Global View: UltraTech, Tech Mahindra and Devyani International could give 10-14% return

The Indian markets are likely to consolidate on Tuesday tracking muted global cues, but there will be stock-specific action in which global brokerage came out with their reports on business development, or earnings outlook.

We have collated a list of recommendations from various global brokerage firms according to a Zee Business TV report:

UltraTech Cement: Buy| Target Rs 9,000

Goldman Sachs maintained a buy rating on UltraTech Cements post-December quarter results but raised the target to Rs 9,000 from 8,800 earlier that translates into an upside of 14 per cent from Rs 7,870 recorded on 17th January.

The results were in-line with estimates, but the near-term outlook remains mixed. The structural thesis is intact. UltraTech remains the top pick given its capacity expansion plans, scale, pricing premium, and increasing Green power share, which will drive higher volume growth and margin expansion.

Tech Mahindra: Outperform| Target Rs 1,950

CLSA maintained outperform rating on Tech Mahindra post-December quarter results with a target price of Rs 1950 that translates into an upside of over 13 per cent from Rs 1722 recorded on 17th January.

CTC is Tech Mahindra’s largest and among its most expensive acquisitions, the transactions will close immediately and will add 1.5% to TechM’s revenue in FY23.
 
The management emphasised that the acquisition is both margin and EPS accretive. The transactions are aimed to add digital capabilities and domain knowledge in the insurance vertical besides nearshore delivery capacity.
 
CTC has a scale presence in a fast-growing market with healthy margins. However, at 4x 2021 sales, the valuation is at the upper-end of the range for similar transactions in the space and thus, its commercial rationale hinges on TechM’s ability to realise cross-sell opportunities.

Also Read: Anil Singhvi’s Strategy January 18: Day support zone on Nifty is 18,200-18,250 & Bank Nifty is 38,000-38,125​

Devyani International: Outperform| Target Rs 207

CLSA initiated coverage on Devyani International with an outperform rating and a target price of Rs 207 that translates into an upside of over 10 per cent from Rs 187 recorded on 17 January.

Devyani International (DIL) is Yum! Brands’ largest franchisee in India, with more than 705 stores including KFC, Pizza Hut and Costa Coffee.
 
The company is a diversified QSR leader. The Ebitda is expected to grow 4x in FY21-24 with high FCF. With a portfolio of highly recognised global QSR brands, DIL is positioned to ride its core brand business momentum with an aggressive 29% store network CAGR estimated for FY21-24.
 
A net-cash balance sheet (ex-lease liability) and expected Rs5.8bn of cumulative adjusted FCF in FY22-24 provide enough headroom for inorganic growth opportunities.

(Disclaimer: The views/suggestions/advices expressed here in this article is solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)