Credit Suisse has maintained its neutral stance on the stock with an unchanged target price of Rs 340. It terms the company’s payout as a big one and stated that a stake sale by the government looked unlikely anytime soon. With the dividend, the Centre has received Rs 5,800 crore, which should help its finances in FY17. The brokerage house prefers Vedanta over Hindustan Zinc.
Macquarie has maintained its outperform rating with a reduced target price of Rs 340. It has also lowered FY18-19 earnings per share (EPS) estimates by 6 percent factoring lower cash. The research firm believes the dividend cannot be read as a precursor to government stake sale. It, however, makes a strong case for high dividend yield should drive a multiple re-rating.
On the payout, the dividend implies 143 percent payout for FY17. The special dividend is lead by the government’s fiscal requirements, it said.
Deutsche Bank has reiterated its buy call on the stock with a target of Rs 364 as it views the dividend payout as a highly positive thing. He believes the distribution of surplus cash will support a re-rating. The quantum of dividend was higher than expectations and sees 700 bps improvement on return on equities. Furthermore, it believes that the premium valuations for the firm should sustain given the strong zinc pricing outlook.
Nomura has a buy rating with an unchanged target of Rs 3,594. It highlighted that concerns on inspection outcome have been affirmed now.
JPMorgan has a neutral call on the stock with a target of Rs 575. The research firm sees some traction in respiratory business but large opportunities are still some time away. The company currently awaits large ANDA approvals in the US, it said. But domestic formulation is growing higher than the industry, but watch out for the impact of goods and services tax (GST), the research firm said.
Morgan Stanley has initiated coverage on the stock with an outperform rating and forecasts 30 percent free cash flow CAGR in FY17-19. The research firm said that the company’s positioning is on par with global miners and better than local peers. It believe
that the balance sheet risk has subsided.
Macquarie has maintained outperform rating on the stock with a target of Rs 345. It has highlighted the windfall income of USD 1.2 billion from the dividend payout of Hindustan Zinc. The research firm pegs tax leakage from dividends to be neutral to the company’s target price. Furthermore, it feels that the company may be able to pay higher dividend, given tax credits against dividend distribution tax paid by Hindustan Zinc.
JPMorgan too has an overweight call on the stock with a target of Rs 330. It concurs with previous view that the dividend is a big positive for the company. The research firm further expects the company to return the cash to shareholders through a buyback
or dividend.
Macquarie has maintained outperform rating on the stock with a target of Rs 125. The stock remains a top pick in the Indian Media space, the research firm said. Clarity on GST rate and subscription uptick from Q1 will be the key near term variables, the
Macquarie has said.
Morgan Stanley is underweight on the stock with a target of Rs 258. It feels that the valuations for its PKC Deal look aggressive. Currently, the PKC open offer has been completed and the deal will lead to 6-8 percent of earnings upgrade, the research firm
added.
Deutsche Bank has reiterated its sell call on the stock with a target of Rs 305. The research firm expects the pace of market share gains to be slower on higher competitive intensity. It does not anticipate any material movements in profitability.
Credit Suisse has maintained outperform rating on Cairn India with an unchanged target of Rs 345. It has placed its bet on growth capex restarting and highlighted the approval of extension in production sharing contracts.
Morgan Stanley is overweight on the stock with an increased target price of Rs 530. Its channel checks strengthen the conviction of the research house. It points out that the valuation must be viewed in the context of high earnings growth visibility and feels that government initiatives are an opportunity for structural increase in market share. Next catalyst for the stock is strong earnings growth in Q4FY17.
IT sector
CLSA believes the weakness in the dollar index may boost dollar revenue in Q4 and first quarter of next fiscal. Simultaneously, sharp rupee strengthening is likely to be a headwind on margins. Hedging and lower wage hikes may limit FY18 earnings impact.
Furthermore, growth in dollar revenue, buyback or dividends could be stronger drivers than forex pressure. Cross-currencies are likely to help Q4 growth by 50-90 basis points.
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