Buy, hold or sell?: Brokers analyse these 4 stocks

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Here's the list of stocks that brokerage houses analysed:

TCS

Credit Suisse has maintained neutral call on the stock and reduced target price by 2-3 percent to Rs 2,500.

"Medium-term growth can accelerate from current levels, although we remain circumspect on margins. Due to low expectations, even a small acceleration can be a decent stock trigger. But given the low visibility, so far, of this happening, we remain on the sidelines for now, We cut estimates and target price by 2-3 percent to factor in recent cautious comments on Q2 growth," the brokerage house reasons.

Given that TCS has made significant investments in the past few years in platforms, new geographies and localisation, it believes 26-28 percent medium-term operating profit margin is feasible. Consistent dividend payout and even a higher payout are under the board's consideration.

In management meet, TCS indicated that the recent slowdown in discretionary spending by large US banks was temporary. This can come back in a quarter or two but it is difficult to say that with certainty, the brokerage house says.

As digital scales up, TCS sees no reason why revenue growth cannot get back to the mid-teens and management does not see scale as a constraint. It has not witnessed any impact of either the "Brexit" or the US elections so far. Average pricing is stable, the management says.

Ashok Leyland

CLSA has maintained its sell call on the stock with a target of Rs 79 per share, saying there is potential of 7-11 percent earnings per share (EPS) dilution post Hinduja Foundries merger. It expects this development to weigh on Ashok Leyland's valuation multiples.

The brokerage house says the announced merger of Hinduja Foundries – a loss-making promoter-owned company – into Ashok Leyland is likely to raise investor concerns.

It feels the merger will result in a 3 percent equity dilution and potential 7-11 percent EPS dilution based on Q1FY17 performance of Hinduja Foundries.

It says the merger aims at achieving a turnaround of Hinduja Foundries under Ashok Leyland's stewardship, which cannot be ruled out, but requires a leap of faith.

Meanwhile, Nomura has retained its neutral call on the stock with a target price of Rs 93 as it believes valuation for a loss-making Hinduja Foundries is on the higher side.

It feels FY17 EPS is likely to benefit from accumulated losses in Hinduja Foundries, leading to lower tax rates. For FY18, EPS dilution could be around 6 percent, assuming EBITDA break-even by Hinduja Foundries, it says.

While management expects the merger to turn EPS-accretive over the next 2-3 years, Nomura thinks this is a steep target. It sees no major benefit from this accruing to Ashok Leyland shareholders, unless it is done to mitigate risks to supplies.

Reliance Communications

Deutsche Bank says the deal between Reliance Communications and Aircel is positive but leverage remains an issue.

"We view the deal as a positive development, as it includes substantial spectrum holdings, a reasonable network footprint, a 10 percent revenue-share of the USD 29 billion Indian mobile market and opportunities for significant synergies. Yet, it will likely be saddled by Rs 35,000 crore in debt, and the projected synergies of around Rs 2,500 crore per annum will be crucial in achieving the targeted leverage of 4.5x net debt/EBITDA," the brokerage house explains.

Furthermore, the merger is expected to raise USD 1 billion in equity in the medium-term.

Its Q1FY17 results indicated that the transition of CDMA subscribers to LTE has been well-managed; hence the brokerage house has maintained hold rating on the stock with a target price of Rs 65.

Key upside and downside risks include higher- or lower-than-forecast growth in mobile revenues, it says.

Bank of America Merrill Lynch has retained underperform call on Reliance Communications with a target price of Rs 39, saying cellular entity will have net debt/EBITDA of 4.2x-8.9x and core Reliance Communications will have net debt/EBITDA Of 5.6x-56x.

Prestige Estates

Morgan Stanley is overweight on Prestige Estates with a target price of Rs 245 as its project execution drives near-term growth.

Prestige has total development potential of 152 million square feet. It has a quality land bank in attractive city markets (Bangalore-centric portfolio) and is now geographically diversifying.

Its upcoming project portfolio supports an incremental Rs 102 crore from annuity income in FY17 and its unrecognised sales of Rs 6,980 crore should translate into revenues in the quarters ahead. Its business restructuring plan of dividing operations into separate verticals could deepen its market presence, the brokerage house says.

Macquarie has outperform call Prestige Estates with a target price of Rs 235, saying presales started on a soft note but launches should aid momentum.

The company is on track to achieve FY17 guidance on most parameters, the brokerage house said, adding debt remained stable and interest cost is adequately covered by rents.