Tata Motors, Wipro and Adani Ports, among others, are being tracked by analysts on Tuesday.
Brokerage: Kotak Sec | Rating: Maintain Buy | Target: Cut to Rs 465 from Rs 520
The brokerage house highlighted how weakness in UK and Europe hit JLR sales and volumes there declined by 8 percent year on year in March. It further stated that the outperformance by new models was offset by steep decline in volumes of existing models. It has lowered its FY19-20 consolidated EPS estimates by 17-22 percent. Going forward, it expects JLR’s overall volume to increase 3.5% yoy in FY2019 led by growth in China JV. It is also building in 6.3-6.4 percent EBIT margin for JLR in its estimates.
Brokerage: Kotak Sec | Rating: Upgrade to Buy from Add | Target: Cut to Rs 450 from Rs 475
Kotak Securities said that the revised target is factoring in worst case business impact of closure of Mundra plant. It highlighted that ports data for key cargo classes suggests a healthy 3-9% yoy vol growth for FY18. It has cut estimates by 10 percent to factor nil imported coal volumes for Mundra power plant.
Brokerage: Credit Suisse | Rating: Maintain Outperform | Target: Rs 310
Credit Suisse said that aluminium prices have bounced back sharply driven by news of sanctions on Rusal, but the impact of the same is unclear. It also said that the stock is trading near the lowest EV/EBITDA multiples since 2012.
CLSA expects cross-currency benefits to support growth and margin for Indian IT companies, even as they are seen to be reporting the strongest March quarter in four years. It expects revenue for the quarter to grow 2.1-3.1 percent, while the margin may expand by 50-260 basis points. While overall demand trends haven’t improved, deal signings are better, it observed.
Among stocks, it expects Infosys to guide for 6-8 percent growth in dollar terms, while maintaining a margin of 23-25 percent. For HCL Tech, it sees a guidance of 10.5-12.5 percent growth in dollar terms, while the margin is seen at 19.5-20.5 percent. For Wipro, it sees growth guidance of 0.5-2.5 percent in dollar terms on a QoQ basis for the first quarter of next year. The brokerage has maintained a buy call on HCL Tech, Infosys, TCS, & Sell Ratings On Tech Mah & Wipro.
Brokerage: Morgan Stanley | Rating: Underweight | Target: Rs 290
The global research firm highlighted the company’s exchange filing, which said that one of its telecom service provider clients in India filed a petition to initiate insolvency resolution process with the National Company Law Tribunal in February 2018. It subsequently admitted its claim in March 2018.
Since then, Wipro has been engaged with the client to discuss the potential outcome of the process. It has now estimated that this development will have an adverse impact on both revenue and profitability.
The impact would be 0.65-0.75% of consolidated revenues at the net income level for 4Q18, the brokerage cited Wipro’s filing. “We believe impact on IT Services revenues for the quarter is likely to be less than the impact on profitability, given the likelihood of provisions against receivables hitting the bottom line. We think the company may still report revenues within the guided range,” the research note from Morgan Stanley added.
Brokerage: HSBC | Rating: Upgrade to Hold from Reduce | Target: Raised to Rs 88 form Rs 84
The global financial services firm pointed that domestic steel sector is witnessing one of the best time in many years. Steel prices trending higher on the back of uptick in demand, while both flat and long prices are up 15 and 20 percent quarter on quarter, respectively. The crude steel production run rate is also steady at about 4.5 percent for six months.
HSBC said that SAIL has shown a remarkable turnaround with the company posting a profit in Q3. All of its major plants are profitable at EBIT level and finished steel capacity has increased by 45 percent.
Going forward, it expects the company to report an average volume growth of 11 percent and EBITDA growth of 46 percent for FY19-20. It is also expecting the company to return to profitability for the first time in four years.
CLSA said that change of top management can also drive discussion around M&A possibilities. It further said that appointment of successor will be key to stability & valuation. Having said that, it sees limited risk to earnings of the bank.
UBS said that stressed corporate debt has largely been flat since March 2015. Further, around 15.5 percent of loans needed a haircut, of which 3.6 percent are yet to be recognised as NPL.
It pointed out that a fresh wave of NPLs rose following PNB fraud and new RBI rules as well. It has cut loan growth and earnings estimate by 0-22 percent for Fy19.
It is removing ICICI Bank from its Asia Pacific key call list and has retained anti-consensus cautious views on Yes Bank, State Bank of India, Punjab National Bank and IndusInd Bank. It prefers ICICI, HDFC Bank and Kotak Mahindra Bank.On their earnings, it cited RBI rules being a new threat and the results could be 27 percent lower in a downside scenario.The Great Diwali Discount!
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