Indian Hotels, Federal Bank, Coforge from BSE Midcap index hit record highs

Shares of Coforge hit a new high of Rs 8,236.95, gaining 3%, and zooming 71% in six months, on a strong growth outlook.

Indian Hotels Company (IHCL), Federal Bank and Coforge from the BSE Midcap index have rallied by up to 5 per cent and hit their respective record highs in Tuesday’s intra-day trade after a strong rally in the equity markets. The BSE Sensex has surged 1.4 per cent or 1,078 points at 78,418 at 11:39 AM.

 

Among the individual stocks, Federal Bank hit a new high of Rs 210.50, after rallying 5 per cent on the BSE on expectations of a strong earnings. In the September quarter (Q2 FY25), the private sector bank had delivered steady earnings in an otherwise difficult operating environment, with key variables improving. Given the solid change in management and the potential to scale-up steadily (critical gap already being filled), Federal Bank can potentially re-rate further to 1.5x FY26E P/BV, according to analysts.  Market recovery: Sensex pops 1,113 pts, Nifty up 327 pts; top reasons here

 

 

Analysts at Motilal Oswal are bullish on Federal Bank as the company has demonstrated a strong growth trajectory over FY22-24, with a 20 per cent compound annual growth rate (CAGR) in its loan book and 18 per cent deposit growth. This was despite the bank facing net interest margin pressure (NIM) and higher cost ratios due to rising funding costs and operational expenses.

 

The bank has also maintained a strong asset quality, with its gross non-performing assets as well as net non-performing asset ratios improving to 2.1 per cent and 0.7 per cent in FY24, driven by controlled slippages and robust recoveries. This success is attributed to strategic customer selection and strong underwriting practices, which remain effective even in co-lending partnerships. 

 

“Over FY25-27, we believe the bank is well poised to deliver an 18 per cent loan CAGR, aided by effective risk management and fintech partnerships,” the brokerage said in a note, while reiterating its ‘Buy’ rating on the stock with a target price of Rs 230.

 

Shares of IHCL are up 2.5 per cent to Rs 755.60, surging 13 per cent in two weeks after the company reported a strong operational performance for Q2FY25. For FY25, the management maintained a double-digit revenue growth guidance led by the sustained growth in new businesses, not like-for-like growth and healthy same store performance.  This is reflected in a strong 16.5 per cent growth in consolidated hotel segment revenue in October, which is set to accelerate in the remaining months of Q3, the management said.

 

Analysts at Elara Capital have revised IHCL to 'Accumulate', from 'Sell', with a higher target price of Rs 795, from Rs 519 earlier, based on SoTP analysis.

 

With industry-leading portfolio addition, IHCL is on track to open 25 hotels in FY25. Despite the increased pace of new signings in the industry, its key Taj branded assets in different micro markets pan-India are facing fewer new supplies from competition. Thus, there is continued growth momentum.  "IHCL outperformed our estimates in Q2. IHCL is a bigger beneficiary of the strong demand undercurrent than what we had estimated earlier," the brokerage firm said.

 

Shares of Coforge hit a new high of Rs 8,236.95, gaining 3 per cent on the BSE in intra-day trade on a strong growth outlook. In six months, the stock has zoomed 71 per cent, as compared to the 6 per cent rise in the BSE Sensex.

 

Coforge's order book, which is executable over the next 12 months, now stands at $1.3 billion, reflecting a robust 40 per cent year-on-year growth. Additionally, the company added 13 new clients in Q2FY25.

 

The robust growth in 12 month executable order book and green shoots in the BFSI segment along with higher headcount addition provides strong growth visibility. The focus on margin levers such as improving pyramid, and other efficiency measures will drive margin improvement, according to analysts.

 

Coforge is steadily progressing towards its earlier revenue guidance to reach $2 billion revenue in the medium-term. The addition of Cigniti will help achieve this. Coforge has seen encouraging, broad-based growth. Strong order book offers revenue visibility near term. Q3 will see some impact due to furloughs but these are factored in the guidance, analysts at Elara Capital said.