“I feel that with the product mix change in favour of high yielding assets like credit card loan, MSME and personal loan, ICICI Bank’s NIM and ROA going forward should sustain at the level of 4.5% and 2% respectively. At the current market price, the price to book is around 2.4 times FY25 price to book multiple.”
Sunny Agrawal, Head of Fundamental Equity Research, SBI Securities, “for FY23, Mrs Bector’s has reported net sales of around Rs 1,362 crore and net profit of Rs 90 crore. Our estimate suggests that sales are likely to expand from Rs 1,362 crore in FY23 to Rs 1,891 crore, almost Rs 1,900 crore in FY25 and net profit of Rs 90 crore from FY23 to Rs 167 crore in FY25. ”
Just going through some of the buy calls that you are issuing out. I just wanted to get a sense of names like Mrs Bectors Food right now. I have picked up this one because you have already seen a massive rally in the stock year to date. How much more of an upside do you think the stock can garner on a 12-month basis? And what makes you so bullish on this story?
My price target for Mrs Bectors Food is around Rs 1358. As we all know, Mrs Bectors Food is one of the leading players in the biscuit and bakery category in North India. Their biscuit brand is Cremica and on bakery side, English Oven is the brand which they are riding the rally on.
Looking at the success in North India, they are now expanding on a pan India basis. Many plants are likely to get commercialized over the next six to 12 months. One of the lines of biscuit in Punjab is likely to get commercialized in this quarter. Then there is a plan to expand the capacity of the biscuit line in MP. That plant is likely to get ready by FY25.
In addition to that, one bakery plant in NCR with an estimated capex cost of Rs 33 crore is likely to get commissioned by the third quarter of FY24. In addition to that, the company is scouting for land in Khopoli, Maharashtra, where again the bakery product will be expanded. We feel that for FY23, the company has reported net sales of around Rs 1,362 crore and net profit of Rs 90 crore. Our estimate suggests that sales are likely to expand from Rs 1,362 crore in FY23 to Rs 1,891 crore, almost Rs 1,900 crore in FY25 and net profit of Rs 90 crore from FY23 to Rs 167 crore in FY25.
So we will see a massive jump in sales volume and earnings over the next two years. That makes us bullish on Mrs Bectors Food with a price target of Rs 1,358 for next 6 to 12 months.
I find an interesting name from the real estate pack, Kolte Patil. Most of the houses and analysts are positive on DLF, Godrej Properties or even Lodha. You are picking up Kolte Patil, why?
Kolte Patil is one of the leading players as far as Pune market is concerned. And we have seen a very healthy traction in terms of the project launch pipeline as well as the sales. In addition to that, Kolte Patil has recently ventured into the Mumbai market. There also, they are seeing very healthy sales.
My price target for Kolte Patil is a high of Rs 570 within the next 6 to 12 months. We expect the company to deliver a profit of Rs 223 crore in FY25 as compared to Rs 102 crore in FY23. And sales of around Rs 1900 crore in FY25 as compared to Rs 1,488 crore in FY23.
You have Maruti, UltraTech Cement, Polycab, Kalyan Jewellers, Praj Industries, Good Luck India, as well. Let us just talk about ICICI Bank a bit more. It has been quite an underperformer. When do you see it coming out of the hiatus and what levels are you watching out for?
I feel ICICI Bank has delivered a robust set of results for Q2. We have seen NII and net profit growing by around 24% and 36% to 18,300 crore and 10,261 crore. It is the second largest private sector bank in India, of a very robust asset quality. We have seen some pressure on NIM in this quarter. NIM was down by 30 basis points due to repricing of the deposit and CASA market becoming more challenging. But I feel that with the product mix change in favour of high yielding assets like credit card loan, MSME and personal loan, the NIM and ROA going forward should sustain at the level of 4.5% and 2% respectively.
At the current market price, the price to book is around 2.4 times FY25 price to book multiple.
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