CLSA has retained its buy call on the stock with a revised target price of Rs 200. It has assigned an enterprise value of Rs 18 to the new businesses based on 2 times EV/sales. The brokerage firm said that the recent acquisition of Forever 21 is an aggressive foray into the innerwear segment. The recent brand in-licensing should be new growth levers. High startup costs could lead to 10-3 percent cuts in calendar year 2018-19 EBITDA.
Motilal Oswal has a buy rating on the stock with a target price of Rs 1,000. The brokerage house highlighted the significant improvement in Zomato’s performance in FY17 and that its sharp reduction in burn is a significant positive.
The company is a major stakeholder in the restaurant listings and food ordering firm. It highlighted that Zomato had refrained from discounting and applied it to less than 2 percent of the orders. Going forward, the company has massive room to continue growing transactions without spending much.
Motilal Oswal has a buy rating on the stock with a target of Rs 2,110, adding that the re-rating is led by diversification and balance sheet granularity. The brokerage house expects the bank to register 28 percent loan CAGR over FY17-20. The robust loan growth and net interest margin (NIM) expansion will drive 27 percent PAT CAGR through FY20. Furthermore, the lender is poised to leverage on investments in franchise, people and technology, the brokerage house added.
Credit Suisse has initiated coverage on the stock with a target price of Rs 115. The research firm sees next leg of revenue growth likely to be driven by new products and channels. It expects 15 percent revenue growth and 20 percent earnings per share (EPS) growth in FY19. In fact, the new flooring capacity can add 8-9 percent to FY20 revenue. It estimates FY19 free cash flow yield at 6 percent.
The research firm also sees risks for the stock if there are global trade barriers, volatility in prices and currency. Global home textile market is expected to posts a CAGR of 8 percent. Provenance of issues o Egyptian cotton sheets led to a revenue loss of 13 percent and it expects these woes to be out of the base by the second half of this fiscal year.
Citi pointed to media reports of Voltas, along with Havells and Crompton being in the race to buy Kenstar. It highlighted that Kenstar will be an extremely attractive acquisition at the right valuation and had a strong presence, market share and dealer network in consumer durables. From the company’s perspective, it would be a good deployment of Rs 900 crore cash on balance sheet.
India Strategy
CLSA said that a growth in government expenditure in FY17 was a key driver of growth for India. It highlighted states’ plan to taper expenditure by 10 percent in FY17-18 to lower fiscal deficit. Furthermore, select states will focus on housing for infrastructure spend, it said. However, a possibility of a reduction in productive development spend exists.
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