Fed Rate Hike
Brokerage: Phillip Capital
The global research firm said that the US Federal Reserve expectedly hiked interest rate by 25 basis points to 1-1.25 percent. But, it said, such an aggressive policy stance may strengthen US dollar and hence weaken the rupee. This weakness in rupee and liquidity tightness in the US may be near term negative for the Indian market.
Brokerage: Citi | Rating: Sell | Target: Rs 347
The financial services firm reiterated its concerns on potential pricing risks on the back of higher LNG cost. Further it said that iats FY18/19 earnings were 9/19 percent below consensus. The sell call is on the company’s oil-linked earnings peaking. The key upside risk to the stock could be crude being above USD 60 a barrel along with new policy for stranded gas-based power plants.
Brokerage: Morgan Stanley | Rating: Equalweight | Target: Rs 2,909
The global brokerage firm said that the Miryalguda EIR was an incremental positive news for the company. Having said that, earnings recovery for the firm is a key challenge. It expects the Srikakulam API plant to fall in compliance in due course.
Simultaneously, it believes that Duvvuda resolution may take time, given the number and nature of observations. It sees low visibility over launches of major products and expects speciality ramp up to be slow and prolonged.
Brokerage: Citi | Rating: Buy | Target: Rs 930
Citi highlighted that the company had entered digital space with the launch of Sun NXT app. Further, it said that its long term plans imply similar monthly average revenue per user (ARPU) that the company realizes from DTH. From the new app, it expects the company to work on garnering advertising as it builds scale. It expects the company’s business to pick up in FY18 both from advertising and subscription front. Additionally, it expects the discount to peers to narrow due to business prospects and profitability.
Brokerage: Morgan Stanley | Rating: Overweight | | Target: Rs 1,506
The brokerage house said that there was a stable subscriber base for Jio post the start of paid telecom services. Jio’s addition of 3.9 million telecom wireless subscribers in April 20147 was the highest in the industry, it said. While Jio had the highest subscriber adds, it gained from smaller operators, the report added. Furthermore, it expects Reliance to achieve 106 million active subscribers by March 2018, with an average ARPU of Rs 175 a month. On the other hand, it sees the energy business being in the driver’s seat for earnings growth until FY19.
The brokerage house sees no need to change estimate of loss given default (LGD) forecast of 60%. There is a risk to farm loan waivers and forced PSU consolidation, it added. It prefers ICICI Bank and State Bank of India.
PSU Bank Merger Reports
Brokerage: Credit Suisse
The research firm said that of 20 PSY banks (ex-SBI), nine had impaired loans in excess of 20%, while 12 of them had CET-1 below 8 percent. Merger of these banks with relatively better peers appears to be the only alternative. Having said that, mergers can weaken the performance of relatively better PSUs, it said. If BOB merges with 2 small banks, impaired levels would reach 19%, it added. It was neutral on Bank of Baroda, underweight on PNB, Bank of India and Union Bank.
Brokerage: Axis Capital | Rating: Buy | Target: Rs 1,200
The brokerage house expects revenue growth/margin to improve from second half of FY18. It sees 15-20 approvals in US in FY18.
Brokerage: Hathway Cable | Rating: Overweight | Target: Rs 49
The brokerage house said that GTPL IPO will bring in cash for the company as it sells some shares along with improving visibility on quarterly numbers of the group. Rating is largely premised on improving cable monetisation and fast roll out of fixed wireline broadband services.
Brokerage: Citi | Rating: Buy | Target: Rs 1,020
The brokerage house cut FY18 and FY19 EPS estimates by 9.3 and9.7 percent. The estimates are reduced after factoring in actual FY17 numbers and higher base business erosion in the US.