HDFC Securities upgrades target price of this chemical share, maintains buy rating on ICICI Bank; sees upside of up to 30% in these stocks

Brokerage house HDFC Securities sees up to 30 per cent return in specialty chemical maker Neogen Chemicals Ltd (NCL) and leading private lender ICICI Bank. Subscribing 'buy' rating, the brokerage has upgraded the target price for Neogen Chemicals, while maintained its previous target on ICICI Bank. The brokerage is bullish on these stocks over good show in the q3fy22 and expansion plan.  

Neogen Chemicals | CMP: Rs1692 | Target: Rs 2150

Upgrading target for this share, HDFC Securities said ramp-up in the capacity utilisation of the recently-tripled organic chemicals facility at Dahej will fuel near-term growth. EPS will more than triple to Rs 38.8/share in FY24E, from Rs 12.6/share in FY21, it said. It also said electrolyte formulation business will further play a pivotal role in continuation of the growth momentum.

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"We maintain a BUY on NCL, with a revised target price of Rs 2,150/share," it added.  

Recently, leveraging on its competencies in manufacturing advanced lithium-based salts, Neogen Chemicals Ltd (NCL) has announced the establishment of a 250- MT electrolyte formulation capacity. The Indian government has announced a USD 2bn production linked incentive (PLI) scheme to support manufacturing and localisation of Advanced Chemistry Cell (ACC) production units, with the aim of localising the supply chain. Currently, the company makes these lithium salts for non-electrolyte applications. Thus, electrolyte formulation is seen as a step forward in the value chain.  

Neogen Chemicals share has given over 130 per cent to its shareholder in one year and nearly 350% in two years. 

ICICI Bank | CMP: Rs 805 | Target: Rs 940

Being bullish over q3fy22 result posted by this leading private lender, the brokerage believes that ICICI Bank is building its risk-calibrated asset book to sustain its market share gains and profitability, although incremental RoA reflation is likely to be only marginal, going ahead. The bank’s relentless digital initiatives to further accelerate market share gains across retail and wholesale through NTB customer acquisitions and better cross-sell are also likely to bring a set of new challenges around higher opex intensity and sub-optimal pricing in the medium term.

"We raise our FY22E/FY23E earnings estimates by 1.5%/1% to factor in lower credit costs and maintain BUY with SOTP-based TP of INR940," said HDFC securities.