Brokerage: Motilal Oswal | Rating: Buy | Target: Raised to Rs 335
Motilal Oswal expects the stock to get re-rated and there are many levers to drive an upside. It expects wage hike to impact earnings by 6 percent in FY19. Having said that, an average wage hike of 22 percent is higher than its estimate of 18 percent. It has raised estimates for annual wage bill to Rs 36,400 crore in FY18 and Rs 36,200 in FY19.
Despite cost increase, it sees adjusted EBITDA CAGR Of 15% to Rs 19,700 crore over FY17-19 and believes that EBITDA growth is driven by annual volume growth of 6.7 percent and operating leverage.
Brokerage: Morgan Stanley | Rating: Underweight | Target: Rs 221
The brokerage house said that annual wage hike impact likely at Rs 5,700 crore Vs Rs 5,000 Cr in 2012 hike. A higher wage hike implies 13-14% downside risk to FY19 earnings estimate. Further, FY18 dividend has downside risk versus FY17 payout.
Brokerage: Edelweiss Sec | Rating: Initiate coverage with buy | Target: Rs 1,300
The broking firm highlighted that the company chalked out capacity expansion programme for FY18-H1FY21. Post expansion, the company will be the fifth largest cement manufacturer in India. Going forward, it estimates the company to post revenue CAGR of 19 percent over FY17-19.
Brokerage: ICICI Securities | Rating: Initiate coverage with buy | Target: Rs 725
The brokerage house highlighted that the company is a market leader in Indian ship repair segment and holds 39 percent share. Strengths include a strong orderbook, L1 status, bidding pipeline and debt-free status of the firm. It also said that the firm is a natural beneficiary of large and critical government projects.
Brokerage: CLSA | Rating: Upgrade to buy | Target: Raised to Rs 620
The global research firm expects normalization of stress and retail scale up to lift earnings. It also said that the valuations were attractive and the stock can re-rate as asset quality normalizes. Further, it sees scope for operating efficiencies that will aid earnings.
Brokerage: CLSA | Rating: Buy | Target: Rs 200
CLSA said that the company’s proposed fixed cost pooling will enhance competitive advantage. The FCP could entitle the company to PLF incentives and will add 4-8 percent to FY19 EPS. It also highlighted that the valuations are compelling and the stock trades at 6-year average PE.
Brokerage: CLSA | Rating: Buy | Target: Rs 1,900
The broking firm is pinning hopes on GST rates on restaurants which are likely to be revised in two weeks. One of the options could be to reduce GST to 12 percent with no input credit and that slab appears negative. It is still awaiting clarity on the taxation front and could have negative impact on the earnings in near term.
Brokerage: HSBC | Rating: Buy | Target: Rs 700
The global research firm said that enhanced value proposition including tactical discounting to maximise market share. It said that jewellery revenue growth momentum will continue & will be a key catalyst.
Brokerage: IDFC Sec | Rating: Outperform | Target: Rs 683
The brokerage said that exclusivity agreement with Adani Transmission is another step to reduce dependence on asset heavy business. Its focus on defence equipment business can create value for shareholders. Moreover, steady cash flows from EPC & power distribution business can create shareholder value.
Brokerage: Deutsche Bank | Rating: Buy | Target: Raised to Rs 870
The global financial services firm has reiterated its rating on volume ramp up and margin improvement. In fact, the capacity in India could double in five years, it added. A rise in share of value-added products could boost margins and it has also raised FY18/19 earnings by 2/4 percent.
Pharma
Brokerage: Credit Suisse
Credit Suisse said that the worse has not yet played out and returns should decline sharply. In fact, it expects price erosion to stay in double digits for next 3 years. In fact, an impact of faster approvals is yet to play out. It prefers stocks with low price erosion risk or business model shift beyond generics. Among stocks, it prefers Sun Pharma and Cipla and sees the highest risk for Dr Reddy’s.
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