Buy, Sell, Hold: 6 stocks are being tracked by brokerages today

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Vedanta

Brokerage: CLSA | Rating: Buy | Target: Raised to Rs 405

CLSA said that a rise in Q2 EBITDA was driven by higher commodity prices, low base for HZL volume. Meanwhile, earnings outlook was strong given the ramp up of new aluminium smelters and zinc expansion.

Brokerage: Macquarie | Rating: Outperform | Target: Rs 372

Macquarie said that the company’s Q2 EBITDA was 5% below estimate due to higher costs in the aluminium division. Further, higher costs and short alumina position drove 5-6 percent cut in FY18-19 EPS. The firm also sees a case for multiple re-rating, raise India business EV/EBITDA To 6x from 5.5x.

Power Grid

Brokerage: Axis Capital | Rating: Hold | Target: Rs 215

Axis Capital said that the company’ Q2 growth was largely in-line with pickup in capitalization. Further, an expectation of further capitalisation gives visibility of 15% earnings CAGR over 5-7 Years.

Brokerage: CLSA | Rating: Buy | Target: Rs 260

CLSA said that the firm’s Q2 capitalisation was up 50%, HVDC lines drive catch-up. In fact, a strong Q2 supported the thesis of strong PAT growth led by high-margin telecom business. Further, it believes that the best is yet to come in terms of capitalization. It is also forecasting 40% rise in regulated equity in FY17-20, which should drive EPS CAGR of 15%.

Glenmark

Brokerage: Macquarie | Rating: Outperform | Target: Rs 728

The research firm said that Q2FY18 EBITDA handsomely beat our estimate led by lower other expenses. Further, it said that the stock was trading at an attractive valuation of over 14x FY19e EPS. A reduction in net debt and US sales acceleration remains a key.

Hindalco

Brokerage: Macquarie | Rating: Outperform | Target: Rs 330

The brokerage said that Novelis’ Q2 EBITDA beat its estimates by 6%, led by strong volume growth. Meanwhile, commodity price upgrades & guidance drove 9-15% EPS upgrades for FY18-20. It also sees a case for multiple re-rating and increase the India business EV/EBITDA from 6.5 times to 7 times.

Brokerage: UBS

UBS expects positive reaction to strong Novelis results & upward revision to FY18 consensus. The biggest risk in India is to import competition and the execution at its units.

Brokerage: Credit Suisse | Rating: Outperform | Target: Rs 270

JV completion between Kobe & Novelis should help efficiently monetise rolling Korean capacity. Further, it remains positive on the firm with some upside at Novelis, relative strength in aluminium prices.

Divi’s Labs

Brokerage: Edelweiss Fin | Rating: Reduce | Target: Rs 920

Edelweiss said that it revised FY19 EPS by 10% post current clearance of regulatory issues. It rules out growth for next 2 years as the firm is unable to initiate fresh capex for Kakinada.

AU Small Fin

Brokerage: Morgan Stanley | Rating: Initiate coverage with overweight | Target: Rs 725

The brokerage expects strong growth/high profitability going ahead. While the stock is not cheap w.r.t to Sensex multiples, expect premium valuation to persist.

Berger Paints

Brokerage: Macquarie | Rating: Neutral

Macquarie said that Q2 results in-line with estimates & indicate 8-9% volume growth, while volume growth appears to be similar to Asian Paints. It also said that the gross margin improved QoQ but still trending down YoY.