2022 grew exponentially by 129% YoY to 64,486. Domestic sales for the M&M auto seen huge rise of 142% while exports remain contracted due to global slowdown. It took No. 1 position in SUV Market with 34,262 UV sales in September 2022. The automaker’s tractor dispatches also saw highest-ever monthly sales in September 2022 with growth of 21% year-on-year to 48,713 units.

 

Zydus Lifesciences Ltd:

 

Zydus Lifesciences is engaged in an integrated pharmaceutical company with business encompassing the entire value chain in the research, development, production, marketing and distribution of pharmaceutical products. The product portfolio of the Company includes Active Pharmaceutical Ingredients [API] and human formulations. Total revenue of the company stood at 3,922 crore for the quarter ended June 2022 and Net profit stood at 518 crore for the same period. Ebitda margin was at 20.5% for the June quarter contracted by 272 basis points YoY mainly due to lower gross margins; major revenue (around 40%) came from United States. The Research & Development cost of the company is at 7% of the total revenue. Zydus Lifesciences’ focus on cost optimisation helped sustain Ebitda margin of 20% plus amid high input cost pressures which is positive for the company. It generated 315 ANDA approval out of 428 ANDAs filed in the US.

 

Dr. Reddy’s Laboraories Ltd.:

 

Dr.Reddy’s Laboratories is engaged in Pharmaceutical Services and Active Ingredients, Global Generics and Proprietary Products. The company offers a portfolio of products and services, including Active Pharmaceutical Ingredients (“APIs”), Custom Pharmaceutical Services (“CPS”), generics, biosimilars and differentiated formulations. Total Revenue of the company increased 6% YoY to Rs 5,215 crore in the June 2022 quarter. Its Net profit grew robustly by 212% YoY to Rs 1,189 crore in the quarter ended June, 2022. Operating profit margin for the Q1FY23 rise by 171 bps YoY to 34.6%. Company spent 8.3% out of total revenue on the Research and Development for the same quarter.

 

Siemens Ltd.:

Siemens is engaged to offer products, integrated solutions for industrial applications for manufacturing industries, drives for process industries, intelligent infrastructure and buildings, efficient and clean power generation from fossil fuels and oil & gas applications, transmission and distribution of electrical energy for passenger and freight transportation, including rail vehicles, rail automation and rail electrification. The company delivered strong performance despite challenging environment in Q1FY23. Total sales rose 50.5% to Rs 4,198 crore in the June 2022 quarter, up from Rs 2,789 crore in the June 2021 quarter. Its Net profit grew significantly by 112% YoY to Rs 300.7 crore in the quarter ended June, 2022.

 

Hindustan Aeronautics Ltd.:

 

Hindustan Aeronautics is engaged in the design, development, manufacture, repair, overhaul, upgrade and servicing of a wide range of products including, aircraft, helicopters, aero-engines, avionics, accessories and aerospace structures. The company delivered robust financial performance in the June quarter. Total sales grew 124% and Net profit grew 218% YoY to Rs 3,622.5 crore and 620 crore respectively in the quarter ending June 2023. Ebitda margin increased 781 basis points to 22.8%. Continuous order inflows in maintenance, repair & overhaul (MRO) with strong order pipeline of 1.25 lakh crore in manufacturing for the next three to four years and execution of other key orders and sustained growth in MRO will drive revenue growth in double digits in coming period.

 

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