Federal Bank, Infosys & Oberoi Realty Q1FY21 Results Review - HDFC Securities

Federal Bank: Mr. Darpin Shah, Institutional Research Analyst, HDFC Securities

We maintain a BUY on Federal Bank with a target price of Rs 64. Our earnings estimates are mostly unchanged. We assign a target multiple of 0.9x FY22E, as return ratios are likely to be subdued over FY21-22E at ~0.75%, mostly due to elevated credit costs (~1.25%) and muted growth (~10%). We believe the impact of COVID-19 on the bank will be lesser than is indicated by its current valuation. Further, we like its granular liability franchise (FB's deposits (%) from retail and small business customers are the highest amongst peers).

Shares of FEDERAL BANK LTD. was last trading in BSE at Rs.52.05 as compared to the previous close of Rs. 49.85. The total number of shares traded during the day was 4426467 in over 10836 trades.

The stock hit an intraday high of Rs. 53.7 and intraday low of 50.55. The net turnover during the day was Rs. 231672831.

Infosys: Mr. Apurva Prasad & Mr. Amit Chandra, Institutional Research Analyst, HDFC Securities

We maintain BUY on Infosys (top pick), following 1Q revenue/margin outperformance (both absolute and relative). Key positives include the following: (1) large deal renewals (16% YoY) and largest-ever deal win (Vanguard) provide growth visibility; (2) resilience in core geography (NorthAm BFSI) and large accounts supported by demand in cloud, workplace transformation, and automation; (3) operational rigour, aided by cost optimisation (including short-term discretionary cuts), coupled with strong cash flows (1Q FCF/PAT at 130%). INFY's operational outperformance vs. TCS is reflected in margin differential being the lowest in two years (94bps), lower supply-side disruption, converging attrition coupled with revenue growth premium (>400bps over FY20-22E CAGR). Our target price of Rs 980, 20x Jun-22E EPS (18x earlier), factors in higher visibility/outperformance, following ~7% EPS estimate increase for FY22E.

Shares of INFOSYS LTD. was last trading in BSE at Rs.910.9 as compared to the previous close of Rs. 831.45. The total number of shares traded during the day was 3327650 in over 83384 trades.

The stock hit an intraday high of Rs. 952 and intraday low of 890. The net turnover during the day was Rs. 3066015701.

Oberoi Realty: Mr. Parikshit D Kandpal, Institutional Research Analyst, HDFC Securities

Oberoi Realty: We maintain BUY with revised TP of Rs 500 (vs Rs 538 earlier) to factor in 10-15% property price discount and recalibration of cap rates higher by 100bps to 11%. Although we expect luxury residential demand to be tepid, we remain constructive on ORL, given its comfortable balance sheet (net D/E 0.16x), strong brand recognition and new incremental 1.1mn sqft leasing in Commerz-3. We revise our EPS for FY21/22 by +38%/-35% as profit recognition for Worli 360W is expected to be in FY21E (vs FY22E earlier) and completion of residential projects could be delayed due to COVID-led disruption.

Shares of OBEROI REALTY LTD. was last trading in BSE at Rs.362.4 as compared to the previous close of Rs. 370.75. The total number of shares traded during the day was 3326 in over 264 trades.

The stock hit an intraday high of Rs. 372 and intraday low of 362.4. The net turnover during the day was Rs. 1213824.

Source : Equity Bulls

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