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Bank of America Merrill Lynch has maintained buy rating on the stock, with unchanged target price of Rs 194 as Q3 numbers were broadly in-line while capacity addition lagged target. According to the research firm, 50 Kcal per Kg decline in Coal GCV (gross calorific value), if not passed on, may impact earnings by 6 percent and decline in interest rate may lead CERC (Central Electricity Regulatory Commission) to cut FY20-24 regulated return on equity (RoE). BoAML built 100 bps interest rate cut in regulated return on equity to 14.5 percent.
While retaining overweight rating with increased target price at Rs 185 (from Rs 180 earlier), JPMorgan expects the company to close the acquisition of phase-I of Chhabra plant by March. Inorganic growth plan are EPS accretive, it feels.
Citi has maintained buy rating on the stock, with a target price at Rs 186 but preferred Power Grid given faster EPS growth and higher return on equity. The company believes it can add a further 2,620 MW in Q4. Change in measurement of GCV had no impact on Q3 result, JPMorgan says.
IDFC Securities believes latest CERC regulations have reduced RoE for company's projects by over 4 percent and also believes commercialisation of plants will be slower in FY18 & FY19. The brokerage feels the stock is trading at reasonable valuations, while reiterating underperform rating, with revised target price at Rs 167. According to the brokerage house, positive HC order on appeal against CERC norms is key risk.
Goldman Sachs expects NTPC's plant load factors (PLFs) to remain below 80 percent. The brokerage house says Q3 was in-line with expectations and timely capacity addition remains key. It is neutral on the stock, with increased target at Rs 176 (from Rs 169).
With retaining hold rating on the stock, with a target price at Rs 175, Emkay says it has rolled valuation multiple to FY19. It has assigned price-to-book value multiple of 1.9x to its regulated equity as on FY19. Earnings marginally impacted due to fall in PAF & PLF in Q3FY17, it feels.
Credit Suisse see signs of bottoming out but Bharat Forge is already pricing in a big recovery. The brokerage house will see benefits of a growing product portfolio from FY18 and is building in an 18 percent topline CAGR over the next two years. It has maintained neutral rating on the stock, with increased target to Rs 920 (from Rs 850).
While retaining buy rating on the stock, with a target of Rs 1,200, CLSA says it sees a strong turnaround over next two years.
Citi says Bharat Forge's Q3 revenue was 5 percent above estimates driven by domestic business. Domestic medium & heavy commercial vehicles will get a pre-buy boost and non-autos business was strong in Q3, it adds. It believes new segments like defence & aerospace should boost profits in long-term and North America truck demand should revive by CY2018. It has neutral rating on the stock, with target at Rs 980.
Kotak expects standalone revenue to grow at 17 percent CAGR over FY17-19. It feels valuations are expensive; hence it retained sell rating on the stock, with increased target at Rs 900 (from Rs 810).
With assigning neutral rating on Cipla, with a target price at Rs 575, JPMorgan says Q3 results were in-line and ramp-up in US was key for margin expansion. Cost control & lower R&D were key drivers of higher EBITDA and R&D execution was key for US ramp-up, it adds.
CLSA feels pick-up in US sales looks critical for improved profitability in FY18. The brokerage house has retained outperform rating on the stock, with target price at Rs 645.
Deutsche Bank feels it was a weak quarter and operating leverage is yet to play out. It retained hold rating on the stock, with target at Rs 550, while cutting FY17 EPS to factor in the Q3 miss.
Nomura has downgraded Cipla to neutral, with increased target at Rs 665 (from Rs 605). The brokerage house cut earnings estimates for FY17/18/19 by 8 percent, 15 percent & 3 percent, respectively.
Macquarie has maintained neutral rating on the stock, with increased target at Rs 626 (from Rs 575).
Goldman Sachs says Q3 earnings were in-line, while retaining its sell call, with increased target at Rs 459 (from Rs 439).
While assigning equal-weight rating to Hero Motocorp, with target price at Rs 3,239, Morgan Stanley says drop in raw material per unit drove the beat in earnings. Maintaining margin was tough due to market share pressure & high inventory and inventory was at 7 weeks versus normal of 4 weeks, it adds.
Bank of America Merrill Lynch has reiterated underperform rating on Union Bank, with lowered target at Rs 79 (from Rs 87) and cut FY17/18 profit estimates by 35/15 percent as asset quality issues continued to linger.
ICICI Securities has upgraded Jubilant Life to buy from add, with increased target at Rs 846 (from Rs 757) as valuation are attractive at 14.6x FY18 & 12.2x FY19 earnings.
ICICI Securities has downgraded IGL to hold from add but raised FY17 EPS by 8 percent & target price by 15 percent to Rs 1,015. Rise in margins was driven by 21-23 percent YoY fall in gas cost, it feels.
While maintaining buy call on Ramco Cement, with increased target at Rs 775 (from Rs 675), ICICI Securities says it raised FY18-19 EPS by 6-9 percent on lower interest costs. It feels near-term stock performance could remain range-bound.
Daiwa has upgraded stock to buy from outperform and increased target to Rs 130 from Rs 115 as asset under management growth was strong despite QoQ decline in loan disbursals.
CLSA has retained sell rating on the stock as stressed loans are high. Target price has been increased to Rs 135 from Rs 120, it says.
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