Zydus Wellness | Brokerage: Sharekhan | Rating: Buy | Target: Rs 1,472 | Return: 18 percent
Macquarie has maintained an outperform rating with a target of Rs 304. Channel checks suggest muted cigarette volume performance for Q4 and EBIT growth could be at 8 percent YoY for Q4, the research firm’s report stated. ITC remains its top pick in the Indian consumer space and expect a further re-rating on GST tax clarifications in May.
Bank of America Merrill Lynch (BofA-ML) has reiterated a buy call on the stock with an increased target price of Rs 360 from Rs 330. It sees cigarettes to drive growth and FMCG is aiding the valuation here. It expects a sharp re-rating ahead with growth visibility. Meanwhile, FY18-19 is likely to see a solid rebound in growth.
Nomura has reduced its rating on the stock with a target price at Rs 110. It sees APM’s stake sale in GPPL as an opportunity as well as threat to Adani Ports. If purchased by another player, it could raise competition for Mundra. In its view, Adani Ports must be keen to buy Pipavav Port and this will increase the former’s market share in the West Coast by 7-8 percent. A key upside risk for the stock is the better-than-expected traffic growth. Currently, the stock is trading at 23.4 times FY19 P/E.
JPMorgan is overweight on the stock with an increased target price of Rs 425 from Rs 360. The research firm believes Sobha’s pre-sales show improvement in national capital region’s (NCR) residential market. It also said that the real estate firm exceeded JPMorgan’s FY17 pre-sales target by 20 percent. The company’s positive free cash flow performance will continue in FY18.
JPMorgan is currently overweight on the stock with a target price of Rs 270. The management has shown focus shifting from price to ‘balanced approach’. Its current capacity utilization provides scope for volume growth over the next two years.
Citi has a buy rating on the stock with an increased target price of Rs 1,905 from Rs 1,764. The research firm is factoring in 8-14 percent increase in consolidated and standalone earnings per share (EPS) and that the reduction in working capital is the biggest positive of the nine months that ended in FY17. Furthermore, it sees indicative margin of new order wins being in 8-9 percent range. The company may miss sales growth and inflow growth guidance. Its top picks in industrials are BEL, L&T and NBCC, while in the consumer industrial sector, its choices are Crompton Consumer and Voltas.
Citi has a buy call on the stock with a target of Rs 860. It places its bet on the company’s likely benefit from global consolidation wave. Strong balance sheet is an advantage and has capacity to close deals quickly, the brokerage’s report added. The management stressed that it is not averse to walking away from deals, it stated, adding that emerging markets to remain key drivers of growth.
Citi has maintained a neutral call on the stock with a target of Rs 3,315. US FDA's re-inspection of plants appears mixed, it said. Meanwhile, API facilities appear to have sailed through re-inspection, but the serious observations at Duvvada have complicated the issue.
Bank of America Merrill Lynch has maintained its buy rating on the stock due to successful US FDA inspection. This should be sentimentally positive for valuations, it feels. With Srikakulam being a large facility, only two observations seem benign and are in fact a positive development for the firm. There is no valuation overhang in the near term for the three plants under watchlist. It sees a better chance of resolution over the coming 2-3 months. Moreover, the Vizag unit might take few quarters for complete resolution.
Kotak Institutional Equities has maintained its buy rating on the stock with an unchanged target of Rs 250. It believes that globalization is imperative for Indian tyre firms and the company has taken congnisance of investors’ concerns after the Cooper deal.
Kotak Institutional Equities has an increased target price to Rs 371 from Rs 310. It believes the superior returns and growth prospects drive re-rating. Kotak expects good business growth prospects to drive 20 percent CAGR over FY17-20
Morgan Stanley has upgraded the stock to overweight with an increased target of Rs 3,251 from Rs 2,502. The research firm believes domestic sales & exports are at a trough, will see gradual recovery
Nomura stated that Coal India has notified lower grades of coal in 177 mines with effect from April 1, 2017. The financial impact of grade changes is current under assessment, the brokerage cited management’s commentary. The incremental revenue hit would be another Rs 400 crore. A part of revenue hit is already reflected in lacklustre nine months to FY17 for FSA realisation
Goldman Sachs has remained neutral stance on the stock with a cut in target price to Rs 1,057 from Rs 1,096.
Oil & Gas
Credit Suisse believes the oil and gas sector will see near term headwinds, but its fundamentals are intact. Oil marketing companies (OMCs) have been hurt by headwinds across business segments, but annual GRMs should stay robust in the range of USD 5-5.5 per barrel. A ramp up in expansions alone adds 15-20 percent to EPS by FY19, the brokerage house feels. It also expects fuel demand to pick up by the third quarter of this calendar year. Excluding one-offs, it sees core EPS CAGR of 12 and 20 percent for BPCL and IOC.
It has increased targets of Indian Oil by 7 percent to Rs 455, HPCL by 26 percent to Rs 600 and BPCL at Rs 815 per share.
Credit Suisse has an outperform rating on Tata Steel and JSPL. It stated that the fourth quarter continued to see production share shift towards major Indian steel players. Currently, export offers were steady and domestic prices were improving and if these sustain, then margins look set to bounce back. The research firm said that domestic flat prices have started to rise after being weak for much of the fourth quarter and believes that margins could moderate a bit in Q4. Furthermore, it expects improvement in underlying domestic steel demand.