Brokerage: Morgan Stanley | Rating: Underweight | Target: Raised to Rs 1,000
The global broking firm said that a combination of rolling price growth & cost efficiency drove margin expansion. It sees a gradual volume recovery that portends the risk of stock de-rating. The firm also lowered the fiscal’s estimate marginally as it incorporated the F1H18 results.
Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 1,440
Motilal Oswal observed that there is remarkable growth in EBITDA and that augurs well for the future. In fact, it said that a revival of rural growth is already underway and is likely to pick up steam.
Brokerage: Axis Cap | Rating: Buy | Target: Increased to Rs 1,400
Axis Cap said that the firm is a best play on two structural trends — premiumisation & shift to organised due to GST. It expects operating margin to rise by 350-400 basis points over Fy17-20 on multiple margin tailwinds.
Brokerage: PhillipCap
The broking firm said that the company’s September quarter results were significantly below estimates with revenues and margins disappointing too. The revenue from voice segment were hit on account of Tata Teleservices.
Brokerage: Kotak Sec
Kotak Securities said that the revenue was down 2% QoQ & 6.5% YoY To Rs 42.2 billion, 2.3% Below Expectations. It will revise earnings model post the company’s stance on earnings call. It expects the stock to trade down.
Brokerage: Kotak Sec | Rating: Reduce | Target: Rs 900
Kotak Securities said that the IT firm disappointed again with 0.9% constant currency revenue growth. The results also highlight the risk of dependence on a single offering for growth. It has broadly retained its estimates and believes the portfolio approach to IPR licensing deals with IBM helps in de-risking.
Brokerage: Motilal Oswal | Rating: Neural | Target: Rs 970
The brokerage expects the firm to post revenue CAGR over FY17-19 and EPS CAGR of 6.7 percent during the period. Further, it said that there could be some gestation before clarity emerges on end-results from latest investments.
Brokerage: Deutsche Bank | Rating: Sell | Target: Cut to Rs 700
The bank values HCL Tech at 12x FY18 P/E, supported by an earnings CAGR Of 3%. Given the lopsided revenue growth and margin headwinds, it values the firm at a discount to Infosys. Going forward, sustainable improvement in revenue from software & services is a key risk.
Brokerage: IDFC Sec | Rating: Neutral | Target: Rs 895
IDFC Securities sees accelerated pace of investments in IPR as a risk. It highlighted that revenue drag in the second half was to restrict FY18 growth to lower end of guidance. In fact, the Q2 margin performance is a key positive for the stock.
Brokerage: Macquarie | Rating: Outperform | Target: Rs 1,033
Macquarie said that it expects the firm to post strongest dollar revenue growth at 12 percent year on year in this fiscal among large cap IT pack.
Brokerage: Kotak Sec | Rating: Sell | Target: Raised to Rs 1,250
The broking firm highlighted that it continued strong growth traction despite headwinds during GST and RERA. Decline in borrowing costs support margin leading to strong earnings growth. It also revised estimates by up to 9-12 percent to reflect the ongoing business momentum. It is also building in 50 basis points margin compression between FY18 and FY20, largely reflecting higher leverage.
Brokerage: Nomura | Rating: Buy | Target: Rs 251
Nomura said that the firm’s strong 23% YoY revenue growth was aided by strong volume growth. Further, it believes that inventory build up post GST in Q1 also benefitted volumes. Currently, it is factoring in 14.8/15 percent margin for Fy18/19 against 13.9 percent in the first half of this fiscal.
Brokerage: Deutsche Bank | Rating: Hold | Target: Rs 200
The global financial services firm said that commodity pressure led to subdued earnings growth and the revenue beat was likely due to pricing increases offset by rising lead prices. It is building in robust revenue growth driven by stabilization in automotive battery share or market pricing.
Brokerage: Macquarie | Rating: Neutral | Target: Rs 940
Macquarie said that guidance of 20 percent year on year loan growth is achievable, owing to traction seen in Q2. Further, the valuations leave little room for further upside. A strong loan growth & stable asset quality are key catalysts for the stock.
Brokerage: Credit Suisse | Rating: Neutral | Target: Rs 950
Credit Suisse cut earnings estimates by 3-4 percent on lower margin and other income. The stock, it said, remains expensive at 26 times FY19 earnings.
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