Brokerage: Jefferies | Rating: Buy | Target: Rs 398.23
Jefferies believes that the reduction in taxation by the government under GST will give ITC a chance to reduce price in small-sized cigarettes. It also sees the company delivering 7.2 percent and 6.6percent volumes in FY18 and FY19. For the current fiscal, it is assuming price increase of 2.2 percent on a full year basis. Lower than estimate volume growth & continued risk from illegal cigarettes are the key risks according to Jefferies.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 310
Morgan Stanley said that its calculations suggested a 4 percent reduction in cigarette taxes as well as 2 percent price flexibility for the stock. It sees the stock to rise relative to the country’s index over the next 30 days.
Brokerage: Citi | Rating: Buy | Target: Rs 295
The global financial services firm believes that a demand-driven price rally is yet to play out on the stock. Speaking on its merger with ACC, it said that there could be a likely change in the Group strategy and this implies upside for both ACC and Ambuja Cements.
Brokerage: Morgan Stanley | Rating: Underweight
The research firm expects a muted performance in the first quarter of this fiscal. It sees limited signs of pick-up in spending from Q1 itself. Further, it believes that the stock could fall relative to country index over the next 60 days. For Q1, it sees constant currency revenue growth to be slower and sees several headwinds to the margins.
Brokerage: Morgan Stanley | Rating: Underweight | Target: Rs 215
The brokerage house sees the stock to fall relative to the country’s index over the next 60 days. It sees IT services revenue performance in Q1 to be weaker than that of peers. It cites healthcare and retail to be the key areas of concern.
Brokerage: Morgan Stanley | Rating: Equal-weight | Target: Rs 475
Morgan Stanley sees the share price falling in absolute terms over the next 60 days. It highlighted that the short term valuation is much less compelling and added that legacy projects were taking longer to monetize.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 635
The research firm sees the stock to rise relative to the country’s index over the next 30 days. Further, it sees an opportunity for greater than two times returns over the next three years. It forecast an acceleration in revenue growth, led by market share gains. In its base case, it is factoring in 22 percent jewellery revenue CAGR in FY17-20.
Brokerage: Credit Suisse | Rating: Underperform | Target: Rs 2,200
The brokerage firm highlighted that the stock was trading at a premium to Sun Pharma or Lupin despite highest price erosion risk. It highlighted that the Bachupally plant after April inspection has not received any approval, while the Duvvada plant has a risk of escalation to an import alert. On the key support to the stock, he said the approval to Copaxone remains the key and could potentially add 20-25 percent to FY19 earnings per share estimates.
Brokerage: Nomura | Rating: Neutral | Target: Rs 320
Nomura said that the production by Coal India was down year on year for the third consecutive month, while offtake growth remained muted.
Brokerage: Macquarie | Rating: Outperform | Target: Rs 1,625
Macquarie observed that the gross non-performing loans (NPLs) for FY16 would have been 72 percent higher under the assessment of the Reserve Bank of India (RBI). The gross NPL of 0.9 percent reported for FY16 would have been closer to 1.5 percent. Going forward, it said that investors will view these numbers with a lot of suspicion. Pharma
Brokerage: Credit Suisse
Credit Suisse highlighted that Cipla was its top pick in the sector. Having said that, for the sector, it said that increasing price erosion in the US is the key reason for being negative on the sector. Approvals in the US are up 30 percent over 2016, 40 percent in last 2 months, it highlighted. Going forward, it expects approvals to increase, which is worrying as over 30 percent are going to be new entrants. It also observed that the risk for high margin drugs is high with nod timelines reducing from 40 + months to 15-18.
Among other companies in the sector, it said that Dr Reddy’s has high risks as top 5 drugs are over 50 percent of the profit. The concern over Dr Reddy’s is due to FDA risk for Duvvada and Bachupally units.
IT
Brokerage: CLSA
CLSA said that Indian IT hiring has stayed soft, while bottom up hiring stays concentrated. It said that the sector underperformed in June led by correction in TCS, Wipro & Tech Mahindra. Q1 results, commentary on recovery key to avoid another washout
Telecom
Brokerage: Credit Suisse
Credit Suisse mentioned that tariff intervention most effective tool to protect government’s & banks’ interest. Having said that it sees practical and political challenges in tariff intervention. Lower taxes, easing terms for spectrum payments, likely ways to help telecom companies. It continues to stay cautious on the sector due to competitive pressure.
CV Sector
Brokerage: Deutsche Bank
Deutsche Bank pointed that June sales point to a recovery and maintains a positive view on Ashok Leyland. It has been expecting a recovery in truck demand In H2FY18. Tata Motors & Ashok Leyland outperformed the industry in June, it added. Deutsche Bank maintained buy rating on Ashok Leyland with a target price of Rs 115. The risks include slower than expected volume recovery & market-share losses.
E&C/Infra
Brokerage: Ambit
Ambit sees pick up in earnings growth momentum and is likely to sustain. It said that the government will boost its capex budget, aided by public markets. The sector seems to have bottomed out in terms of cash generation, margins, growth and capital needs.
Autos
Brokerage: Nomura
Nomura maintained Maruti Suzuki as its top pick in the sector. It likes Mahindra and Mahindra on healthy rural demand and launch of a new MPV in the second half. It maintains 13% growth forecast for Maruti in FY18
2-wheeler Cos
Brokerage: Deutsche Bank
The financial services firm observed that domestic 2-wheeler volumes for June grew by 4% YoY, driven by scooters. Further, it said that bulk of the weakness has been driven by 36 percent year on year decline for Bajaj. It maintains a buy call on Eicher, hold on Hero MotoCorp and Bajaj Auto, while it has a sell call on TVS Motor.
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