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Brokerage: CLSA | Rating: Buy | Target: Rs 1,170
The brokerage house believes that the company is likely to see a growth recovery in IMS and said that apps & engineering are growing ahead of peers. There is a valuation discount to peers, which suggests that there are concerns on IP licensing strategy. Having said that, the firm offers absolute upside from growth & rerating, the report added.
Brokerage: Morgan Stanley | Rating: Underweight | Target: Cut to Rs 3,250
The global research firm has cut FY18-F20 earnings estimates by 11-17% on account of weak Q3. At 43x F2020e P/E, risk reward appears balanced, it said, adding that amid uncertainty on the levy of GST on ENA, one could await a better entry opportunity.
Brokerage: Morgan Stanley | Rating: Equalweight | Target: Rs 659
Morgan Stanley said that NAFTA Class 8 Sales May Peak In 2018 With 26% Growth. Further, it sees a scope for decline in these sales by 5% in 2019 & 11% in 2020. Overall, it expects 30% growth in FY19/2018 NA truck exports.
Brokerage: Nomura | Rating: Buy | Target: Cut to Rs 505
Nomura remains sanguine on earnings recovery In FY20. Further, deleveraging via asset monetisation should be another catalyst. At 7.4X, FY20 EV/EBITDA, stock is not cheap vs regional peers.
Brokerage: CLSA | Rating: Sell | Target: Rs 430
The brokerage house said that three observations for Halol related to deviation from certain ops & procedures. If the US FDA is satisfied with response, Halol plant could be upgraded to VAI. If upgraded, it would revive the approval cycle & warning letter
could be lifted.
In base case, it is building incremental revenue of $100 m/$150 m For FY19/20 From Halol, while in bull case it is building incremental contribution of $200 m/$300 m for FY19/20 From Halol. A delay in clearance beyond the estimated timelines could
delay US recovery.
Brokerage: Goldman Sachs | Rating: Buy | Target: Rs 488
Higher containerisation & benefit of better connectivity will support growth, it said, adding that diverse geographic & cargo exposure limits potential impact from slowdown. The firm will continue to see market share gain, it said.
PSU Banks
Brokerage: Credit Suisse
Credit Suisse said bond hit will add to Q4 woes and over-ownership will weigh on earnings. It observed that PSU banks are staring at potential treasury loss of Rs 20,000 crore In Q4. The current 10 percent excess bond holdings are the highest in the last 12
years. It continues to prefer private over PSU banks.
NBFCs
Brokerage: Morgan Stanley
The firm observed that higher rates are here to stay and one must stick to non-bank NBFCs. It likes NBFCs structurally, but most will de-rate over the next year.
Banks
Brokerage: Jefferies
Jefferies continues to prefer private sector banks, especially corporate oriented ones. It is also positive on banks with greater moats around retail liability. It likes Yes, Axis, ICICI and HDFC Bank. It is perennially positive on HDFC Bank. Meanwhile, it said that private corp banks available at comparatively inexpensive valuations. Further, the Street is not pricing in recovery in earnings and is narrowly focusing on near term asset quality issues. It prefers private sector banks and said that valuation gap has
opened up between SOE Banks & Private Sector Banks.
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