Moneycontrol Be a Pro
Get App
Last Updated : Oct 22, 2019 02:07 PM IST | Source: Moneycontrol.com

Foreign brokerages cut target price of these 6 cos after Q2 results; do you own any?

FII remained net buyers in the last week as they bought equities worth Rs 3213.17 crore, while Domestic Institutional Investors (DII) also bought equities worth of Rs 2184.81 crore.

 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

Market witnessed buying last week, with Nifty regaining 11,600 and Sensex closing above 39,000 on the back of buying from FIIs, positive global cues and mostly inline earnings from India Inc.

FII remained net buyers last week as they bought equities worth Rs 3213.17 crore while Domestic Institutional Investors (DII) also bought equities worth of Rs 2184.81 crore.

The S&P BSE Mid-cap index gained 4.64 percent, S&P BSE Large-cap index rose 3.49 percent and the Small-cap Index was up 2.78 percent last week.

Close

“Market continued its upward momentum for the sixth straight session (On October 18), its longest gaining streak in seven months, on account of positive global cues, said Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Private.

Here are six companies in which foreign brokerages has cut the target prices post their September quarter earnings (Source - CNBC-TV18):

Avenue Supermarts

D-Mart supermarket chain operator Avenue Supermart has posted a 47.54 percent year-on-year (YoY) rise in net profit at Rs 322.63 crore for the quarter ended in September.

The total revenue, or the total income, increased by 22.26 percent on a YoY basis to Rs 5,998.90 crore for the quarter ended in September, compared to Rs 4,906.54 crore reported in the year-ago period.

Earnings before Interest, Tax, Depreciation, and Amortization (EBITDA) in Q2FY20 stood at Rs 517 crores, as compared to Rs 388 crore in the corresponding quarter of last year.

The EBITDA margin improved from 7.9 percent in Q2 FY19 to 8.6 percent in Q2 FY20.

Research house Citi has maintained sell rating on the stock and cut target to Rs 1,255 from Rs 1,550 per share as the Q2 numbers were below estimates.

However, it raised FY20/21 EPS estimates by 13-14 percent on corporate tax cut and see no room for error on store expansion & operating metrics.

Infosys

Infosys posted 5.8 percent sequential growth in Q2 FY20 with its net profit at Rs 4,019 crore. The revenue during the quarter rose 3.8 percent QoQ to Rs 22,629 crore. The same in dollar terms rose 2.5 percent at $3,210 million.

The management, revised its full-year constant currency revenue growth guidance to 9-10 percent, up from 8.5-10 percent earlier and maintained its full year EBIT margin guidance at 21-23 percent.

Infosys signed $2.8 billion worth of deals during the September quarter.

Jefferies has cut target to Rs 915 from Rs 930 per share but maintained buy call on the Infosys as the Q2 performance was largely in-line with expectations.

It is a slight miss in revenue growth offset by marginal beat in margin while high TCV helped by significant renewals, it added.

The company remains one of the best placed among top tier IT companies and likely to benefit from the tailwind of large-scale digital transformation, it further said.

Wipro

Software services provider Wipro reported 7 percent sequential growth in the second quarter profit at Rs 2,552.7 crore against profit of Rs 2,387.6 crore.

IT services revenue in dollar terms increased 0.5 percent sequentially to USD 2,048.9 million while the same in constant currency grew 1.1 percent QoQ.

The earnings before interest and tax (EBIT) fell 0.1 percent sequentially to Rs 2,650.7 crore and margin contracted 40 bps to 18.1 percent in quarter ended in September, impacted by wage revision.

Jefferies has put underperform call on the Wipro and cut target price to Rs 218 from Rs 230 per share.

The company beat the margin estimates, but growth underperformance continues and expect to continue to top-tier peers, which will cap margin upside and drive gradual valuation de-rating.

It feels that the growth continues to lag peers at 3.5-4.5 percent (YoY Constant Currency) over FY20-22e while margin estimate for FY20-22 is at 17 percent and FY20/21/22 EPS estimates at Rs 16.60/17.20/18.10, said Jefferies.

DB Corp

DB Corp reported a 63.6 percent jump in its consolidated net profit at Rs 75.57 crore in the quarter ended in September while its revenue was down 8.70 percent at Rs 531.39 crore as against Rs 582.09 crore in second quarter of 2018-19.

The company's advertising revenues were 11.18 per cent down at Rs 367 crore as against Rs 413.2 crore in the second quarter of last fiscal, it said.

CLSA has cut target to Rs 185 from Rs 220 per share buy remained with buy call.

According to CLSA, the Q2 revenue was disappointing while the profit beat the estimates due to tax reversals.

It feels that the margin may expand further, led by continued decline in raw material costs. It cut FY20-21 estimates by 2-7 percent and forecast 6 percent earnings CAGR over FY20-22.

It kept its positive stance on stock at it offers 7 percent dividend yield.

Zee Entertainment Enterprises

Zee Entertainment Enterprises reported 6.9 percent growth YoY in the September quarter profit at Rs 413.2 crore against Rs 386.7 crore.

The revenue during the quarter grew by 7.4 percent to Rs 2,122 crore.

The EBITDA increased 2.5 percent YoY to Rs 692.9 crore, but the margin contracted 160 bps YoY to 32.6 percent in Q2FY20.

The Bank of America Merrill Lynch (BofAML) has maintained a neutral call and cut the target to Rs 360 per share on the back of rise in WACC to 11.3 percent to account for uncertainty in management control.

Incremental driver for stock is not earnings but clarity on stake sale, it added.

The research house tweak FY20-22e for reduced tax from 35 percent to 25 percent increasing EPS by 17-10 percent.

Federal Bank

Federal Bank has reported a healthy 56.7 percent YoY growth in the Q2 FY20 profit while the net interest income (NII) grew by 9.9 percent YoY to Rs 1,123.8 crore.

The gross non-performing assets (NPA) rose 8 bps to 3.07 percent, and the net NPA increased 10 bps to 1.59 percent QoQ.

The company's fresh slippages at the end of Q2 increased to Rs 540 crore, and provisions increased to Rs 251.8 crore.

Morgan Stanley has underweight rating on the stock and cut target to Rs 80 from Rs 90 per share.

It feels that the earnings is likely to be under pressure and lower the estimates further by 3-6 percent for FY20-22 while the asset quality remains weak given high NBFC/HFC exposure.

Jefferies has maintained buy call on Federal Bank while cut target to Rs 120 from Rs 123 per share.

The broking house has trimmed NIM for FY20 but largely maintain loan growth and NIM estimates for the following years. However, the overall estimates cut by 2.0-2.5 percent.

Citi has also maintained buy call but cut target to Rs 105 from Rs 120 per share.

According to Citi, Q2 was weaker than expected as lower corporate loan growth and margin contraction have dragged the NII. However, slippages rose but were from within the watchlist.

Further developments on CEO’s term will be the key going ahead and tweak FY20/21 estimates +3 percent/-3 percent for lower tax rate/NII and higher credit cost, it added.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Oct 22, 2019 02:01 pm
Loading...
Sections
Follow us on
Available On