Investment Series – XIV | Globe Capital Market LTD.

Company Name	Industry	Market Cap (Cr.)	LTP	TTM PE	Expected Target
ACC Ltd.	Cement	43408	2270	32.04	2850
BSE Ltd.	Exchange	8119	589	33.15	750
HDFC Bank Ltd.	Bank	7,80,184	1401	19.649	1775
Hero MotoCorp Ltd.	Auto- 2 Wheeler	50929	2549	19.21	3250
Larsen & Toubro Infotech Ltd.	IT	80757	4605	32.6	6450
REC Ltd.	NBFCs	24252	92	2.37	125
Tata Steel Ltd.	Metal	1,22,600	100	3.14	135
Zensar Technologies Ltd.	IT	4997	215	12.8	305

ACC Limited

Profile:
ACC Limited is a part of Adani Cement and one of India’s leading producers of cement and ready-mix concrete. ACC has 17 cement manufacturing sites, over 83 concrete plants and a nationwide network of channel partnersto serve its customers. With a world-class R&D centre in Mumbai, the quality of ACC’s products and services, as well as its commitment to technological development, make it a preferred brand in building materials. With sustainability at the core of its strategy, ACC is the first Indian Cement Company to sign the Net Zero Pledge with Science Based Targets.

Key Triggers:

management outlook: The post-monsoon quarter will see the traditional rebound for the cement sector, including for ACC. The Company has had significant cost pressures in the recent past due to steep fuel price rise. However, recent cooling off in energy costs will impact us positively in the coming quarters.
Expansion Plan: ACC has aggressive growth plans and its capacity expansion initiative through its new green field projects at Ametha is progressing well and is expected to be commissioned by March 2023.

Valuation & View:
At the current price of Rs 2270, the stock is trading at EV/EBITDA multiple of 10.65x which lower than within peers. Hence, we recommend a ‘BUY’ rating for the target price of Rs. 2850 in 12 months perspective.

Key Risk:

Future rise in fuel cost may dent profitability and growth.

Valuation Metrics
CMP (Rs.)	2270
Target Price (Rs.)	2850
NIFTY 50	17311
52 Week H/L	2785/1900
Market Cap (Cr.)	42600
P/E (ttm)	48.8
EPS (ttm)	72.14
P/BV (ttm)	3.04
Book Value (ttm)	738.09
Industry	Cement

Chart comparison with Sensex

Source: Ace Equity

BSE Limited

Profile:
BSE Limited is Asia’s oldest Stock Exchange and one of the most identifiable brand names in India with high levels of recognition among investors, intermediaries, and the public. In fact, today BSE is the world’s fastest exchange with a speed of 6 microseconds.

Key Triggers:

Future Opportunities:
1. Mutual Fund & Insurance Distribution Platform: India with a population of 1.3 billion people is on the cusp of an explosive growth in the Fintech space since the past 3-4 years. With a population of 300m+ people in the middle class and upper middle class across the 200 odd cities coupled with the fact that a major proportion of the population is young, the demand for innovative Fintech solutions across India is phenomenally high. This has fueled steady development in the Fintech space in financial products like mutual fund and Insurance.
2. Power Exchange : India’s power demand is expected to grow with the government’s focus of providing “24×7” clean and affordable power for all. Of around 1,200 billion units (bu) of electricity generated in India, the short-term market accounts for around 130-150bu.
Cash & Investments: As on March 31st 2022, the Company has cash & investments of Rs. 5480 cr. Which is 68% of the current market capitalization.

Valuation & View:
At the current price of Rs. 589, the stock is trading at ttm P/E multiple of 34.2x with ttm EPS of Rs. 17.22. Hence, we recommend a ‘BUY’ rating for the target price of Rs. 750 in 12 months perspective.

Key Risk:

Adverse economic conditions could negatively affect its business, financial condition and result of operations.

Valuation Metrics
CMP (Rs.)	589
Target Price (Rs.)	750
NIFTY 50	17311
52 Week H/L	1079/421
Market Cap (Cr.)	7963
P/E (ttm)	34.20
EPS (ttm)	17.22
P/BV (ttm)	3.03
Book Value (ttm)	196
Industry	Exchange

Chart comparison with Sensex

Source: Ace Equity

HDFC Bank Limited

Profile:
HDFC Bank Limited is one of the fastest growing Bank in India. It is well-positioned to capitalise on the India’s growth opportunity. HDFC Bank continues to focus on executing its ten-pillar strategy across various products and segments to create, catalyse and capture the next wave of growth. As of September 30, 2022, the Bank’s distribution network was at 6,499 branches and 18,868 ATMs / Cash Deposit & Withdrawal Machines (CDMs) across 3,226 cities / towns as against 5,686 branches and 16,642 ATMs / CDMs across 2,929 cities / towns.

