Buy, sell, hold: 8 stocks that analysts are watching out

The brokerage house sees margin improvement at Samvardhana Motherson Peguform and expects international business growth to remain robust.

The company has a solid track record of generating value by turning around distressed assets. UBS says Samvardhana Motherson Reflectec continues to gain share in the US market and India business will grow faster than domestic car production.

So it expects Samvardhana Motherson Peguform's EBITDA margin to improve by about 200 basis points over FY16-19.

Jammu & Kashmir Bank

CLSA has upgraded the stock to buy and raised target price to Rs 77 from Rs 65 earlier on a reasonable valuations but slashed earnings growth estimates.

It says recovery of the J&K state will be key for better operational efficiency and remains conversative on management's indication of growth from next year.

Bank's CASA franchise remains strong and contributed 45 percent of deposits (which grew by 17 percent YoY), it says, adding demonetisation could further boost profit.

Pharma stocks

Bank of America Merrill Lynch says US generic pricing environment further muddled by litigations.

According to the brokerage house, greater scrutiny could lower the occurrence of opportunistic price hikes. It says 1 percent increase in price erosion in US leads to 1.5-4 percent impact on EPS.

It prefers Lupin & Biocon in Indian pharma space. Lupin is only large cap company with no pending regulatory issues.

BoAML prefers Biocon as it's a strong proxy to the biosimilar opportunity and Biocon is likely to be largely unaffected by generic pricing concerns.

Sun Pharma

Credit Suisse has downgraded the stock to neutral from outperform and cut target to Rs 620 from Rs 800. The stock is already factoring in a Halol resolution delay, it feels.

It says US Department of Justice risk is still a large overhang and investors are focussing on potential penalty.

Market is ignoring potential EPS cuts and 20 percent of FY18 EPS is driven by price increase, Credit Suisse says.

Oil marketing companies

Citi says fuel price hike should lay to rest investor concerns. It has maintained buy call on all 3 oil marketing companies with BPCL as preferred pick.

It feels downside should be limited given non-discretionary nature of fuel purchases. According to the brokerage house, worst-case EPS impact for BPCL/HPCL/IOC is likely to be 8/13/7 percent.