Buy, Sell, Hold: 5 stocks & 1 sector are being tracked by analysts on January 5, 2018

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The brokerage house said that fundraising necessitated by Vodafone merger pact is limiting peak leverage. Further, it expects the company to use the proceeds primarily to prune leverage to Rs 47,300 crore. Key challenges include loss of subscriber market share and low capex. Going forward, it expects debt to increase in the second half of this fiscal owing to lower EBITDA.

The brokerage house said that Rs 3,250 crore fundraising will provide much-needed liquidity. Further, equity dilution will take away potential gains from existing shareholders. It estimates combined net debt post Vodafone merger to drop to Rs 87,100 crore.

The brokerage house said that capital infusion was much needed, cosniderign its leveraged balance sheet and the need to catch up with incumbents on 4G networks (capex).

The global investment bank believes this activity will increase market confidence in the commitment of promoter entities. Further, it will help in lowering debt, but leverage ratios may stay elevated given ongoing rapid decline in operating income.

CLSA believes that there could be a revival in long-term growth. Further, merged company offers compounded growth rate of 38 percent in operating income over the next three financial years.it expects integration costs and full merger synergies of Rs 14,000 crore annually by March 2023.

Godrej Cons

The broking firm said that subsidiaries are dragging the superior standalone return ratios. Further, cash conversion cycle for consolidated entity improves to 19 days.

Motherson Sumi

The brokerage house said that the firm is a global giant built on sound operating/financial principles. In fact, its history of value creation through acquisitions offers sizeable upside risk. It expects pickup in autos to drive acceleration in Motherson’s growth.

IIFL sees good mix of business with steady growth and turnaround potential to drive earnings. It expects revenue, operating income and earnings per share to grow at a compounded rate of 16 percent, 16 percent and 28 percent respectively over the financial years through March 2020.

PI Industries

The brokerage expects PI to bounce back to growth from the second half of the current financial year, led by new product launches and exports business. Further, robust orderbook provides revenue visibility for next three years. It expects revenue and net profit to grow at a compounded rate of 12 percent and 6 percent over the financial years through March 2020.

The global research firm expects oil prices to hold late 2017 gains and hence sees $63 Brent. It expects refining margins to moderate down as demand-supply looking balanced. It expects model steady rise in marketing margins, but uncertain in a heavy political 2018-19.

The research firm maintains cautiously optimistic outlook on Indian equities. Further, fiscal crunch, several state elections, earnings downgrades and high valuations make nervous. Rural demand revival and financial inclusion, affordable housing beneficiaries,

infrastructure focus, energy sector, acceleration of NPA resolution are the key theme to be played.