Key Triggers:

Merger with HDFC Limited : Merger will create growth re-rating to the HDFC Bank. The management expects the merger to be completed earlier by Q1/Q2 of fiscal 2023-24. Only 2% of its customers source their home loans through HDFC Bank, while 5% do it from other institutions. The latter is equivalent to the size of its retail book. Home loan customers typically keep deposits that are 5 to 7 times that of other retail customers. And about 70% of HDFC Ltd.’s customers do not bank with HDFC Bank, after merger the bank will be benefited more.
Share swap ratio : The share exchange ratio shall be 42 equity shares, credited as fully paid up, of face value of Re 1 each of HDFC Bank for every 25 fully paid-up equity shares of face value of Rs 2 each of HDFC.

Valuation & View:
At the current price of Rs. 1447, the stock is trading at ttm P/BV multiple of 3.03x with ttm book value of Rs. 470.95. Hence, we recommend a “BUY” rating for the target price of Rs. 1775 in 12 months perspective.

Key Risk:

Company has low interest coverage ratio.

Valuation Metrics
CMP (Rs.)	1447
Target Price (Rs.)	1775
NIFTY 50	17311
52 Week H/L	1725/1272
Market Cap (Cr.)	8,04,548
P/E (ttm)	19.3
EPS (ttm)	74.97
P/BV (ttm)	3.24
Book Value (ttm)	446
Industry	Banks

Chart comparison with Sensex

Source: Ace Equity

Hero Motocorp Limited

Profile:
Hero MotoCorp (Hero) has been the largest manufacturer of motorcycles and scooters globally, for more than two decades. Over the past 10 years, it has rapidly expanded its capacity, geographic footprint, customer touch points and R&D capabilities to emerge as a truly global brand. It is present in both the motorcycles and the scooter segments, with a market share of nearly 48.3% and 10% respectively.

Key Triggers:

Hero Motocorp is a good proxy on rural market recovery: The Company is the best-placed to benefit from this expected revival in the rural economy (50% of the company’s domestic volumes are derived from rural India) considering its apt product portfolio, strong brand recall, and robust distribution network.
Electrifying Future: As the market leader and a global automotive major, the Company launches its maiden e-scooter in two variants V1 Plus at Rs. 1,45,000 and V1 Pro at Rs 1,59,000 (including subsidy cuts). While the bookings for this model will commence from October 10, deliveries will kick off in the second week of December.
Future Outlook:Demand for personal and sustainable mobility solutions continue to keep the global two-wheeler market buoyant. The expected softening in commodity prices and normalising semiconductor availability will aid in meeting the demand.

Valuation & View:
At the current price of Rs. 2554, the stock is trading at ttm P/E multiple of 19.3x with the ttm EPS of 132.68. Hence, we recommend a ‘BUY’ rating for the target price of Rs. 3250 in 12 months perspective.

Key Risk:

Slowdown in economy may dent growth in profitability.

Valuation Metrics
CMP (Rs.)	2554
Target Price (Rs.)	3250
NIFTY 50	17311
52 Week H/L	2950/2147
Market Cap (Cr.)	51061
P/E (ttm)	19.3
EPS (ttm)	132.68
P/BV (ttm)	3.11
Book Value (ttm)	822.18
Industry	Two-Wheeler

Chart comparison with Sensex

Source: Ace Equity

L&T Infotech Limited

Profile:
Larsen & Toubro Infotech Ltd offers extensive range of IT services like application development, maintenance and outsourcing, enterprise solutions, infrastructure management services, testing, digital solutions, and platform-based solutions to the clients in diverse industries.

Key Triggers:

LTI and Mindtree announce merger to create India’s next large-scale IT services player: The Boards of Directors have approved a composite scheme of amalgamation of both these independently listed IT services companies under the Larsen & Toubro Group. The proposed integration will see LTI and Mindtree join strengths to create an efficient and scaled-up IT services provider exceeding $3.5 Bn. The transaction is subject to shareholder and regulatory approvals. Upon the scheme becoming effective, all shareholders of Mindtree will be issued shares of LTI at the ratio of 73 shares of LTI for every 100 shares of Mindtree. The new shares of LTI so issued will be traded on the NSE and BSE. Larsen & Toubro Limited will hold 68.73 % of LTI after the merger. The merger is expected to enable the combined business to derive benefits by way of creating more opportunities for growth in customer relationships through enhanced attention to brand building.

Valuation & View:
At the current price of Rs 4622, the stock is trading at ttm PE multiple of 32.6 times. Hence, we recommend a BUY rating for the target price of Rs 6450 in 12 months perspective.

Key Risk:

Any change in merger plans will effect its valuation and performance.

Valuation Metrics
CMP (Rs.)	4642
Target Price (Rs.)	6450
NIFTY 50	17311
52 Week H/L	7595/3733
Market Cap (Cr.)	83225
P/E (ttam)	32.6
EPS (ttm)	142.38
P/BV (ttm)	8.80
Book Value (ttm)	524
Industry	IT

Chart comparison with Sensex

Source: Ace Equity

REC Ltd.

