CLSA reiterated its buy call on the stock with a lower target price of Rs 590 from Rs 600. The research firm observed that growth was driven by strong traction across BFSI and manufacturing, a rare feat achieved by the company. Furthermore, stronger outlook for energy, BFS and synergies keep growth palpable, it added.
However, the company’s guidance at 0 to -2 percent for the first quarter of this fiscal will keep recovery momentum at bay in FY18. Additionally, it cut revenue expectations by 1.5 percent and earnings per share (EPS) by 2.5 percent, but sees growth recovering from the fourth quarter of the fiscal.
Meanwhile, Bank of America Merrill Lynch reiterated its neutral stance on the stock with an increase in target price to Rs 500 from Rs 480. The company’s Q4 revenue growth was in line with estimates and marginally ahead of the consensus, it observed.
While it has cut FY18/19 EPS by 5 percent on weaker than expected profitability and rupee strength, it also expects FY18 margin to be compressed by 50 basis points year on year due to the currency’s headwinds.
Signalling a cautious stance on the information technology (IT) major, Nomura maintained a reduce rating with a lower target price of Rs 430 from Rs 435. It was wary of the limited organic growth, lack of signs of turnaround as well as pressure on margins.
In fact, the weaker positioning in key markets were likely to be a drag on margins. The research firm expected FY17-19 revenue/EPS CAGR f 4 percent and 2 percent, respectively and said that the EPS cuts were driven largely by lower growth expectations and margin pressures.
Wipro was the least preferred stock for Nomura among Tier-I IT firms. Among the key upside risks for the stock are better than expected revenue growth and stronger margin.
With an implied 5 percent downside, Goldman Sachs was neutral on the stock with a target of Rs 450. The global financial firm cut its estimates by up to 2 percent for FY18-19 due to weaker guidance.
Placing its bet on housing finance companies’ likely gains due to government initiatives, Morgan Stanley upgraded the stock to overweight with an increased target to Rs 750 from Rs 560. It believes that HFCs multiples may stay strong due to developments on the policy front. Further, it said that LIC Housing Finance was its preferred choice given its core home loan profitability and reasonable valuation. It also raised EPS estimates and target due to strong revenues.
Nomura maintained a neutral stance on the stock and increased target to Rs 360 from Rs 340 due to the developments around its valuation front. The global brokerage firm expects business to recover from cyclical lows, but valuations are already at mean levels.
Having said that, it saw better asset quality and pick up in collections along with return on equities (RoEs) to be back to 16 percent in two years. It expects disbursement growth of 16-18 percent in the next two years, leading to 16-17 percent assets under management growth for FY17-19.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
