Brokerage: Bank of America Merrill Lynch | Rating: Buy | Target: Rs 360
The global research firm observed that the company’s core portfolio of coconut and edible oil has stable growth with volume CAGR of 6/8 percent. The coconut oil segment, it added, may post a robust show in the medium term. Furthermore, a scale-up in value-added hair oil may remain healthy, led by market development. Going forward, the BofA-ML expects innovation pipeline to focus on growing future categories. It sees seasonality and reliance on select raw materials as the key risks.
Brokerage: Nomura | Rating: Reduce | Target: Rs 458
The brokerage house continues to foresee long term challenges for the company. It highlighted that it also saw loss of market share in the organized space for the company. At current valuations, it said, the recovery could be priced in and sees limited further
upside. ITC remains its top pick in the sector.
Brokerage: CIMB | Rating: Hold | Target: Rs 505
The brokerage house highlighted that the managemnet’s focus remained on profitability for the electro-mechanical projects (EMP) segment. Further, it expects consumer durable joint venture to target 10 percent market share in 10 years.
Brokerage: Jefferies | Rating: Underperform | Target: Rs 1,359
Jefferies expects profitability for the company to remain subdued in the near term on the back of weak demand. For the first quarter of this calendar year, it sees volume growth to be better than expected, but earnings before interest, taxes, depreciation and amortisation per tonne remained below peers. Having said that, the volume growth is likely to slow down post robust CY17 due to no major capex activity. It sees synergy benefits being some time away.
Brokerage: CLSA | Rating: Sell | Target: Rs 73
The brokerage firm said that Idea’s annual report reinforced the stress in business and the impact of high spectrum debt burden. It said that the company’s net debt increased by 26 percent year on year to Rs 51,000 crore. Further, it also has high contingent liabilities at 66 percent of net worth. CLSA lowerd FY18/19 revenue and EBITDA forecasts by 1-7 percent.
Brokerage: CLSA | Rating: Buy
CLSA said that the next few weeks remain crucial for the stock. It said that there was no further clarity on tobacco taxes. These taxes under GST could decline in double digits, it feels, based on the assumption that there are no further levies. It sees a worst-case outcome of 8 percent tax hike.
Brokerage: Credit Suisse | Rating: Underperform | Target: Rs 1,020
The research firm said that a price erosion risk for the company remains high. It could face double digit annual price erosion over the next three years, the report added. Further, it highlighted that 75 percent of US profits comes from low competition products. Express Script Joining Walgreens Consortium may impact earnings in Q4FY18 or Q1FY19, the report added. It also cut earnings per share (EPS) estimates for FY18/19 by 6/8 percent as it is building lower approvals due to 483s at Goa and Indore.
Brokerage: Citi | Rating: Sell | Target: Rs 355
The global financial services firm cut FY18 EPS estimates by 5.7 percent.
Brokerage: CIMB | Rating: Add | Target: Rs 1,646
The brokerage house raised FY18-19 sales volume estimates by 4-6% after a tough financial year 2017. Further, it believes that the farm division’s globalization drive will be value accretive, it added.
Brokerage: Axis Capital | Rating: Buy | Target: Rs 1,326
Axis Capital said that guidelines by the Securities and Exchange Board of India (SEBI) could pave the way for options trading and that the company may opt for gold. It expects more product launches on other commodities as and when regulator permits. It also expects the company to apply for product approval and launch it by August or September.
Brokerage: JPMorgan | Rating: Underweight | Target: Rs 330
JPMorgan said that a sharp decline in PE and LPG prices created material risk for Q2 and Q3. It sees downside risks to consensus earnings estimates. Meanwhile, US contracts remain an overhang, it added.
Telecom
Brokerage: Goldman Sachs
Goldman Sachs said that Indus may be a good strategic fit, given the strong balance sheet of Bharti Infratel. In case of a stake hike, Infratel’s FY17 net debt to EBITDA would be 3.9 times/5 times. Further, it added that leverage is not a concern with an option to sell tower stake for Bharti Airtel.
Financials
Brokerage: CLSA
CLSA observed that business environment for financials had improved from the low post demonetisation. Banks expect the trend to improve further as well. Among key risks, ti sees competition from bonds and cut in lending rates as being the key.
Among non-bank lenders, housing and retail NBFCs were seeing better growth, it observed. It also expects HFCs to benefit from the government’s push for affordable housing. Microfinance institutions (MFIs), it said, were facing headwinds on collections even though there is some improvement. Meanwhile, impact of loan waiver is still unclear, it added.
Pharma
Brokerage: Credit Suisse
The brokerage house said that the US margins for pharma companies were still very high to attract new competition, while price erosion will stay high. Analysis of EBITDA margin of Indian firms shows US margins still rich at 40-55 percent, it added. A new entrant can still make a RoCE of 25 percent on an average portfolio.
The price erosion risk, it added, is the highest for Taro, Dr Reddy’s and Lupin, while it is the least for Aurobindo. It is cautious on Lupin and Dr Reddy’s Laboratories and is positive on Cipla.
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