Buy, sell, hold: 4 stocks analysts are watching

Moneycontrol Bureau

Cummins India

With retaining underperform rating on Cummins and target price of Rs 687, Bank of America Merrill Lynch says it sees moderate growth in exports in the medium-term and de-rating is likely as growth expectations continue to reset. Third quarter earnings beat was driven by surprise in exports & domestic sales. It feels industrials will lead domestics & aid distribution sales.

Phillip Capital has maintained neutral rating on the stock, with increased target price at Rs 990 (from Rs 955 earlier). The brokerage house feels current valuation leaves limited room for upside and revival in domestic growth seems priced into current valuations. Margin expansion in Q3 was mainly due to operating leverage benefits and gross margin was largely flat YoY due to an unfavourable sales mix.

Morgan Stanley is underweight on Cummins with a target for the stock at Rs 647. Uncertainty persists in export markets, it believes.

Emkay has upgraded FY17/18 earnings per share by 4.4 percent & 8.5 percent while advising accumulate rating on the stock, with increased target price by 8.2 percent to Rs 1,065.

Glenmark Pharma

JPMorgan has neutral rating on Glenmark with a target price of Rs 915 as it feels improving US growth trajectory and emerging market recovery priced into valuations. The brokerage house says it continues to like long-term business potential and newsflow on innovation R&D pipeline could be a positive trigger but delay in US approvals is a downside risk to estimates.

Bank of America Merrill Lynch has reiterated its buy call on the stock, with a target price of Rs 1,100 as it feels strong growth and balance sheet clean-up are major re-rating triggers. Q3 earnings beat was led by higher than expected sales of gZetia in US. US business now is in a strong growth phase. Other segments are in line and operating leverage boosted margin, the brokerage house says.

Macquarie has an outperform rating on the stock, with a target price of Rs 1,350. Valuations look attractive, with stock trading at 14x FY18 EPS, the brokerage house feels.

Marico

With having a neutral call on the stock and target price of Rs 265, JPMorgan says Q3 earnings were in-line, led by margins and revenue performance was subdued.

Sun TV Network

CLSA says special court verdict on former Telecom Minister Dayanidhi Maran and his brother & head of the company Kalanidhi Maran, in Aircel-Maxis case, ended long-standing legal overhang on the company. The brokerage house has upgraded the stock to buy from sell and raised target price to Rs 661 from Rs 438.

Company's advertising revenue has been weak but TV ratings have improved. CLSA expects advertising revenue CAGR of 12 percent over decline & recently improved TV ratings. Rerating is pegged on advertising growth, but lower legal, policy issues are key positives, the brokerage house says.

With maintaining buy rating with revised target price at Rs 750, ICICI Securities says the court ruling will trigger rerating. The company will be a major beneficiary of speeding up digitisation in the state, it believes.

Emkay has retained its buy call on Sun TV Network with a target price of Rs 850. It raised target PE multiple to 26x and says valuation to FY19 EPS implies 54 percent upside.

With legal overhang behind, Emkay believes re-rating in the stock is imminent. The brokerage house says resolution of phase III digitisation and growth in DTH are key upside risks while it expects cable TV & DTH subscription revenue to grow at 12 percent CAGR FY16-19.