Buy, sell, hold: 7 stocks to watch out for your portfolio

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Moneycontrol Bureau

Dr Reddy's Laboratories

With retaining underperform rating on Dr Reddy's Labs and target price of Rs 2,800, Jefferies says the stock is expensive and part of the margin improvement is unlikely to sustain.

The company reported a strong quarter led by sharp margin improvement. Its commentary was muted and it guided for a weak Q4. The company sees delay in key approvals that were growth drivers.

Credit Suisse also maintained underperform rating on the stock, with unchanged target at Rs 2,750 and slashed FY18 EPS estimate by 3 percent. It says Q3 was good with 17 percent EBITDA beat driven by better margin & lower SG&A (selling, general and administration). According to the research firm, margin beat may not sustain but SG&A savings should continue. Court verdict on Aloxi can give maximum 18 months upside, it feels.

Macquarie cut FY17/18/19 EPS to Rs 85/140/175 from Rs 94/156/187. It feels the stock may trade at a discount to fair value in near term. The brokerage house will look to add stock only on weakness. "Rolling to FY19, target price increased to Rs 3,500 from Rs 3,425 and resolution of US FDA issues will be key catalyst," it says.

Morgan Stanley says Dr Reddy's expects modest Q4 due to delay in new launches. It feels FDA audit at partner site & raised queries may delay gGleevec launch and gNuvaring launch will be delayed to end of FY18 or beyond. The brokerage house has revised target to Rs 3,110 from Rs 2,883, while retaining equal-weight rating on the stock.

However, Bank of America Merrill Lynch has reiterated buy rating on the stock due to sequential improvement in operating metrics. He says Q4 earnings will be softer but sees growth momentum to accelerate from FY18. The brokerage house cut its EPS forecasts to factor in delay in key US launches, but increased target price to Rs 3800 from Rs 3,765.

ACC

Citi is neutral on ACC, with increased target price at Rs 1,580 (from Rs 1,365). It continues to see lack in visibility on volume/capacity growth for company and prefers to play cement sector via Shree Cement, UltraTech Cement, Grasim and Ambuja Cement.

Morgan Stanley is underweight on the stock, with a target price at Rs 1,372. Key positive surprise was better-than-expected realisation but better realisation was offset by higher per tonne cost, the research firm says.

Bharat Forge

While maintaining reduce call on Bharat Forge, with unchanged target price at Rs 797, Nomura says structural headwinds to growth are due to price on higher emission and segments like railways & aerospace are too small to offset headwinds.

Order inflows for Class 8 trucks in North America increased 20 percent to 21,600 units YoY.

Titan Company

Morgan Stanley says Titan Company is a must-own stock & is its top pick in the space as organised jewellery retailing is emerging as a multi-year investment theme.

Vedanta

Credit Suisse has maintained outperform rating on Vedanta, with increased target at Rs 305 (from Rs 244) as it can play rise in zinc prices via company. Every USD 100 per tonne rise in price adds 5 percent upside.

Hindustan Zinc

Credit Suisse has downgraded Hindustan Zinc to neutral, but increased target price to Rs 340 from Rs 295 as it feels Vedanta is a better stock to play the zinc upside than company. The company remains solid operationally but valuations are too rich, it feels.

Strides Shasun

Credit Suisse says quarter beat was driven by sharp margin improvement. It will re-rate Strides Shasun once return on capital employed expand & company starts generating free cash. The brokerage house has maintained outperform rating on the stock, with increased target at Rs 1,370 from Rs 1,235.