PSU Bank Recap
The global broking firm said that the move was a game changer and expects re-rating in PSU banks. In fact, the package takes care of all requirements in one stroke, it added. The infusion is highly dilutive, but very positive for FY19 adjusted books. Though it is positively surprised by the quantum of recap, it said that the recap still managed to match its estimates of capital needs for both NPA provisioning and growth. Among stocks, it expects the highest positive impact on Punjab National Bank as it is more sensitive to capital availability than State Bank of India or Bank of Baroda.
Brokerage: Morgan Stanley
Morgan Stanley gave a double upgrade to SBI to overweight and highlighted that this was the first overweight since 2011. It also upgraded PNB, ICICI Bank and Axis Bank to overweight, while Bank of Baroda was upgraded to equal-weight.
Macquarie said that recapitalisation would likely further compress risk premiums. Along with this, it said, structural reforms in the banks need to be followed soon. A bold measure, it added, is that this is a first step towards solving a vexed issue.
Brokerage: CLSA | Rating: Buy | Target: Rs 660
CLSA said that the company’s results showed a positive surprise in ad revenues despite GST disruption. It expects this revenue to accelerate in the second half of FY18. The management also maintains its mid-teens guidance for domestic subscription growth. It also forecast the company to deliver 21 percent earnings CAGR over FY17-20.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 610
The research firm expects a rebound in both ad & subscription revenue in H2. The valuation at 18x FY19E EV/EBITDA is undemanding. The firm also trimmed FY18 & FY19 EBITDA estimates by 7 percent & 5 percent, respectively.
Brokerage: Macquarie | Rating: Outperform | Target: Rs 615
The global broking firm said that there is an upside risk to margin estimates of 31.5 percent in FY19 and FY20. It estimates a robust 20 percent EPS CAGR over FY17-20.
Brokerage: Morgan Stanley | Rating: Equal-weight | Target: Rs 980
Morgan Stanley said that the revenue headwind was offset by resilient margins and that P/E rerating was some time away. The brokerage also said that the revenue growth guidance cut is a negative, but valuations provided a support.
Brokerage: Macquarie | Rating: Outperform | Target: Rs 1,070
The global broking firm said that valuation gap between the company and TCS will narrow when a clarity on CEO emerges. Having said that, it raised EPS estimates by 2.2 percent for FY18 and sees FY18 EBIT margin in the midway of 23-25 percent guidance.
Brokerage: CLSA | Rating: Buy | Target: Rs 1,100
CLSA highlighted that the company has begun to bring costs back under control and that it is returning to basics with focus on execution and cost control. It tweaked earnings upwards from margin execution and said that the valuation is inexpensive at 13 times FY19.
Brokerage: Macquarie | Rating: Neutral | Target: Rs 1,100
The brokerage house highlighted that volume growth was returning after GST-led disruption in the first quarter. It also said that margin recovered back, aired by lower other expenses. In the near term, raw material could keep the pressure on margins. It is advising investors with long term horizon to add stock on dips.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Raised to Rs 1,400
Morgan Stanley said that a recovery was underway and that domestic business could benefit from acceleration in discretionary consumption growth. It cut FY18-20 EPS estimates by 2-5 percent and is projecting 19 percent earnings CAGR for FY17-20.