Incred has ‘Reduce’ rating on IndiGo and 3 other stocks. Take a look

Apr 06, 2024, 10:30:39 AM IST1/5

Out of Favour

Domestic brokerage InCred Equities has given ‘Reduce’ tag to 4 stocks in its latest report. The list includes IndiGo, Tata Steel, among others. Here are the revised target prices,

2/5

Clean Science and Technology

Rating: ReduceTarget price: Rs 663
Valuation: Consensus EPS estimates are too high and in the most likely case, FY24F EPS will be 20% below FY23 EPS. We also cut our FY25Fand FY26F EPS estimates to Rs22.1 and Rs25.5, respectively. We retain our REDUCE rating on the stock with a marginally lower 12-month target price of Rs 663 (from Rs 666 earlier). Upside risk: A sharp recovery in MEHQ prices will lead to an upgrade of our EPS estimates.

3/5

IndiGo

Rating: ReduceTarget price: Rs 2,000
Valuation: We have a REDUCE rating on the stock with a target price of Rs.2,000, valuing it at 8.5x FY26F EV/EBITDAR, vs. median multiple of 8.8x (Nov 2015 to now, excluding the Covid-19 pandemic period). We believe the slight discount is warranted as (a) the time for resolution of grounded fleet is uncertain, (b) we expect IndiGo’s ASK to grow in line with the industry vs. higher earlier, and (c) a reduction in the gap in RASK-CASK between IndiGo vs. Air India/Vistara over FY20 till now.

4/5

SBI Card

Rating: ReduceTarget price: Rs 500Valuation and outlook: We have a REDUCE rating on the stock with a target price of Rs.500, corresponding to ~3.5x FY25F P/BV.Bull-case valuation: Assuming a 10% beat to our estimates and a higher multiple of ~4x, the target price can be Rs.600.
Bear-case valuation: Assuming a 10% miss to our estimates and a lower multiple of ~3x, the target price can be Rs.450.

5/5

Tata Steel

Rating: ReduceTarget price: Rs 82
Valuation: In the foreseeable future, the steel market will likely experience sustained downward pressure, resulting in no improvement in steel spreads. We value Tata Steel at 6.5x EV/EBITDA to arrive at our target price of Rs.82. The rise in target price is due to a higher P/E multiple (vs. 6x earlier). Retain our REDUCE rating on the stock.

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