Macquarie says HCL Technologies is its top pick in the large cap Indian IT services space as the company has been striking a good balance between payout and merger & acquisition investment.
On buyback, the brokerage house says without shareholder nod, company can buy back shares up to 10 percent of shareholder equity and with shareholder nod, it can buy back up to 25 percent of shareholder equity.
The company will consider a proposal for buyback of shares on March 20.
Macquarie says return of capital and US visa reforms are two dominant themes for Indian IT sector.
CLSA has downgraded United Spirits to sell post recent run-up, saying regulatory issues continued as Karnataka government raised alcohol taxes on Wednesday.
It feels tax rate hike will lead to a product price hike of 7-8 percent by the company. Hikes are manageable for the company but it leaves little scope for margin-accretive hikes, the brokerage house says.
Hardening in input prices could raise concerns on margins, according to the research firm. Key stock drivers are SC verdict on liquor ban & effective GST, CLSA says.
Karnataka has raised additional excise duties (AED) by 6-16 percent on alcohol from April.
Goldman Sachs says Karnataka government's 5.5 percent VAT removal on alcohol offset up to 16 percent hike in additional excise duty but there was no VAT levied in the off-trade channel.
United Spirits will need to raise prices by 2-4 percent across key brands, it says.
CLSA has a buy call on the stock with a target price of Rs 580 as the management expects advertising spending to normalise in FY18.
Company's focus is on improving the viewership of flagship channel Zee TV. Sale of sports business will boost pay-out, the brokerage house says.
Deutsche Bank has upgraded JSPL to hold with a target price at Rs 112, saying its upgrade premised on improving confidence in steel volume ramp-up.
Steel volume growth and cost savings will drive 90 percent EBITDA growth over FY17-19, it feels.
Deutsche Bank says for Bank of Baroda, the worst of non-performing loan worries is behind and net interest margin pressure will sustain.
FY18 should witness recoveries on asset quality front, it believes. The bank expects 15 percent return on equity by FY19 and the brokerage house is building at 12 percent return on equity in its expectations.
Deutsche has a buy call on the stock with a target price at Rs 205.
Goldman Sachs has increased its target price on the stock to Rs 521 from Rs 496 after it raised FY18-19 EPS estimates by 5-7 percent.
Credit Suisse has maintained outperform rating on Bharat Electronics with a target price at Rs 1,800 as it has reasonable confidence on company's orders, execution & margin EPS.
The research firm says better execution environment will drive growth on a large opportunity basket. It expects average order inflow run rate of Rs 13,500 crore per year for FY17-19.
The company highlighted that most of its capex budget has been spent and focuses on improving execution. It is confident of further improvement in pharmacy margins.
While maintaining buy rating on the stock with a target price of Rs 1,530, CLSA says focus on execution will enable company to improve revenue growth.
Stronger hospital & pharmacy performance will offset losses in new venture, CLSA feels.
Citi has initiated coverage on the stock with neutral rating and target price of Rs 580, saying the company has global leadership in high growth APIs and its move to formulations augur well for long-term growth.
The brokerage house believes formulations related expenses will suppress EBITDA margins by 400-500 basis points and valuations are reasonably fair at 22x FY18 EPS estimates.
Financials
CLSA says HDFC remains its top pick in financials segment as the expansion of subsidy scheme by government is positive for housing finance companies.
Housing finance companies should benefit from uplift in credit demand. Subsidy extension on housing loans can bring down interest cost to 4-5 percent, the brokerage house says.
Consumer
Deutsche Bank has upgraded HUL, Colgate and Emami to buy in consumer space.
The brokerage house feels up-stocking by 'trader' wholesale can potentially benefit staples. It sees 15-17 percent potential upside for HUL, Colgate and Emami.
Jubilant Foodworks, Titan Company, ITC, HUL, Nestle and GSK Consumer are top picks in the space.
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