Stock Tips: Based on the financial results of the first quarter of the current financial year, the brokerage firm has reviewed its stock recommendation. Apart from this, analysts have given rating based on the financial position and future plans of Aditya Birla Group’s flagship company Grasim Industries, country’s multi-national real estate company Shobha and telecom company Vodafone Idea. Analysts have rated ‘Ad’ for Grasim Industries and Shobha while Vodafone Idea has been rated ‘Neutral’.
- According to Kotak Institutional Equities, the EBITDA of Aditya Birla Group’s flagship company Grasim in the first quarter of the current financial year, April-June 2021, has been as per estimates. The company has been in good financial health due to higher VSF (Viscose Staple Fibre) prices despite lower sales. VSF business will keep the company’s financial position better due to increasing demand and higher prices going forward. On the other hand, chemical margins are also recovering from record low levels.
- According to Kotak Institutional Equities, the capacity of Grasim’s VSF and Chemicals division is likely to increase by 30 per cent in the next 6-12 months, which will accelerate volume growth.
- The company has set a target to pay off all debt in the current financial year 2022 by reducing stake in the fertilizer business.
- Keeping all the above in view, Kotak Institutional Equities has increased the Fair Value of this stock from Rs.1520 to Rs.1675 and has retained the rating of ‘Add’. On August 23, its stock closed on NSE at a price of Rs 1,438.
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- Despite the second wave, the country’s multi-national real estate company Shobha’s pre sales stood at about 0.9 msf (million sq ft) in the first quarter of April-June 2021, up 38 per cent year-on-year but down 33 per cent on a quarterly basis. Stayed.
- Its share in new sales stood at Rs 570 crore, up 45 per cent year-on-year and down 35 per cent on a quarterly basis.
- The debt of the company has also reduced. In the April-June 2021 quarter, the company’s total debt stood at Rs 2820 crore, which was Rs 2850 crore in the last quarter of the last financial year, January-March 2021. The company’s management has indicated that the company’s focus will remain on cash flow management so that debt can be reduced. Presently the company’s debt to equity (Net Debt/Equity) is around 1.15 (1.15x).
- Analysts at brokerage firm Edelweiss expect sales to pick up on the back of recovery in home demand and Shobha’s launch of around 12.6 msf is also in the pipeline.
- Edelweiss retained Shobha’s ‘Buy’ rating and raised its target price from Rs 574 to Rs 709 per share. Analysts have cut the weighted average cost of capital, removed the NAV discount and increased its target price based on the estimated valuation of December 2022. On August 23, it closed at Rs 569.40 on NSE.
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- The health of Vodafone Idea, which is facing financial crisis, was negatively affected due to the lockdown imposed due to Corona and the fall in ARPU (Average Revenue Per User). Its adjusted EBITDA in the first quarter April-June 2021 of the current financial year declined to Rs 1280 crore as compared to Rs 1710 crore in January-March 2021.
- The company is facing a challenge with investments in its growing network and non-convertible debentures (NCDs) of Rs 6470 crore, deferred spectrum repayment of Rs 8200 crore and AGR (Adjusted Gross Revenue) in FY 2021-22. I am facing difficulties in payment of installment.
- The company is focusing on investing in 16 circles. 94 percent of the revenue comes from these circles.
- In the April-June 2021 quarter, the company has got a tax refund of Rs 1 thousand crore and now the balance receivable of the company is Rs 5800 crore.
- The company has increased the entry level tariff of postpaid/prepaid plans thereby making cash available to the company for repayment and capital expenditure.
- According to analysts of brokerage firm Motilal Oswal, by raising capital or getting a relief package from the government, the company can get immediate liquidity support for debt of Rs 19.07 thousand crore including AGR liability. The analyst of the brokerage firm has retained the ‘neutral’ rating of the stock. Its stock closed at Rs 6 per share on NSE on 23 August.