In today’s briefing:
- Cipla: Rigor on Portfolio Execution and Cash Generation Initiatives to Support Growth
- Growth, Margin Concerns Resurface for Auto Sector Amid Prevailing Geopolitical Crises
- Initiating Coverage:Indiamart Inter.
- JK Cements: Paint Business Foray to Complement Wall Putty Business
- Jubilant FoodWorks (Update): CEO quits adds risks on all fronts. Maintain REDUCE
- Pick of the Week: Kotak Mahindra Bank
Cipla: Rigor on Portfolio Execution and Cash Generation Initiatives to Support Growth
- We initiate coverage on CIPLA Ltd (CIPLA) with a BUY rating and a target price of Rs 1,200 (PE 24x for FY24E EPS), implying an upside of 15.5% from the current levels.
- CIPLA continuous to focus on the demand levers in the chronic and acute therapies and complex products in its existing as well as pipeline portfolio
- The company’s active advancement of innovative consumer-centric products is expected to accelerate the augmentation of the global consumer wellness franchise
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Growth, Margin Concerns Resurface for Auto Sector Amid Prevailing Geopolitical Crises
- Resurfaced chip availability concerns amid geopolitical issues Russia is the largest producer (~40% share in global production) of rare earth metal palladium, which is used in manufacturing of semiconductor.
- Further Ukraine is the largest producer of neon gas, which is another important component for semiconductor (chip) manufacturing.
- Therefore, any supply chain disruption of these critical raw materials in this space would impact the availability of chips, resulting in an adverse impact on OEM volumes and associated productivity.
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Initiating Coverage:Indiamart Inter.
- We assign 45x to the company’s FY24E earnings of Rs 150 to arrive at the target price of Rs 6,800/share, implying an upside of 52% from the CMP.
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JK Cements: Paint Business Foray to Complement Wall Putty Business
- The company is setting up plant to manufacture decorative paint with a total capital investment of Rs 600 Cr to be invested over a period of 5 years
- Entire capital investment for the paint business would be funded through equity infusion and redeemable preference capital by the parent JK Cement.
- We maintain our BUY rating on the stock and value it at 13x FY24E EV/EBITDA to arrive at a target price of Rs 3,100/share, implying an upside of 35% from the current levels.
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Jubilant FoodWorks (Update): CEO quits adds risks on all fronts. Maintain REDUCE
- We have seen CEO changes for various other consumer companies in the past, and most changes have been value accretive.
- However, we remain cautious until the new CEO showcases his execution capability.
- His exit (along with past exits of many members of senior management) is certainly adding several risks.
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Pick of the Week: Kotak Mahindra Bank
- We recommend a BUY rating on the stock with a target price of Rs 1941, implying an upside of 10% from the CMP.
- Kotak Mahindra Bank (KMB) offers diversified banking and financial products/services to customers in India and oversea
- Incorporated in 1985 as Kotak Capital Management Finance Ltd, the company has since ventured successfully into various branches of the financial services segment through its various subsidiaries
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