Aurobindo PharmaTarget Price: Rs 921Upside: 33 percentReasons: Faster approvals and market share gains in recently launched products will drive US business growth of 17 percent CAGR over FY16-18.
Expect valuation discount to converge on back of healthy earnings growth of 21 percent CAGR over FY16-18E driven by improving product mix in US and EU margin expansion.
Any delays in USFDA approvals of key ANDAs filed or any delays in EU site transfer of products could cap margin expansion.
Target Price: Rs 710Upside: 7 percentReasons: Estimate BPCL’s refining segment EBITDA to increase by 40% over FY16-18E driven by higher refining margins and throughput post Kochi capacity expansion.
Expect net auto fuel marketing margin to improve over the next 12 months by over 10 percent – every Rs 0.5/litre increase in margin improves BPCL’s FY17 EPS by 13 percent.
Forecast EBITDA/ net profit growth of 13 percent/ 14 percent CAGR over FY16-18
Target Price: Rs 200Upside: 10 percent Reasons: The company will likely be the key beneficiary when the demand recovery in P/V resumes after the initial shock.
Our preference for Maruti is based on the company’s model pipeline (the strongest in recent history), which should result in resilient market share and improved pricing power.
Target Price: Rs 200 Upside: 22 percentReasons: The company is reducing its costs and gaining market share in a weak market and is better prepared when the market picks up.
With Coal India – the agreement to supply higher domestic coal, eliminate costlier imports and improved coal quality is a positive – leading to a cut in fuel cost over the last year, despite price rise.
Target Price: Rs 18450 Upside:29 percentReasons: It remains the cost leader in the Indian cement industry by a large margin (15 percent lower than the nearest competitor).
The valuation on current production does not appear to build in any upside from the company's strong operating leverage (given capacity utilization of around 62 percent in FY18) or any major upside from an upcycle.
Target Price: Rs 315 Upside: 28 percentReasons: SBI is likely to be key beneficiary of demonetisation. It is a leader in credit cards, debit cards, digital products and has a disproportionate share in rural lending and government business.
Worst of NPL recognition and credit costs are behind – slippages were at 3.4 percent and credit costs at 2.1 percent in 2QFY17, and should gradually decline
Target Price: Rs 575Upside: 15 percentReasons: Global luxury volumes are expected to improve over the next three to six months, driven by new launches in the SUV portfolio.
Expect the GBP depreciation to start positively affecting margins from Q4FY17 onwards. A 10 percent depreciation in the GBP/USD leads to a 15-20 percent increase in TAMO’s EPS after a lag of three to four quarters.
TCS Target Price: Rs 2900Upside: 27 percentReasons: Rupee depreciation should further air revenue growth and margins
TCS may deliver sector-leading USD revenue CAGR of 12.6 percent in FY17-19.
Target Price: Rs 680 Upside: 45 percentReasons: Backed by improvement in deal wins – particularly in the hitherto underperforming telecom vertical, the company is poised to deliver a strong performance in 2HFY17.
Target Price: Rs 277Upside: 20 percentReasons: Improving visibility on the Cairn-Vedanta merger, which should help resolve the long-pending cash fungibility issues for Vedanta Ltd, support deleveraging and also simplify the corporate structure.
Merger with Cairn India should help improve capital allocation efficiency across the various group entities, with better alignment of the promoter interest with that of the minorities.
Target: Rs 1450
Upside: 16 percent
Reasons: It is the biggest beneficiary of an easy liquidity environment; we expect Yes to be amongst the very few banks wherein NIMs would improve.
Loan growth at 38 percent remains much higher than the industry average. This will moderate but will still remain strong at 25 percent
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