Credit Suisse initiates coverage on Delhivery with ‘outperform’; CLSA bullish on Lemon Tree
Credit Suisse (CS) has initiated coverage on Delhivery with an ‘outperform’ rating due to favourable industry structure and structural growth in e-commerce volumes. The same brokerage has maintained its ‘underperform’ rating on . CLSA said LemonTree is a ‘buy’ while Nomura India has a similar recommendation for ().
In the case of Delhivery, Credit Suisse sees a strong moat in terms of scale, network complexity and a versatile technology platform. It noted that the company’s parcel volumes doubled in FY22 compared with a 40 per cent market growth. It forecast a 29 per cent revenue CAGR for Delhivery over FY22-25. It prefers Delhivery to other internet peers due to no acquisition cost, diversified growth and cheaper valuation. The brokerage finds the stock worth Rs 675 at 24 times FY30 EV/Ebitda.
On JSW Steel, this brokerage believes that the stock trades at an expensive valuation despite the recent correction. It values the scrip at 6.5 times FY24 Ebitda to arrive at a target of Rs 425. The brokerage has lowered its FY23 and FY24 Ebitda estimates to factor in lower steel and elevated coal prices.
In the case of Lemon Tree, which has guided for a 100 per cent jump in revenues in FY23, CLSA said it remains positive on the recovery in occupancy and ARRs. Margin expansion in the March quarter was driven by a pick up in corporate demand, it said while suggesting a target of Rs 80 on the stock.
Nomura India, meanwhile, noted that Hindustan Unilever (HUL) parent Unilever Plc has appointed activist investor Nelson Peltz as a Non-Executive Director and a member of its compensation committee effective 20 July 2022. It noted that activist Investors in the recent past (before the pandemic) were pushing global consumer companies for better accountability to shareholders.
“They were pushing companies to overhaul boards, tighten costs, improve margins, exit underperforming businesses or loss-making categories that are not core to the company, and generate more profit for shareholders. This, in turn, should lead to pressure on its India subsidiaries to deliver margin expansion for its parent,” Nomura said.
The brokerage has maintained its ‘Buy’ rating on HUL, expecting a 12 per cent EPS CAGR over FY22-24. “We value HUL at a P/E of 55 times March 2024 EPS, implying a target price of Rs 2,575. At present, HUL trades at 50 times Mar-24 EPS,” the brokerage said.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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