Tata Communications, Tatva Chintan Pharma and Bandhan Bank | Here is why brokerages see up to 48% upside on these stocks

Brokerage houses have been bullish on Tata Communications and Tatva Chintan Pharma after they reported mixed result in the quarter ended March 31, 2022. They also feel Bandhan Bank offers good upside from current levels as strong momentum across segments would drive loan growth. Of the three stocks, brokerage firm Axis Direct sees a maximum upside of 48% in Tata Communications.   

Tata Communications 

This Tata Group company reported a 22 per cent growth in consolidated profit at Rs 365 crore for the quarter ended March 2022 against a profit of Rs 299.2 crore in the same period a year ago. Axis Direct maintained a buy rating on Tata Communications with a target price of Rs 1610, which translates into an upside of nearly 48% on today's low price of Rs 1088.35 per share. The time duration set by the brokerage is 12 to 18 months and CMP is Rs 1234 per share.  

"Growth to be driven by platforms viz. cloud, edge, security; next generation connectivity; NetFoundry; MOVE & IoT wherein each having robust market size growth potential of 15-25% CAGR in next four to five years," it said. It expects overall margins to be stable at 25.5% in FY24 vs. 25.3% in FY22, with some weakness likely in FY23. "Strong cash flows generation to aid deleveraging," it said. 

Another brokerage house, ICICI Securities, though maintained a buy rating on the stock, but slashed target price from Rs 1680 to Rs 1600, saying revenue growth disappoints again. The target price has been set at CMP of Rs 1234.  

"We have cut our EPS estimates by 5-12% over FY23-24E, and accordingly, reduced our target price to Rs1,600 (from Rs1,680; 20x FY24E EPS). Maintain BUY," said ICICI Securities. 

Tatva Chintan Pharma 

ICICI Securities maintained a buy rating on Tatva Chintan Pharma, however, reduced target price to Rs 2,875 from Rs 3,000. Explaining logic behind maintaining buy rating, it said Near-term outlook for SDA appears weak, but underlying demand is intact and margins, which are protected by pass through agreements, holds strong. Tatva Chintan Pharma on Monday reported a 16.7% YoY decline in the consolidated profit at Rs 17.5 crore for the quarter ended March 31, 2022, against Rs 21 crore in the corresponding quarter of the previous financial year. 

Bandhan Bank 

Brokerage house Edelweiss reiterated buy rating on Bandhan Bank with a target price of Rs 415, implying a 22% upside on Tuesday's closing price of Rs 340 per share. Stating Bandhan Bank is a potential turnaround candidate, it said Bandhan Bank was one of the fastest growing mid-sized private banks before the onset of the pandemic and state-specific issues in Assam and West Bengal (WB) crippled credit growth. It said asset quality will only improve from here on and strong momentum across segments would drive loan growth.