Brokerage: Morgan Stanley | Rating: Overweight
The research firm has initiated coverage on the stock as it expects an upswing in earnings growth in 2017. Further, it said that the earnings are at an inflection point. Going forward, it expects the stock price to double by 2020 as organic revenue and earnings per share continue to improve from FY18.
Brokerage: CLSA | Rating: Underperform | Target: Rs 387
The brokerage firm highlighted that the company had increased its market share in India mobile business by 170 basis points to 33 percent in FY17. Further, it said that gearing had increased marginally to 2.7 times EBITDA but remained in control. Despite an improvement on CC basis, the company’s operations remain a drag on return on equities and RoCEs.
Brokerage: Credit Suisse | Rating: Underperform | Target: Rs 960
Credit Suisse believes that the risk in secured products were rising while the spreads were seeing a decline. Growth on such a large book that runs down quickly will be tough, it added. Furthermore, last three years have not seen much opex benefits, it added. On the stock front, it said that it was difficult to justify the multiple expansion as a stock price driver for the company. Having said that, its earnings per share (EPS) estimates go up after incorporating the recent growth target.
Brokerage: ICICI Securities | Rating: Hold | Target: Rs 1,158
The brokerage house said that it is impressed with the management’s strategies which will be rolled out over the next few years. But, its consumer product segment could report sluggish growth in FY18.
Brokerage: Macquarie | Rating: Underperform | Target: Rs 97
The global research firm believes that the recent price correction was warranted given the pressure from exports. With a recovery in global prices, the firm does not expect further price cuts in the next 3-4 months. However, the negative free cash flow in the company is reducing its ability to pay dividends. Its consensus earniings downgrades to further pressurize the stock.
Brokerage: JPMorgan | Rating: Overweight | Target: Rs 540
JPMorgan observed that high salience of gold jewellery during Q1 implied lower operating margin for jewellery. It estimates jewellery sales growth in Q1 to be over 35 percent after accounting for discounts.
Brokerage: Goldman Sachs | Rating: Buy | TGarget: Rs 552
The global financial services firm increased FY19-20 EPS estimates by 1-2% to reflect higher jewellery sales growth. It also increased long-term margin forecast and expects higher operating leverage from faster sales.
Brokerage: Morgan Stanley | Rating: Overweight | Target: Rs 588
Morgan Stanley said that sales of Discovery and launch of Velar should improve sales going forward.
Brokerage: CLSA | Rating: Buy | Target: Rs 1,120
CLSA said that the near term outlook on the company was uncertain, but the longer term thesis was strong. The uncertainty was on the back of competitive landscape along with a margin pressure from goods and services tax (GST). It sees growth returning to pre-demonetisation levels in the second half of this fiscal. It cut FY18/19 EPS estimates by 5/6 percent.
Financials
Brokerage: Nomura
Nomura expects Migration from SDR book to NPAs but slippages should reduce in FY18. Having said that, the provisioning could be more volatile given the RBI’s coverage for large stress cases. With the migration to MCLR, it expects net interest margins, pre-provisioning operating profit pressure to continue for all corporate banks. Net interest margin performance in FY18 remains key monitorable factor, the report added.
Going forward, it expects slippages for PSU banks in the first quarter to moderate from FY17 run-rate. It also sees a significant reduction in slippages for PSU banks, only in H2FY18. For retail banks including Yes Bank, it sees 24 percent PPOP growth in the first quarter. Expect Shriram Trans, M&M Fin to clock improvement in the asset quality.
Cement
Brokerage: Goldman Sachs | Rating: Neutral | Target: Rs 255
The brokerage firm said that lower cement prices and volumes along with higher costs were the key risks for UltraTech. It has a buy call on the stock with a lowered target price to Rs 4,650.
For Shree Cement, increase in petcoke price and slow capacity ramp up are the key risks for the stock. It also has a buy rating on the stock with unchanged target price of Rs 20,000.
Meanwhile, for ACC, higher/lower than expected demand growth and ASP growth were the key risks for the stock. It has a neutral rating on ACC with an unchanged target price of Rs 1,660.
In case of Ambuja Cements, lower demand/ASP growth were the key risks for Ambuja Cement. It has a neutral rating on the stock with a target of Rs 255.
Information Technology
Brokerage: Goldman Sachs
Goldman Sachs sees constant currency dollar revenue growth for top 5 IT vendors at 1.3 percent quarter on quarter against the average 3.2 percent over the last four years. Headwinds for the sector include negative impact of cloud on legacy app services. Rupee appreciation and visa charges along with wage hikes could impact margins.
Some margin headwinds could be offset by margin levers like lower wage hikes, the brokerage said in its report. It has reiterated its sell call on Infosys and is neutral on TCS and Wipro. Meanwhile, it maintained a buy rating on HCL Technologies and Tech Mahindra. Lower FY18-20 EPS estimates for coverage by an average of 3-5%.
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