2 Large Cap, 1 Small Cap Company Stocks To Buy According To ICICI Direct

On October 29, Indian indices began the day on a down tone, with the Nifty falling below 17,800 on mixed global cues. The Sensex was down 465.06 points (0.78 percent) at 59,519.64, while the Nifty was down 132 points (0.74 percent) at 17,725.30. ICICI Direct has recommended two large-cap companies and one small-cap company with significant upside potential.

SBI Life Insurance- Steady premium growth; elevated claims impact PAT

The brokerage has given a price target of Rs 1360 on SBI Life Insurance, with a 15% upside potential.

Q2FY22 Result

• Business is gaining traction, and the forecast for claims is positive.
• NBP rise of 17 percent YoY; gross premium growth of 14 percent YoY
• VNB margins are solid at 21.8 percent, thanks to product mix and pricing increases.
• Surplus increased by 1.3 times QoQ to Rs 256 crore, owing to higher investment income.
• For H1FY22, the net Covid claim is Rs 1338 crore, with a Covid reserve of Rs 266 crore.

Target and Valuation

"SBIL's share price has grown by ~1.6x over the past four years. Factoring distribution strength & diversified product mix, we retain our BUY rating on the stock Target Price & Valuation: We value SBIL at 3.2x FY23 EV with revised TP of Rs 1360," the brokerage has said.

According to ICICI Direct, to help with general growth and VNB, the company has launched a non-par and protection solution. Covid claim appears to be moderate; reserves of Rs 266 crore appear to be enough. Maintaining commercial momentum requires a strong distribution network. Product mix and improved persistency will help VNB margins stay around 21-22 percent.

Astec Lifesciences- CRAMS likely to witness strong growth ahead

Astec Lifescience, founded in 1994, specialises in the development of active ingredients and intermediates for the agrochemicals industry.

The brokerage has given a price target of Rs 1575 on Astec Lifesciences, with a 31% upside potential.

Key triggers for future price-performance:

Improved herbicide plant utilisation will boost revenue growth for the CRAMS business, which is forecast to grow in the high thirties between FY21 and FY24E.
Enterprise base business is expected to increase in the mid-teens, while commercialization of critical three compounds in a $1 billion industry provides great revenue visibility for enterprise sales in the long run.
Astec recently upped their R&D spending to 4% of sales. Because the main focus is on strengthening the speciality compounds portfolio, meaningful product development with a large industry size can be expected in the medium to long term.
This would help the company's long-term performance. A new R&D centre may serve as a stand-in for the old one.

"Astec Lifescience's share price has grown by 32% CAGR over the past six years. We believe this is a good opportunity to play on the CRAMS business theme. We initiate coverage on the stock under Stock Tales format with a BUY rating and target price of Rs 1575 Target Price and Valuation: We value Astec Lifescience at ~25x P/E FY24E EPS to arrive at a target price of Rs 1575/share," the brokerage has said.

United Spirits-Premiumisation trend continues to strengthen

The brokerage has given a price target of Rs 1080 on United Spirits, with an 18% upside potential.

Q2FY22 Results

• On every front, USL outperformed I-direct predictions.
• Revenues increased by 14% year on year to | 2447 crore, owing to a 4% increase in volumes and a 10% increase in realisation.
• EBITDA increased by 58 percent to $ 426 crore, with margins of 17.4%. (12.6 percent in Q2FY21)
• PAT doubled to Rs 273 crore as a result of a one-time reversal benefit in interest expense.

Target and Valuation

"With its broad portfolio and focus on placing existing brands in the upper prestige segment, along with introduction of its several iconic brands from Diageo stable, USL is well placed to capitalise on the rapidly growing premiumisation trend in the sector. We remain positive on the long term growth prospects of the stock and maintain our BUY recommendation Target Price and Valuation: We value USL at Rs 1050 i.e. 58x P/E on FY23E EPS," the brokerage has said.

Key triggers for future price performance;

EBITDA performance will be boosted by a better product mix and higher RoI brands.
Strong cash generating and double-digit return ratios Newer distribution channels (e-commerce), portable packaging (Hipster) to engage with a young client base

Disclaimer

The above stocks are picked from the brokerage report. 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.