Brokerage: Nomura | Rating: Reduce | Target: Reduced to Rs 268
Nomura highlighted that the company’s June quarter results were weak when compared to estimates. Additionally, a double whammy was in the form of sharp contractions in gross margins on the back of rising copra prices.
Moreover, the profitability may remain under pressure given the lack of pricing power amid weak demand. It also reduced earnings estimates by 6.2 percent for FY18 and 4.3 percent for FY19 to factor in weak first quarter.
Brokerage: BofAML | Rating: Buy | Target: Rs 360
The global research firm expects growth to revive from the second quarter. Speaking on the stock, it said that the valuation was not cheap and resilient earnings per share (EPS) CAGR will support. The volumes are likely to grow 8-10 percent in the medium term and drive 12-15 percent sales growth.
Brokerage: Ambit | Rating: Sell | Target: Raised to Rs 260
The company should deliver sales/EPS CAGR of 15/12 percent over FY17-20. The valuation of 42 times FY19 P/E is unreasonable given its weaker EPS growth.
Brokerage: CLSA | Rating: Buy | Target: Rs 300
CLSA expects margins to improve from Q1 lows for JSW Steel. It sees a case for valuation multiples to expand on better pricing and margin visibility.
Brokerage: Jefferies | Rating: Underperform | Target: Increased to Rs 163
Jefferies expected the margin to improve from June quarter lows, while volume growth could be muted. A new expansion capex would delay deleveraging, while growth may be back ended, it added.
Brokerage: Credit Suisse | Rating: Outperform | Target: Increased to Rs 265
Credit Suisse said that the June quarter did not see full benefit of coking coal price cut with respect to the company. The company, it said, is focussed on maintaining exports at 23 percent. It also is constructive on the stock on the back of improving global
steel prices.
Brokerage: Macquarie | Rating: Neutral | Target: Rs 222
Macquarie said that despite a weak volume run-rate, FY18 volume guidance was maintained. Further, it expects the company to achieve the target set for volume in FY18. There is a strong case for price hike in domestic market, it added.
Brokerage: JPMorgan | Rating: Overweight | Target: Raised to Rs 240
JPMorgan said that the company is well positioned for the upcoming cycle. The stressed asset acquisition would be positive, if done.
Brokerage: Nomura | Rating: Buy | Target: Rs 242
Nomura observed that the earnings were in line and project execution was on track. Further, it added that the earnings outlook remains sanguine.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 236
The research firm said that the June quarter was in line and said that it remains a key long term pick in the industry. Further, it said that the company is well-positioned to win Trans corridors being planned for renewables.
Brokerage: JPMorgan | Rating: Overweight | Target: Rs 240
JPMorgan said that the provision for wage cost increase pulled down profit growth in the June quarter.
Brokerage: CLSA | Rating: Buy | Target: Increased to Rs 265
CLSA said that the best is yet to come for the company in terms of capitalisation. Further, it reiterated its thesis of strong capitalisation in FY17-19. It forecast 35 percent rise in regulated equity in FY17-19.
Shriram City
Brokerage: Kotak Securities | Rating: Sell | Target: Rs 1,850
The brokerage house said that the June quarter performance indicate challenges due to demonetisation and implementation of GST. The operating trends over the next 2-3 years are very crucial, it added.
Brokerage: Citi | Rating: Buy | Target: Rs 213
Citi said that the company can deliver 13 percent EPS CAGR over FY17-20, while the RoE has increased from 18.2 percent in FY17 to 20.6 percent in FY20.
Autos
Brokerage: Credit Suisse
Credit Suisse observed that inventory restocking led to healthy growth. The volume growth for June and July is in single digits, it observed. It has a neutral call on Maruti, Hero, Bajaj Auto and Ashok Leyland. Meanwhile, it has underperform rating on TVS and Eicher Motors.
Brokerage: Macquarie
Macquarie said that restocking by dealers boosted growth. Further, it said that it sees India as offering among the best growth rates globally for autos on a multi-year basis.
Tata Motors is its top pick in Indian auto, given bullish outlook on JLR. It believes that Maruti Suzuki Is the best play on Indian auto growth. Eicher Motors is its preferred company for 2-wheelers. Meanwhile, Maruti’s new models continue to have an order backlog of 16-20 weeks and UV sales grew 48 percent in July 2017, led by Brezza.
Brokerage: Nomura
Nomura said that industry volumes for passenger vehicles and two-wheelers surprised positively. M&HCV industry reported slower than anticipated growth. Meanwhile, PV volumes growth strong at 14% YoY, largely driven by Maruti.
A better way to look at sales would be June and July, while two-wheeler volumes are healthy at 17 percent year on year. It maintains Maruti as its top pick in the sector and likes M&M due to healthy rural demand and launch of new MPV in the second half.
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