Moneycontrol Bureau
CLSA says a tower deal may aid deleveraging but unlikely to boost valuations of Idea Cellular.
The company selling towers for Rs 4,500 crore is at a 15 percent discount to Bharti Airtel's valuation.
In the event of both asset sales, Idea may get total proceeds of USD 1.7 billion that could lower company's debt by 25 percent & boost profits, it feels.
However, these deals do not have a material impact on company's valuation, CLSA says while maintaining risks to company's growth forecasts.
According to the research firm, potential merger with Vodafone and synergies may not fructify pre-FY19.
JPMorgan is overweight on Dabur but slashed target price to Rs 300 from Rs 310 after lowering revenue estimates for FY17-19 by 3-5 percent.
It feels domestic growth recovery will be tepid versus earlier expectations as the company will take 1-2 quarters for operations to normalise from demonetisation impact.
JPMorgan expects H1FY18 to witness mid-single digit growth.
Citi says it was major relief for both companies as government agrees to pay royalty payment.
Target for Oil India is at Rs 300, it says, adding company's crude production has disappointing & declining over the last few years.
Its target for ONGC is at Rs 206. Citi says further re-rating in multiples is unlikely.
Bank of America Merrill Lynch says new Range Rover launch will strengthen product pipeline of JLR. With that volume outlook strengthened but launch cost is likely to recur, it feels.
JLR on Wednesday launched mid-size Range Rover product called ‘Velar’.
For JLR, BoAML expects margin to improve to 15.3 percent/16.1 percent for FY18/19. Hence, it has maintained buy rating, with a target price at Rs 560.
Credit Suisse says JSPL's swift progress at Angul is underway and its 4.2 mtpa unit is expected to start by March/April.
The brokerage house expects the 1 GW Tamnar power unit sale to JSW Energy to conclude next year.
Credit Suisse expects abundant iron ore/coal availability in & around its units. JSPL has no major capex plans after the expansion in Angul concludes and its Angul plant expansion at over USD 510 per tonne capacity in-line with industry benchmark.
Housing finance companies
Morgan Stanley says SEBI has relaxed mutual fund investment norms in housing finance companies, which is a relief for these companies.
SEBI on Wednesday increased additional limit for MF investments in housing finance companies increased by 5 percentage points to 15 percent.
The brokerage house sees some relief as companies see lower lending rates & rising bond yields pressure. These companies will continue to see margin pressures in FY18, it feels.
Morgan Stanley is underweight on PNB Housing, with a target price of Rs 900 while it has equal-weight rating on LIC Housing & Indiabulls Housing Finance, with target of Rs 560 and Rs 775, respectively.
Midcap IT
CLSA says midcap IT companies' discount to larger peers has halved over the last two years. Hence, it finds some growth outliers in Persistent Systems, L&T Technology Services, Larsen & Toubro Infotech and Hexaware Technologies.
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