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CLSA has retained its buy call on Reliance Industries, with increased target price at Rs 1,500 (from Rs 1,350) after the company guided on Jio's FY21 EBITDA of over USD 11 billion and expects 50 percent rise in industry revenue to USD 45 billion by FY21.
According to management, Jio's 4G capacity is nearly 5x of the remaining industry. Jio expects to be able to handle 4 billion GB of data per month by end of 2017.
CLSA says Jio is hopeful of fully sorting out interconnection issues in this month and Jio's capacity may warrant a higher EV/EBITDA (enterprise value/earnings before interest, tax, depreciation and amortisation) multiple of 7.5x.
The brokerage house has raised its multiple for refining to 6.5x EV/EBITDA and retail to 1x EV/sales.
Bank of America Merrill Lynch says further upside in Reliance Industries shares would require an increase in Jio's perceived valuations. The brokerage house is increasing Jio's EV in its SoTP (sum-of-the-parts) from Rs 87 to Rs 280.
BoAML has reiterated its buy call on the stock with increased target price at Rs 1,375 (from Rs 1,200 earlier). Number of Jio Subscribers paying initial Rs 99 will be near-term catalyst, it feels.
BoAML estimates completion of chemical projects to lift EBITDA by USD 2.8 billion in FY19.
Morgan Stanley is overweight on Reliance Industries, with a target price at Rs 1,506. Energy project execution & clarity on telecom KPI should act as key triggers, it believes.
Morgan feels Reliance may achieve EBITDA break-even on telecom investments by end of first year of operations.
Goldman Sachs expects company's stock to react positively to management targets on Jio. Value for Jio in company SOTP is USD 4.5 billion based on 0.7x price to FY16 book value, it says.
Deutsche Bank says Jio believes the Indian telecom market is likely to grow by 50 percent over five years and Jio's outlook & pricing strategy is in-line with its expectations.
Jio believes revenue-share to be driven by share of data capacity among players.
Disclosure: Reliance Industries, the parent company of Reliance Jio, owns Network 18 that publishes Moneycontrol.com.
With maintaining outperform rating on Tata Motors and target price of Rs 630, Credit Suisse says newly launched Velar will plug the gap between Evoque & RR Sport and its sell could be 1,00,000 units per annum.
The brokerage house expects FY18 to be a strong year for the company. JLR margin should see sharp improvement June quarter onwards, it believes.
However, potential US border tax remains key risk to the stock, it feels.
Goldman Sachs has initiated its coverage on Infosys with a sell call and target of Rs 829 as application services is shrinking led by swift contraction in BFSI.
It says the company lagged peers in terms of penetration of new digital areas. The company is more exposed to H-1B/L1 visa changes, it feels.
According to Goldman, frequent management changes may make it harder to achieve stable growth and growth model is not well-suited to its DNA.
CLSA says risks for Bharti Infratel are overdone and rising tower merger & acquisition (M&A) is a positive catalyst for it. The stock is now pricing in a pessimistic scenario on growth, it adds.
Hence, the brokerage house has upgraded its recommendation to buy from outperform.
Macquarie has underperform rating on Coal India, with a target price at Rs 250 as it has cut FY17 dividend expectation to Rs 15 from Rs 20.
CIMB sees no sign of a strong recovery in Coal India as the company is losing market share. Renewables’ growth could be another headwind, it feels.
Headwinds weighed on valuation; hence CIMB has reiterated its reduce call on the stock with unchanged target price at Rs 271.
CIMB has reiterated its reduce rating on BHEL, with a target price of Rs 125 as it feels risks to earnings will persist over FY18-19.
According to the research firm, however, key upside risk is any sharp improvement in working capital of the company.
After the recent uptick, Nomura believes the stock is fairly valued. Hence, it has downgraded to neutral from buy and slashed target price to Rs 2,361 from Rs 2,367.
Banning liquor shops on highways leads to 6.3/10.4 percent earnings cuts in FY18/FY19, Nomura says.
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