CLSA says the stake sale in rent company DLF Cyber City Developers (DCCDL) will trigger 50 percent dilution in FY18.
A 50 percent dilution will limit benefit at EPS level and may lead to near-term volatility, it adds.
The brokerage house feels recent rally in stock already built in higher rent company valuations and some optimism. CLSA believes substantial operational turnaround is key for long-term uptick.
The Audit Committee met on Wednesday and confirmed about talks with GIC for selling 40 percent stake in DLF Cyber City Developers. The company could use these funds to reduce its debt going forward.
Credit Suisse has underperform rating on Dr Reddy's Labs as it is wary about high product concentration at company playing out, which could impact its earnings per share (EPS) for FY18 and market share.
Intas received an approval Decitabine, a drug currently generating USD 80-100 million sales for DRL. It could impact FY18 EPS for DRL by upto 5 percent and product should be 15-20 percent of FY18 EPS, the brokerage house says.
DRL is temporarily out of acne drug Zenatane, which could see USD 10-12 million hit in Q4, it feels. Cipla was supplier for the drug.
With maintaining outperform call on Coal India, Credit Suisse says e-auction volumes at 7.5 million tonne & pricing remained healthy.
Given arms are using buybacks over dividends, tax leakage could be higher, it feels. Despite some improvement, growth in thermal power generation remained weak, it says.
Credit Suisse says revival in power demand remains key catalyst for the company.
Morgan Stanley has an underweight rating on the stock, with a target price at Rs 268 as volumes continued to improve in second half of FY17 but lagged target.
Production & dispatches grew 6 percent and 5 percent in February 2017, respectively. Higher dispatches was a result of reduction in coal inventory at power plants.
Morgan Stanley feels lower coal inventory with better power generation will continue to support volumes.
Wockhardt's US subsidiary, Morton Grove has receives warning letter from US Food & Drug Administration on Wednesday. The facility was inspected for almost two months in Q4FY17.
Macquarie says around 13-15 percent of company's FY17 sales come from Morton Grove, the key facility for the existing US sales of the company.
US business contributed around 20 percent to company's total sales.
The brokerage house says existing sales will not be impacted from Morton Grove but all new approvals will be halted till warning letter is lifted.
Bank of America Merrill Lynch has reiterated a buy call on Tata Motors, with increased target price at Rs 580 from Rs 560 as it expects the valuation multiples to expand as well.
Forex tailwind is likely to be visible Q2FY18 onwards, it feels. BoAML says investor confidence is low but risk-reward is favourable.
Autos
Nomura has remained positive on Maruti Suzuki with a buy call while remained negative on Ashok Leyland, with a reduce call on the stock post February auto sales data.
Four-wheelers sales sustained growth but 2-wheelers continued to decline in the month of February, Nomura says.
Passenger vehicle sales grew 9 percent YoY and medium & heavy commercial vehicle (M&HCV) up 3 percent but two-wheelers sales fell 1-2 percent YoY.
The brokerage house says March 2017 volumes can be stronger on account of pre-buying for MHCVs but MHCV industry demand should remain weak in FY18.
JPMorgan has overweight rating on L&T, with a target price at Rs 1,670 as the brokerage house is optimistic about a pick-up in execution in the near-term.
Uptick in execution will offset negative sentiment due to ordering miss, it says.
The brokerage house says L&T is sure to break out from the Rs 50 band of EPS where it has been stuck for the last six years. Its estimates implied 33 percent EPS growth in FY17, followed by 15 percent growth in FY18.
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