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Last Updated : Feb 13, 2017 03:29 PM IST | Source: CNBC-TV18

Buy, sell, hold: How to trade 12 key stocks post Q3 results?

Morgan Stanley is underweight on Bank of Baroda, with reduced target at Rs 125 from Rs 135 as valuation is expensive in the context of weak earnings progression. Share price will fall relative to the industry over the next 30 days, it feels.

 
 
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Moneycontrol Bureau


Bank of Baroda


With retaining buy call on Bank of Baroda, with increased target price at Rs 225 from Rs 195, CLSA says Q3 earnings missed estimates but stressed loans were below peers and bank is better than most PSU banks w.r.t asset quality & capitalisation. Key disappointment in Q3 was annualised delinquency ratio at 4 percent. Higher-than-expected credit cost is key drag on Q3 results, it says.

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Macquarie has maintained underperform rating on the stock, with reduced target at Rs 115 from Rs 116 following cut in FY17 EPS by 36 percent & FY18 by 8 percent.


Morgan Stanley is also underweight on the stock, with reduced target at Rs 125 from Rs 135 as valuation is expensive in the context of weak earnings progression. Share price will fall relative to the industry over the next 30 days, it feels.


JPMorgan says margins in Q3 declined sharply as yields remained under pressure, while assigning underweight call on the stock with a target price at Rs 133.


Kotak has also maintained reduce rating as growth concerns are yet to be addressed. Loan growth would be a disappointment as compared to investors' expectations and return on equity visibility beyond 12-14 percent by FY2019 still poses as a challenge, it feels. The brokerage house has increased target price to Rs 170 from Rs 160.


State Bank of India


CLSA says the bank's performance has been improving but cut earnings estimates as arms still dragged. Asset-quality pressure moderated with delinquency ratio at 3 percent and 35 percent CASA deposit growth due to demonetisation was a key positive.


The brokerage house feels loan growth can improve from 5 percent YoY as bank gained from lending-rate cuts. CLSA has retained buy call on the stock with target price at Rs 330. According to the research firm, slower-than-expected uptick in India’s economy growth is a key downside risk for the bank and credit risk in the corporate segment is another risk to estimates.


Goldman Sachs has retained neutral call on the stock on balanced risk-reward, with increased target at Rs 262 from Rs 253 and increased FY17-19 EPS by 1-7 percent on Q3 trends. Earnings were below expectations on core but asset quality trends are healthy.


While maintaining buy call on the stock, Kotak says it is top pick in the PSU pack with target price of Rs 320.


Coal India


CLSA has sell call on Coal India, with a target price at Rs 285 and cut FY17 EPS by 2 percent but maintained FY18-19 estimates. The brokerage house sees risk of a partial rollback in coking coal price hike while it feels improvement in volume growth may continue and blended realisations should also improve in Q4.


JPMorgan says Q3 profit missed estimates but underlying earnings were not as bad. Earnings will benefit from the recent coking coal price hike, it feels. The brokerage house remained neutral on the stock, with a target price at Rs 330.


Macquarie has reiterated its underperform rating on Coal India, with a target price at Rs 250 and cut FY17-19 EPS estimates by 7-8 percent. "Results reaffirmed our bearish outlook on its margins & earnings," the brokerage house says, adding stagnant FSA (fuel supply agreement) realisation failed to reflect 6 percent price hike. Fundamentals continued to get worse and suggested de-rating, it feels.


Goldman Sachs has maintained buy call on the stock but cut target to Rs 345 from Rs 360 as it has reduced FY17-19 EBITDA by 4-8 percent mainly on lower average selling price and cut FY17-19 EPS by 8-10 percent.


Idea Cellular


CLSA has a sell call on Idea Cellular, with increased target at Rs 100 from Rs 68. Lower EBITDA & higher interest costs drove company into losses. Disappointing core performance led by a decline in revenue and network costs drag margins & interest burden led to loss in Q3. The brokerage house has cut FY17-19 forecast by 5-25 percent. According to the research firm, potential Vodafone merger is positive but may not fructify before FY19.


Goldman Sachs says Idea's reported Q3 revenues were broadly in line with expectations and wireless revenue growth at negative 4 percent YoY was worse than Bharti & Vodafone. The brokerage house has maintained neutral rating on the stock, with an unchanged target price of Rs 63.


CESC


Nomura has buy call on the stock, with target price of Rs 725 as earnings were in-line with forecasts but above consensus.


CLSA has also a buy call on CESC, with a target price at Rs 1,000. Key issue ahead is the scale-up of the distribution business, it says.


Tata Power


CLSA expects an earnings turnaround in Tata Power led initially by its net long coal position and suggests buying the stock on rebound in coal & expanding of renewables business. Currently it has a buy call on the stock, with a target price at Rs 97.


JPMorgan is overweight on the stock, with a target price at Rs 90.


Crompton Greaves


Morgan Stanley says margin disappointment drove EBITDA miss for Crompton Greaves, while assigning equal-weight rating on the stock, with a target at Rs 60.


Kotak revised its target price on the stock to Rs 65, but it is cautious on the stock. Operationally Q3 was good standalone quarter but outlook appears good, it says.


Hindustan Zinc


Kotak says Hindustan Zinc's Q3 performance was in-line but it has downgraded the stock to reduce on expensive valuations, with increased target price at Rs 290 from Rs 265.


Full benefit of higher mined volume did not reflect in refined metal sales and maintaining guidance at higher than FY16 translated into a strong Q4, the brokerage house says, adding deficit in 2017 & falling inventories can push zinc prices beyond estimates.


Tata Communications


Morgan Stanley is overweight on Tata Communications, with a target price at Rs 690. Proceeds from sale of Singapore data centre is expected in Q4, it feels.


GAIL


Goldman Sachs remained neutral on GAIL but raised target price to Rs 420, driven by earnings changes.


Lower gas transmission volumes were offset by higher transmission tariffs, the brokerage house says. It expects petchem utilisation rates to be the key driver of earnings growth.


Mahindra & Mahindra


Goldman Sachs has maintained buy call on Mahindra & Mahindra, with increased target price by 0.3 percent to Rs 1,376. It feels rural demand should recover led by increased cash availability. The brokerage house has changed FY17/FY18/FY19 standalone earnings by -4.7 percent/-1.9 percent/3.5 percent.


Havells

Kotak has a reduce call on Havells, with a target price at Rs 400. It believe company's brand capabilities will enable strong earnings CAGR.

First Published on Feb 13, 2017 10:18 am
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