From Hindustan Zinc to Cyient and Aurobindo Pharma, a look at what brokerages are talking about these stocks.
Morgan Stanley maintained its underweight stance on the stock with a cut in target price to Rs 410 from Rs 435. The research firm believes that the company would need to show consistent performance in the coming quarters for a re-rating. It trimmed earnings per share (EPS) estimates on stronger currency and higher-than-expected tax rates.
Having said that, it observed that its Q4 performance and FY18 outlook showed signs of recovery and that the earnings could be among the strongest in its coverage in FY18.
Macquarie maintained an underperform rating on the stock with a cut in target price to Rs 380 from Rs 390. The brokerage house foresees margin recovery to remain gradual and has hence lowered its FY18-19 EPS by 15-22 percent. It further said that FY17 revenue growth was marred by client-specific issues.
Furthermore, the appreciation in rupee should keep revenue growth in high single digits. It has built in 8.8 percent revenue growth in FY18. The management’s expectation of low double-digit growth hinges on large deals, it added.
Credit Suisse upgraded its rating to neutral with an increased target of Rs 450. The brokerage house cut its margin on assumptions of rupee levels at USD 65 against 66. It has increased its tax assumptions by a bit as well as revenue growth too. Overall, it has cut estimates by 7-10 percent and estimates 16 percent EPS CAGR for FY17-20.
Macquarie has maintained an outperform rating with a cut in target price by 14 percent to Rs 300. Visibility in volume growth, strong balance sheet, and bullish outlook on zinc prices make the company a safe stock, it said. Key catalysts for the stock are higher zinc prices and volume growth, the research firm’s report added. One percent change in zinc prices impacts FY18 EPS by 1.1 percent, it said.
Citi has a neutral rating on the stock with a cut in the target price to Rs 295 from Rs 300. It expects FY18 margin to be over 60 percent on the back of metal tightness. This is even as the spot LME is lower than Q4, it said.
The research firm believes that while the stock’s valuation is at a peak, a fair bit of optimism is priced in. It recommends playing zinc through Vedanta.
IDFC Securities downgraded the stock to underperform rating with a target of Rs 267. It believes that the stock already factors in high zinc prices. The prices could also recover from current level of USD 2,550 per tonne.
Credit Suisse maintained a neutral call on the stock with a cut in target to Rs 273 from Rs 311.32. The research firm observed that most of the earnings beat was on account of 26,000 tonne of concentrate sales. A stronger rupee, weaker zinc price for FY18 and lower than expected FY18 volume lead to target cut, it said. The output guidance was lower than its expectations, it added.
Deutsche Bank maintained a buy call on the stock with a target at Rs 340. It observed that strong operating performance was driven by higher production and better realisations. The earnings outlook for FY18 remained strong, it said. Overall, it remains positive on zinc despite the recent price weakness.
Morgan Stanley has an overweight call on the stock with a target at Rs 565. The research firm termed Q4 earnings as strong and the guidance for this fiscal as robust. In fact, the revenue and earnings growth may be among the strongest within their coverage universe. It expects earnings CAGR of 16 percent over FY17-19. Furthermore, the margin could have upside risks if the company achieves its outlook.
Credit Suisse has maintained an outperform rating on the stock with a target of Rs 625. A solid momentum in the business is seen by the company, the research firm said. But, visa-related regulatory developments in Australia could be a potential risk.