Buy, sell, hold: 7 stocks analysts are watching out

The brokerage house believes company will be a significant beneficiary of defence capex. Its's tie-up with Navantia, Spain, may endow with certain competitive advantages, it feels.

L&T has emerged as the No 1 player in prequalification for USD 8 billion FICV project.

Havells

Citi says Lloyd's consumer durable business acquisition by Havells for Rs 1,600 crore enterprise value does not look excessive prima facie. For funding the acquisition; some debt may be needed.

Impact will depend on competitive dynamics, cost reduction and synergies, says the brokerage house.

Macquarie feels that the deal is reasonably priced and is likely to be neutral for the company’s near term earnings. However, it sees potential risk to return ratios as well as cash flows of Havells on the back of this deal. Furthermore, it says there is no overlap in the distribution channel for Havells and Lloyd Electric and that the lack of synergies could make this integration challenging for the firm. Its target price for stock was unchanged at Rs 404.

Goldman Sachs says Lloyd deal would provide Havells an entry into consumer durables. Acquisition would allow company to deploy cash generated post Sylvania exit, it adds.Kotak expects a dilution in Havells EBITDA margins on the back of this transaction. The brokerage states that Havells is set to enter the most competitive market segment of consumer durables. It will be far more challenging for it to execute strongly in the air conditioner market. On the deal’s dynamics, Kotak feels that EPS for Havells will be neutral at present. But, going forward, it may be come significantly EPS accretive in the medium term.

Yes Bank

Goldman Sachs has retained buy rating on Yes Bank but removed it from the conviction list. The brokerage house expects improving earnings quality on higher retail in the loan mix.

It has not changed its estimates for the bank but raised stock target price to Rs 1,533 from Rs 1,466.

Goldman expects further re-rating to 15.9x FY18 P/E against 14.7x now.

Kotak Mahindra Bank

Goldman Sachs says Kotak Mahindra Bank may outperform on improving growth prospects & top quartile EPS growth. Lending book is likely to grow at 25 percent hereon, it feels.

Hence, the research firm has upgraded the stock to buy from neutral, with increased target price at Rs 925 from Rs 815.

Sun Pharma, Dr Reddy’s Labs & Lupin

CLSA says manufacturing by Indian generics will see a significant shift towards the US.

Shift augurs well for Indian firms amidst ongoing US policy debate and evolving product mix will drive a manufacturing shift towards the US, it adds.

Sun Pharma, Dr Reddy's Labs & Lupin are likely to lead the transition, it feels. Hence, the brokerage house says these three companies are best placed to mitigate border tax risk.