Brokerage ICICI Direct Research has made a buy recommendation on two multibagger stocks, Persistent Systems Limited and Indian Hotels Company Limited. 4,240.00 for Persistent Systems the brokerage firm sees a potential gain of up to 13%, while with the target price 388.00 for Indian hotels, it has seen a potential increase of up to 14%. The brokerage company has specified a target period of three months for each multibagger stock.
persistent system
Research analysts at brokerage firm ICICI Direct Research said, “The IT space has witnessed significant price correction in CY22 and also the base formation in the last few months keeping in view several negative factors. Post Q2FY23 earnings, some IT companies look promising. Looking at, Persistent is one of them, where the price charts are shaping up well for further gains in the coming quarter. Thus, it provides a favorable risk-reward setup at the present time.”
He further added, “Persistent share price has formed a potential Double Bottom Bullish Reversal Pattern 3100 in which it retraced the CY21 rally (1477- 4987) by 50% in the same time frame, indicating the corrective nature of the price decline within a structural uptrend on a longer degree. We expect the share price to resolve above 3865, which will accelerate further in the coming months.”
“We expect the share price to rise 4240 as this is a 61.8% retracement of the entire CY22 decline (4987-3092). The weekly RSI has given a breakout above the year-long down trend line and has started forming higher high-lows indicating positive momentum building in the stock. Consistently indicated that demand remains strong, generating US$1 billion (bn) in revenue on a quarterly annual basis and is now aiming to achieve US$2 bn annual revenue in the medium term till FY23-28,” the brokerage said. Research analysts at the firm ICICI Direct Research.
“Persistent acquired five companies in FY 2012 building capabilities in payments, cloud, etc. The company indicated that the integration of all companies is largely complete and it is now actively pursuing acquisitions in the Europe region. Persistent’s TCV continues to be strong. This will enable the company to witness revenue growth at 23.7% CAGR in FY 2012-25E as well as EBIT margin of 14.6% from ~70 bps in FY2012-25E. Persistent’s share price has risen ~5.7x in the last five years (from ~. From 655 in November 2017~ 3,762 in November 2022). We value persistence 4,370 ie 26x P/E on FY25E,” claimed research analysts.
He has advised to buy the stock in the range of 3715-3767 with stoploss 3,390.00, and target price 4,240.00.
Shares of Persistent Systems Ltd closed today 3,713.90 each. The stock has given a multibagger return of 471.90% in the last 5 years.
Indian Hotel
Research analysts at brokerage firm ICICI Direct Research said, “Hospitality sector has been a major outperforming sector in CY22 as the stock resolved from multiyear underperformance due to pick-up in tourism after a two-year Covid induced hiatus. Within the structural uptrend, hotel stocks have seen a higher base formation over the past month and are currently resuming their primary upward trend. Indian Hotel is our favorite destination in the hotel sector. It remains at the fore as it is forming a high peak and high trough in all time frames.”
“The stock is on the verge of generating a firm breakout above its last one month range ( 348- 305) and is expected to move towards This is a measurement implication of the range breakout as the 388 level in the coming months, thus providing new entry opportunities. Over the past two years, the stock has rebounded from the 10-week EMA on several occasions, thus providing an opportunity for incremental buying. In the current scenario, it has formed a higher base above the 10-week EMA (currently ) 316) highlights underlying strength and a positive price structure,” the analysts said.
“The performance of Q1FY23 has been the best ever performance in terms of margins in the last 11 years, with the company having an EBITDA margin of ~30%. Average occupancy was 70.4% versus 58.4% in the previous quarter. Average room rates were on 11,397 Vs. 10569/room (up 8% QoQ). Compared to pre-Covid, occupancy, room rates were up 700 bps, 24.7%, respectively. With a strong performance in the seasonally weak quarter, H2FY23 (ie peak season) looks more promising now. This season will also benefit the influx of foreign tourists who usually come to India for long vacations. They have not yet meaningfully participated in the current business performance.”
“Under Ahwaan 2025, the company plans to have a 300+ hotel room portfolio with zero net debt position. IHCL aims to achieve 33%+ margin (35% for new businesses) through cost efficiency. We expect revenue CAGR of 40.9% during FY 2012-24E. Business will fully recover to pre-covid levels while EBITDA will cross pre-covid levels in FY23E; Margins witnessed over 32% in FY24E, with the potential to expand further by ~100 bps thereafter. In terms of b/s, the company generated net income of 3943 crore through rights issue and QIP, out of which 3247 crore will be used to repay the loan and the remaining amount to fund the expansion of Ginger Hotels and development for Sea Rock expansion. With this fund raising, the company has now become a debt free company,” claimed the analysts.
Research analysts of brokerage firm ICICI Direct Research recommend buying shares of Indian Hotels in the range of Maintaining a stop loss of 335-341 for a target price of 308.00 388.00.
Shares of Indian Hotels Company Limited closed today 335.00 each, down 1.46% from previous close 339.95. In last 5 years the stock has given multibagger return of 208.61% and in last 1 year the stock has gained 62.05%. On a YTD basis, the stock has gained 82.02% so far in 2022.
The views and recommendations given above are those of individual analysts or broking companies and not of Mint.
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