1 Auto Ancillaries And 1 Pharma Stock to Buy As Suggested By ICICI Securities

In the tumultuous session, benchmark indexes were trading lower, with buying observed in auto, IT, and power names.

The Sensex down 188.68 points, or 0.31 percent, to 60530.03, while the Nifty fell 50.20 points, or 0.28 percent, to 18059.30. ICICI Direct has suggested buying the stocks of NRB Bearings and Glenmark Pharmaceuticals.

NRB Bearings

NRB Bearings gets an add call from ICICI Securities with a target price of Rs 175. The current market price is Rs 139, with an upside potential of 24%.

Q2FY22 Results

• NRB had a good second quarter of fiscal year 22.
• Revenue for the quarter was Rs 256.6 crore, up 29.8% year over year and 27.4% quarter over quarter.
• EBIDTA was 47.3 crore, increasing 55.8% year on year and 76.9% quarter on quarter.
• PAT of Rs 24.4 crore, up 113.8 percent year on year.

Target and Valuation

"NRB has been making strides towards innovation and R&D. Going ahead, a recovery in auto, & boost in e vehicles sales will help it to grow. We maintain our BUY rating. We build in revenue, EBIDTA, PAT CAGR of 18.6%, 22.2%, 25.2% respectively. Target Price and Valuation: We value NRB at Rs 175 i.e. 18x P/E on FY23E EPS," the brokerage has said.

Key triggers for future price-performance:

Manufacturing should benefit from the auto sector's recovery. NRB is also concentrating on research and development to meet the needs of the e-vehicle market.
A new e-market is set to launch, with the goal of increasing reach and market share while reducing counterfeit goods.

Glenmark Pharmaceuticals

Glenmark Pharmaceuticals gets an add call from ICICI Securities with a target price of Rs 607. Glenmark Pharmaceuticals' current market price is Rs 522.4. 

Key concall highlights:

ICHNOS is expected to raise funds in FY23E.

2) Revenue CAGR of 10- 15 percent over 4-5 years, with a 19 percent margin

3) In FY22E, the company expects to submit 18-20 ANDAs.

4) Respiratory launches in the United States will begin in FY24E.

5) The PDUFA deadline for Ryaltris is January 22nd.

6) Annual capex guidance of Rs6.5-7 billion for the next 2-3 years.

Outlook and Valuation

Over FY21-FY23E, we expect revenue and PAT CAGRs of 9.6% and 8.2%, respectively, with a consistent EBITDA margin of 18-19%. The IPO of the API subsidiary was a success, and the majority of the revenues were used to pay off debt.
In FY22, out-licensing of new items will offer extra funds to enable the company meet its debt reduction target of Rs16 billion in FY22E.

"We remain positive on stock given strong India business and attractive valuation of 14.2xFY23E earnings. Reiterate ADD on the stock with a revised target price of Rs607/share based on 16xFY23E earnings," the brokerage has said.

Disclaimer

The above stocks are picked from the brokerage report of ICICI Direct. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.