CLSA has retained its buy rating on the stock. The research firm believes the new promotional offer will further cement high data usage. Jio could reach 100 million paid subscribers well before March 2019 estimates, CLSA observed. This may lead to an upgreade in EPS estimates. Strong delivery by Jio could drive a significant stock re-rating, it added.
Morgan Stanley believes Reliance Jio’s offerings are attractive and disruptive as Jio Summer Surprise. The new offerings are at 40 percent discount to Bharti Airtel’s average revenue per user (ARPU).
(Reliance Jio is a part of Reliance Industries that owns Network 18 Media & moneycontrol.com)
Macquarie has an outperform rating on Vedanta with a 30 percent upside potential to its target price. It believes that the Cairn-Vedanta merger further diversifies Vedanta’s earnings and strengthens balance sheet. Post the merger, the company will be the 20th largest free gloat midcap company in India.
On the financial front, Vedanta’s Q4FY17 production shows good volume ramp-up across divisions, analysts at the firm wrote in their report. Strong production with higher commodity prices will help the firm repeat historic EBITDA in Q4.
Furthermore, it sees a lot of steam being left in Vedanta’s valuations. It valued the stock at five times EV/EBITDA.
Citi has maintained its buy call on the stock with an increased target price of Rs 30,000 from Rs 28,000 earlier. It believes that Q4 results are likely to be strong driven by volume growth of over 20 percent year on year. The margins would be over levels of 32 percent on higher operating leverage.
The expected a further increase in the waitlist period for Royal Enfield, which is already on the higher side. It is not ruling out a shift of potential Royal Enfield clients to Dominar due to the long waiting. The firm hit a peak production capacity of 60,000 units a month. With the third plant at Vallam Vadagal likely to start production by Q3 of this fiscal, the combined capacity will be 75,000 units per month and nine lakh a year.
It has increased FY17-19 Royal Enfield volume estimates by 1-2 percent and has also increased consolidated EPS estimates by 4-5 percent over FY17-19. Citi has also increased target multiple for Royal Enfield business to 34 times from 33 times.
Nomura has a buy rating with an increased target of Rs 510 from Rs 425. It believes that earnings can grow 17-19 percent despite a very strong base. It also sees no risks tp the company’s eligibility to raise tariff by 5 percent in the near term. It feels that the company can still surprise on volume and marketing margins as LNG demand remains strong.
CLSA has a buy call on the stock with an increased target of Rs 1,920 from Rs 1,780. Recent USD 750 million capital raise will lift Tier-I car to 15% and aid faster growth, the research firm said. Furthermore, it expected the retail segment to lead loan growth.
Meanwhile, the CASA should continue to expand at over 35 percent over the next two years. The research firm also raised profit estimates for FY18-19 by 6-7 percent.
Credit Suisse has initiated coverage on the stock with an outperform rating and target of Rs 625. It believes that the firm’s offerings are relatively immune from challenges that the IT industry is facing. H-1B/L-1 visa dependence is less than 15%, possibly least among its Indian peers, the research firm said. It also expects Cyient to report over 13 percent revenue CAGR over FY17-19. Meanwhile, the margins have scope to expand from the current 13.6% to 14.6% by FY19.
Power
CLSA has a buy call on Tata Power and a sell call on Adani Power and Adani Enterprises. The research firm sees no impact on Tata Power’s estimates after the Supreme Court’s ruling on compensatory tariffs. The company may cut cost by shifting to cheaper coal against Melawan currently. Tata Power Mundra UMPP claimed under- recovery of 70 paise/kwh during Q3, it said in its report.
Meanwhile, on Adani Power, CLSA feels the recovery of USD 578 million to Adani Power by Adani Enterprises looks tough after the apex court’s order. Furthermore, Adani Power is falling short to service 12 percent of debt even at 90% operating PLF.
Non-banking financials
Credit Suisse is positive on Shriram Transport Finance, LIC Housing and Cholamandalam Finance. Additionally, it expects Bajaj Finance and Indiabulls to continue to deliver fast growth. Bharat Financial Inclusion should see some growth after the decline seen in Q3 and it will look for improvement in its collection efficiency. It expects steady growth and continued margin expansion for LIC Housing.
For vehicle financers, it sees a resumption in growth after being hit in December. Q4 will see two Shriram firms’ transition to 120 days past due (DPD) from 150 DPD. These lower DPD may result in an increase of gross NPA numbers.
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