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Brokerages raise target on these 10 largecaps after Q4 earnings; do you own any?

Strong corporate earnings and hopes that declining COVID-19 cases will prompt states to ease lockdowns have buoyed the market sentiment amid concerns of vaccine scarcity and downgrades of India’s growth outlook.

May 26, 2021 / 03:52 PM IST
 
 
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The stock market has mostly been in positive territory in May on the back of strong earnings from the India Inc.

Investors have been concerned about vaccine scarcity and the downgrade of India’s growth outlook by rating agencies but the continuous fall in COVID-19 cases has buoyed the sentiment as it raised hopes that states will soon ease the lockdowns.

The BSE Sensex rose nearly 4 percent in May. FIIs sold equities worth Rs 8,922.02 crore, while DIIs bought equities worth Rs 938.44 crore in the month so far.

Among the broader benchmarks, the largecap index gained over 4 percent, midcap index rose more than 6 percent and samllcap index gained 7.7 percent.

Foreign brokerages raised the target price of these 10 largecap stocks:

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SBI Life | Brokerage: Morgan Stanley | Rating: Overweight | Target: Raised to Rs 1,275

There were better-than-expected numbers across key parameters. The valuation looks attractive at current levels, while near-term perception should be better than lenders.

Tata Steel | Brokerage: Morgan Stanley | Rating: Overweight | Target: Raised to Rs 1,630 from Rs 1,000

The brokerage sees the current steel cycle remaining higher for longer. The company needs to have disciplined capital allocation & a strong focus on de-leveraging. The structural repair of balance sheet will improve its resilience in any downcycle.

UltraTech Cement | Brokerage: Credit Suisse | Rating: Outperform | Target: Raised to Rs 7,400 from Rs 6,500

The strong volume outlook and upcoming capacities can drive the upside. It revises estimates by +3/6 percent for FY22/23. Retain outperform on sectoral merits and valuations.

Godrej Consumer Products | Brokerage: Jefferies | Rating: Buy | Target: Raised to Rs 1,000 from Rs 840

The new CEO announcement can be a trigger for re-rating. The company continues to be a top pick in the FMCG space.

SBI | Brokerage: CLSA | Rating: Buy | Target: Raised to Rs 650

The visibility of 15 percent ROE is high now. The current valuations at 0.7x March 2023 book are undemanding, while FY21 slippages at less than 1.2 percent of loans were best in class.

JSW Steel | Brokerage: Morgan Stanley | Rating: Overweight | Target: Raised to Rs 920 from Rs 590

The broking house raises FY22e/23e EBIDTA by 17 percent/25 percent. The company is well positioned to deliver among the strongest volume growth, and despite new capex plans, net debt-to-EBITDA should be well under 1.5x.

Hindalco Industries | Brokerage: CLSA | Rating: Buy | Target: Raised to Rs 500

Positive India earnings were a surprise and net debt was lower than forecast. The tailwind of strong downstream demand and falling aluminium surplus augurs well. At a 5.3x FY23 EV/EBITDA, company is trading below its median.

Tata Motors | Brokerage: CLSA | Rating: Buy | Target: Raised to Rs 450

The FCF generation at JLR & India continues to surprise positively. FY21 FCF at Rs 5,300 crore despite COVID-related disruptions. The management expects strong volume & FCF to resume in H2FY22.

L&T | Brokerage: Morgan Stanley | Rating: Overweight | Target: Raised to Rs 1,816

The guidance will be a discussion point but it has delivered in the tougher fiscal. The flat margin is a positive outcome, and valuations remain compelling.

HPCL | Brokerage: JPMorgan | Rating: Overweight | Target: Raised to Rs 330 from Rs 285

The company reported a large beat driven by inventory gains and sees a sharp improvement in underlying operating performance. JPMorgan has increased FY22-23 EPS estimates by 14 percent and 8 percent.
Rakesh Patil
first published: May 26, 2021 03:01 pm

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