Profile:
Rec Ltd. (formerly Rural Electrification Corporation Limited) came into existence 1969. A Navratna company under ministry of power. A leader in financing infrastructure projects, providing holistic financing to power sector value chain ranging from generation, transmission or distribution. They have extensive network of 23 offices across the country.

Key Triggers:

High Dividend Yield – The Company has consistent dividend yield of almost more than 10%.
Power sector Policy Reforms – Government consistent efforts towards reforming power sector, policies like DDUGYJ etc will increase demand in future.
Future Outlook – The power sector, globally as well as in India, is undergoing a sea change. This is visible in the increasing deployment of clean renewables and the rising prevalence of grid connected distributed generation. While these trends create churn and disruption in the power sector, they also create opportunities for new and innovative business models. These changes will require flexibility throughout the power sector. That will give impetus to REC’s business.

Valuation & View:
At CMP Rs. 91, the stock is trading at P/BV of only 0.48 times of its Book value. With consistent dividend yield of 12.5% looks an attractive for investment, Hence, we recommend to BUY with the target price of Rs 125 for medium to long term.

Key Risk:

Any govt policy change or future plan change may effect company performance.

Valuation Metrics
CMP (Rs.)	91.6
Target Price (Rs.)	125
NIFTY 50	17311
52 Week H/L	126.53/82.28
Market Cap (Cr.)	24134
P/E (ttm)	2.37
EPS (ttm)	29.94
P/BV (ttm)	0.45
Book Value (ttm)	193
Industry	NBFCs

Chart comparison with Sensex

Source: Ace Equity

Tata Steel LTD.

Profile:
Tata Steel Ltd is Asia’s first integrated private steel company setup in 1907. The company has presence across the entire value chain of steel manufacturing from mining and processing iron ore and coal to producing and distributing finished products. The company has a target to increase domestic steelmaking capacity to 30 MnTPA by 2025.

Key Triggers:

Fully Integrated: Tata Steel, with its geographically diversified presence, touches millions of lives every day. The Company is one of the handful of steel players who are fully integrated – from mining to manufacturing to marketing of finished products.
Reduced Debt Level: Tata Steel remains committed to its annual deleveraging target of US$1 billion in line with its capital allocation strategy to reduce debt. The Company has prepaid Rs. 1325 crores and Rs. 636 crores of gross debt in FY21 and FY22 and became net debt free excluding the preference shares issued. This has lowered the Company’s finance cost by 53%.

Valuation & View:
At the CMP of Rs. 100, stock is looking attractive at P/E(ttm) multiple of 3.14x. Hence, we recommend a ‘BUY’ rating for the target price of Rs. 135 in 12 months perspective.

Key Risk:

China is major competitor
Any change in policy will effect performance of company
Steel is a cyclical commodity

Valuation Metrics
CMP (Rs.)	101
Target Price (Rs.)	135
NIFTY 50	17311
52 Week H/L	143/ 82.7
Market Cap (Cr.)	1,22,802
P/E (ttm)	3.11
EPS (ttm)	32.44
P/BV (ttm)	1.07
Book Value (ttm)	93.7
Industry	Metal

Chart comparison with Sensex

Source: Ace Equity

Zensar Tech. Limited

Profile:
Zensar Technologies is a leading digital solutions and technology services company. It is a part of the Mumbai-based RPG group and is headquartered in Pune, India. It is a leading experience-driven engineering and technology solutions company with a keen focus on conceptualizing, designing, engineering, and managing digital products and experiences for high-growth companies. They have offices located in India, the USA, UK, Europe, and Africa.

Key Triggers:

City building business: Its partnership is focused on helping the city modernize its core systems and accelerate with higher velocity to become one of the leading smart cities of the future. It secured a four-year, multi-million-dollar contract for a smart city projects.
Focus on core business: The Company saw further sharpening of innovative capabilities and strengthened the Company’s expertise in key technology areas such as artificial intelligence (AI) engineering and machine learning operations (ML ops), non- fungible tokens (NFT) on blockchain, metaverse, conversational AI, quantum computing, and applying AI to geographic information system (GIS).

Valuation & View:
At the CMP of Rs. 214, the stock is looking attractive at P/E multiple of 12.8 times. Hence, we recommend a ‘BUY’ rating for the target price of Rs. 155 in 12 months perspective.

Key Risk:

Any change in management policy and adverse market conditions.

Valuation Metrics
CMP (Rs.)	215
Target Price (Rs.)	305
NIFTY 50	17311
52 Week H/L	539/208
Market Cap (Cr.)	4876
P/E (ttm)	12.5
EPS (ttm)	17.2
P/BV (ttm)	1.89
Book Value (ttm)	119
Industry	IT

Chart comparison with Sensex

Source: Ace Equity

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