Mahanagar Gas: This city gas distributor hiked prices for compressed natural gas (CNG) and domestic piped natural gas (PNG) by Rs 2/kg and Rs 1.5 per standard cubic meter. This is the fourth time gas prices were hiked in Mumbai, with the last price revision on September 30, 2021. This should offset the ever-rising input gas costs. The price of liquefied natural gas price touched historical highs with a 62% revision to $2.9 per barrel, since October 2021. CNG and PNG prices are likely to go up. The companies plan to pass on the price hikes to consumers, in a phased manner, without unfavorable effects on margins. The price hikes however have to carry out in a progressive manner as the supply side rate hike cannot be passed in one go. The company’s Q2FY22 total revenue was up 35% QoQ to Rs 930.16 crore. According to reports, Mahanagar Gas’s ROCE is 28% which is an outstanding number depicting returns. Margins for CNG and domestic PNG segments will recover as CNG has a price advantage over petrol and diesel.

Havells: This white goods company gained on the bourses on Thursday during market hours as the company inaugurated a new plant for washing production at Ghiloth. This will help strengthen Llyod’s (a subsidiary of Havells’) production capacity. The company’s growth prospects look good as the revenue this quarter was almost 31% up on a YoY basis. Havells has a product mix in terms of B2B and B2C segments with a good PAN India presence. This will help clock in more sales and Q3FY22 might see a reduction in cost margins as well. Brokerages expect volume growth across all its products segments including lighting, fans, home appliances. The management however sees a lag in the growth of cables as most of its revenue growth was price-led and not demand-driven. Havells growth prospects look good in H2FY22 as demand will be both consumer and industry-driven.

One97 Communications (Paytm): Much to the dismay of its upbeat investors, Paytm’s shares closed at a new low of Rs 1,304 on Monday. Interestingly, a recent report with a ‘BUY’ rating from Morgan Stanley (MS) could be a redeeming factor for the company’s stock. In its report, MS valued the company at $17 billion with a two-year target price of Rs 1,875, which translates to an upside of around 40% from current levels. The brokerage expects Paytm to break even in EBITDA terms by FY25 and clock a revenue CAGR of 43% to reach the level of Rs 16,500 crore by FY26. The brokerage is particularly positive on Paytm’s prospects as the penetration of third-party financial services is very low in India. As Paytm scales up its financial services business, it could boost the share of its non-payment revenues in the overall sales mix to 40% from nearly 25% at the end of H1FY22. The company has a cumulative user base of 33 crore, with nearly 6.3 crore monthly active users. Morgan Stanley believes that such volumes give the company a unique advantage that it can leverage to create relevant financial products based on its repository of consumer data. The take rates (fees charged on gross merchandise value) in the company’s payments business have softened with the advent of Unified Payments Interface (UPI) in 2016. Hence, the profitability in the payments business remains low. Higher competition in the payments space and lower wallets’ merchant discount rates (according to RBI’s latest discussion paper) remain key downside risks for Paytm.

Tatva Chintan Pharma: After a bumper listing at a 95% premium to the issue price of Rs 1,083 on July 29, this niche specialty chemicals maker nearly tripled and traded close to Rs 3,000 levels. ICICI Securities initiated its coverage on this company with a target price of Rs 2,920, which is still lower than the lifetime high of Rs 2,977.80 it touched at the beginning of November. The brokerage expects the company’s positioning in the green chemistry domain to help expand its product portfolio and achieve long-term revenue growth. The company’s exposure to new-age industries like supercapacitor batteries and lithium-ion batteries provides enough visibility for growth.