That’s the view from Bloomberg Intelligence after foreign institutional investors net-sold $10 billion of local stocks since October, the most since 2008, on concerns over faster-than-expected policy tightening by the U.S. Federal Reserve. In January alone, FIIs dumped $4.8 billion of shares, the largest outflow across key emerging markets and the second-highest monthly tally for India.
“The current sharp sell off may signal a climactic move,” Nitin Chanduka and Kumar Gautam, analysts with Bloomberg Intelligence wrote in a note. “In past instances of major FII exodus from India, foreign selling has generally eased when peak-to-trough outflows neared $8-$10 billion, with the sole exception of the 2008 crisis.”
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A pause in this persistent selling would also be a shot in the arm for stocks with high foreign ownership, especially financial and technology companies, due to the close relationship between performances to fund flows. Housing Development Finance Corp., HDFC Bank Ltd., ICICI Bank Ltd. and Infosys Ltd. are among the firms mentioned in the report.This will drive the profitable growth for the company and will help reduce the price gap with grade A players. On the expansion front, the company's 3 mtpa pipeline capacity is expected to be commissioned by FY24 end. The management expects to spend Rs 700-800 crore in FY23 and Rs 1,200-1,300 crore in FY24 on the capex. The back-ended expansion will help the company limit the peak debt to Rs 1,500 crore in FY24," JM Financial said while suggesting a target of Rs 240 on the stock.
Arihant Capital said Orient Cement's weak set of numbers were below its expectation on all fronts but added that the stock trades at 3.9 times FY23 and 3 times FY24 EV/Ebitda.The company, it said, is confident of regaining its volume in coming times with an increase in sales from the B2B segment.
"The company’s replacement cost theory to control the cost will help to drive the margin growth going ahead. Also, boost given by the government in Union Budget 2022 to infrastructure development will aid cement demand to grow. We believe OCL is well-placed to take advantage of a revival in the cement demand in its operating regions by leveraging its planned capacity expansion, better monitoring of cost drivers, and improving financials," it said while suggesting a target of Rs 238 on the stock.Axis Securities foresees positive traction in the cement demand and expects the company to register revenue growth of 19 per cent, Ebitda of 19 per cent, PAT of 25 per cent over FY21-23.
"This will be driven by a volume CAGR of 12 per cent and a consistent realisation improvement of 4 per cent each over FY21-23. We retain our BUY rating on the stock and value the company at 6x FY23E EV/Ebitda to arrive at a target price of Rs 200," it said.
ICICI Securities raised its FY23-24 Ebitda by 5 per cent and increased its target price to Rs 191 per share from Rs178 per share, based on 6 times Dec’23 EV/E.
Ace investor Rakesh Jhunjhunwala held a 1.2 per cent stake in the company at the end of the December 2021 quarter.
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