Jan 10, 2018 01:44 PM IST | Source: CNBC-TV18

Buy, Sell, Hold: 6 stocks and 2 sectors on analysts radar on January 10

Morgan Stanley feels APA with US Internal Revenue Service could positively impact FY19/20 EPS by up to 1 percent. The research house has Equalweight rating on the stock with target at Rs 1,028 per share.

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Brokerage: Credit Suisse | Rating - Neutral | Target - Rs 1,000

Infosys has signed an advanced pricing agreement with US IRS to lower tax rates by 100 bps. The company will reverse tax provisions of USD 225 million in Q3 advanced pricing agreement with US IRS.

Effective tax rates will come down by 100 bps till FY21 and should add over 1 percent to earnings, Credit Suisse said while maintaining its neutral call on the stock with a target price of Rs 1,000 per share.

"We do not see advanced pricing agreement to have material impact on stock price. Agreement does remove uncertainty for the next three years," it said.

Brokerage: Kotak Securities

Kotak Securities said the rationale of US IRS agreement is to enhance predictability of tax obligations for US operations. Agreement does not have any implications for other companies, it added.

Brokerage: Quant | Rating - Reduce | Target - Rs 920

Quant said the US IRS agreement until 2021 will reduce tax rates & uncertainty for the company.

While having Reduce call on the stock with a target price at Rs 920 per share, the research house said Infosys benefits to the tune of USD 270 million in P&L over four calendar years and sacrifices USD 233 million of cash in the near-term.

"We do not consider US IRS agreement to be price sensitive," it said.

Brokerage: Motilal Oswal | Rating - Buy | Target - Rs 1,200

While maintaining Buy call on Infosys with a target price at Rs 1,200 per share, Motilal Oswal said US IRS agreement would drive EPS higher by Rs 6.70 (10.4 percent on FY18e base).

The research house sees a marginal upgrade of 1.4 percent to our future earnings estimates and expects dollar revenue CAGR of 8 percent & EPS CAGR of 7.1 percent over FY17-20.

"We do not expect company’s performance to lag peers materially," the research house said.

Brokerage: Morgan Stanley | Rating - Equalweight | Target - Rs 1,028

Morgan Stanley feels APA with US Internal Revenue Service could positively impact FY19/20 EPS by up to 1 percent. The research house has Equalweight rating on the stock with target at Rs 1,028 per share.

Coal India

Brokerage: CLSA | Rating - Outperform | Target - Rs 335

While upgrading Coal India to Outperform from Underperform with increased target price at Rs 335 (from Rs 260 per share), CLSA said the big price hike lifted earnings outlook.

According to the research house, the full benefit of the price hike may take EPS 36 percent higher in FY19.

Volume growth has moderated in recent months, but should remain decent, it feels. Valuations at 13.5x FY19 PE look reasonable, it said while seeing EPS growth moderating to just 9 percent in FY20.


Brokerage: Motilal Oswal | Rating - Buy | Target - Rs 1,655

Rural recovery is just the beginning of growth revival, Motilal Oswal said, adding Emami had best track record among peers prior to events like demonetisation.

It expects company's earnings growth of 20 percent CAGR over FY18-21.

The research house has maintained Buy rating on the stock as valuations are attractive and set a target price at Rs 1,655 per share.

Its bull case upside is 33 percent for one year & 53 percent for two years.

Jindal Steel & Power

Brokerage: Citi | Rating - Buy | Target - Rs 375

Citi has reiterated its Buy call on Jindal Steel & Power and raised its target price to Rs 375 from Rs 219 per share as the stock is significantly undervalued from long-term perspective.

Speed of execution at Angul w.r.t commissioning is a big positive surprise, it feels.

Company is operating at over 50 percent capacity on both power & steel businesses, it said while increasing FY19/20 consolidated EBITDA by over 10/18.5 percent.

Magma Fincorp

Brokerage: IIFL | Rating - Buy | Target - Rs 220

IIFL has initiated coverage on the stock with Buy rating and target price of Rs 220 per share as it believes company's business performance is at an inflexion point.

It said the legacy assets have run down and disbursements growth is gradually improving.

Larger scale and improving financial performance should lead to credit rating upgrade, it believes.

IIFL has estimated improvement in return on assets to 2.4 percent and in return on equity to 15 percent. It expects 28 percent profit CAGR.

Sun Pharma

Brokerage: Credit Suisse | Rating - Outperform | Target - Rs 640

While maintaining Outperform call on the stock with increased target price at Rs 640 from Rs 595, Credit Suisse said on a relative basis, it is positive on company given lower price erosion risk.

"Increasing contribution from specialty products is positive for the company, but we stay negative on US generic market outlook and expect price erosion to accelerate," it said.

Halol inspection is a key near-term trigger for the stock, it said.

Ports Sector

HSBC said major ports' container & coal throughput is at multi-year high in December. "We are seeing a gradual recovery in trade off a low base and trend may continue."

The research house prefers Adani Ports to Gujarat Pipavav.

"We have Buy call on Adani Ports with a target price of Rs 460 per share and have Hold call on Gujarat Pipavav with a target of Rs 144," it said.

It further said Adani Ports is a key beneficiary of improved cargo growth outlook. "We are relatively conservative on Gujarat Pipavav on long-term challenges."

Cement Sector

HSBC said the cost headwinds will dent profitability of cement companies and the December quarter should bring volume cheer.

ACC and Ambuja Cements are likely to report strong sales in December quarter, according to the research house.

It feels muted demand continues to hit South region and it is only region to face YoY decline.

HSBC cut CY17-19e EBITDA estimates by 13-24 percent for ACC and Ambuja Cements on rising cost pressure and expects momentum to continue in Q4 on sharp surge in volume.

The research house has downgraded ACC to Hold from Buy with reduced target price at Rs 1,870 from Rs 1,900 per share and maintained Hold on Ambuja Cement with increased target price at Rs 260 from Rs 252 per share.
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