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Slideshow | Brokerages give a thumbs down to these 10 stocks amid tough times

Here are the 10 stocks in which brokerages having reduce rating after their March quarter earnings.
May 28, 2020 / 01:11 PM IST
On May 27 the market ended strongly with over 3 percent gain mainly supported by the banking names.
On May 27, the market ended strongly with over 3 percent gain mainly supported by the banking names after a volatile session on May 26. F&O contracts will expire on May 28, which is keeping the market volatile in addition to the uncertainty regarding economic recovery. Here are 10 stocks that brokerages have given a reduce call on: 
Bosch | Brokerage: ICICIdirect | Rating: Reduce | Target: Rs 8,730 | LTP: Rs 9,416. ICICIdirect factor in normalised PAT CAGR of 3.6% over FY20P-22E. Amid current challenges to traditionally strong diesel presence, faster growth in content per vehicle and a focus on business de-risking through faster inroads into petrol and electric powertrain would hold the key to longer term sustainably profitable growth.
Bosch | Brokerage: ICICIdirect | Rating: Reduce | Target: Rs 8,730 | LTP: Rs 9,416. ICICIdirect factor in normalised PAT CAGR of 3.6% over FY20P-22E. Amid current challenges to traditionally strong diesel presence, faster growth in content per vehicle and a focus on business de-risking through faster inroads into petrol and electric powertrain would hold the key to longer term sustainably profitable growth.
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Avenue Supermarts | Brokerage: Prabhudas Lilladher | Rating: Reduce | Target: Rs 1,658 | LTP: Rs 2,200. Broking house cutting FY21 and FY22 EPS estimates of D’Mart by 16.8% and 8.1% due to lockdown impact on footfalls/sales, higher cost of operations and delay in store openings and safety cost. D’Mart has strong balance sheet, and would look at sustaining expansion plans. It estimate flattish EPS in FY21 and 46% growth in FY22.
Colgate Palmolive | Brokerage: Prabhudas Lilladher | Rating: Reduce | Target: Rs 1,224 | LTP: Rs 1,279. Prabhudas Lilladher cutting FY21 and 22 EPS estimates of company by 7.1% and 3.9% respectively based on Covid impact on production and sales in 1Q, delayed recovery post Covid in higher dependence on wholesale channel and delay in opening of high focus modern trade in top cities.
Colgate Palmolive | Brokerage: Prabhudas Lilladher | Rating: Reduce | Target: Rs 1,224 | LTP: Rs 1,279. Prabhudas Lilladher cutting FY21 and 22 EPS estimates of company by 7.1% and 3.9% respectively based on Covid impact on production and sales in 1Q, delayed recovery post Covid in higher dependence on wholesale channel and delay in opening of high focus modern trade in top cities.
JSW Steel | Brokerage: Prabhudas Lilladher | Rating: Reduce | Target: Rs 140 | LTP: Rs 185. Broking house reiterated its negative outlook on the stock due to deteriorating balalcesheet, overhang of Bhushan Power and Steel (BPSL) acquisition, stretched valuations and weak earnings outlook.
JSW Steel | Brokerage: Prabhudas Lilladher | Rating: Reduce | Target: Rs 140 | LTP: Rs 185. Broking house reiterated its negative outlook on the stock due to deteriorating balalcesheet, overhang of Bhushan Power and Steel (BPSL) acquisition, stretched valuations and weak earnings outlook.
Dr. Reddy’s Labs | Brokerage: HDFC Securities | Rating: Reduce | Target: Rs 3,770 | LTP: Rs 3,883. HDFC Securities increased its EPS estimates by 3-7% for FY21/22. The key upside risks are lower price erosion in the US, higher growth in India and EM markets; faster than expected approvals for key products in the US. Despite factoring these launches and margin expansion as per company guidance, brokerage don’t see upside from current levels.
Dr. Reddy’s Labs | Brokerage: HDFC Securities | Rating: Reduce | Target: Rs 3,770 | LTP: Rs 3,883. HDFC Securities increased its EPS estimates by 3-7% for FY21/22. The key upside risks are lower price erosion in the US, higher growth in India and EM markets; faster than expected approvals for key products in the US. Despite factoring these launches and margin expansion as per company guidance, brokerage don’t see upside from current levels.
Domino's Pizza
Jubilant FoodWorks | Brokerage: HDFC Securities | Rating: Reduce | Target: Rs 1,420 | LTP: Rs 1,689. Broking house cut EPS estimate by 5% for FY21/FY22 to factor-in consistent extension of lockdown, weaker consumption sentiments and slower store expansion in FY21/FY22.
Bharti Airtel | Brokerage: Dolat Capital | Rating: Reduce | Target: Rs 615 | LTP: Rs 563. Bharti remains well-capitalized and good-positioned irrespective of the outcome on AGR liabilities or industry structure. Yet, Dolat Capital downgrade Bharti a notch from accumulate to reduce post the recent run-up. This doesn’t alter the structural positive stance on the company/sector.
Bharti Airtel | Brokerage: Dolat Capital | Rating: Reduce | Target: Rs 615 | LTP: Rs 563. Bharti remains well-capitalized and good-positioned irrespective of the outcome on AGR liabilities or industry structure. Yet, Dolat Capital downgrade Bharti a notch from accumulate to reduce post the recent run-up. This doesn’t alter the structural positive stance on the company/sector.
Bajaj Auto | Brokerage: Dolat Capital | Rating: Reduce | Target: Rs 2,721 | LTP: Rs 2,571. Although improvement in product mix and a favorable currency movement should continue to support operating margin, a weak outlook in export volume due to the Covid-led uncertainty in the global market and low crude oil price are likely to remain an overhang on the stock.
Bajaj Auto | Brokerage: Dolat Capital | Rating: Reduce | Target: Rs 2,721 | LTP: Rs 2,571. Although improvement in product mix and a favorable currency movement should continue to support operating margin, a weak outlook in export volume due to the Covid-led uncertainty in the global market and low crude oil price are likely to remain an overhang on the stock.
Apollo Tyres | Brokerage: Dolat Capital | Rating: Reduce | Target: Rs 94 | LTP: Rs 94.80. Dolat Capital expect the company is likely to face pressure on earnings, due to low utilization, high debt, and increase in loss at European operations. Factoring in the current COVID-led disruptions, it reduce consolidated EPS estimates for stock by 31% and 14% for FY21E and FY22E, respectively.
Apollo Tyres | Brokerage: Dolat Capital | Rating: Reduce | Target: Rs 94 | LTP: Rs 94.80. Dolat Capital expect the company is likely to face pressure on earnings, due to low utilization, high debt, and increase in loss at European operations. Factoring in the current COVID-led disruptions, it reduce consolidated EPS estimates for stock by 31% and 14% for FY21E and FY22E, respectively.
Bajaj Finance | Brokerage: Yes Securities | Rating: Reduce | Target: Rs 1,825 | LTP: Rs 1,942. Yes Securities' FY21/22 earnings undergo severe cuts due to adverse adjustments to loan growth and credit cost. Key concerns being high vulnerability of most business lines to Covid and short-cycle nature of book BAF trades at 2.8x/14x FY22 ABV/EPS.
Bajaj Finance | Brokerage: Yes Securities | Rating: Reduce | Target: Rs 1,825 | LTP: Rs 1,942. Yes Securities' FY21/22 earnings undergo severe cuts due to adverse adjustments to loan growth and credit cost. Key concerns being high vulnerability of most business lines to Covid and short-cycle nature of book BAF trades at 2.8x/14x FY22 ABV/EPS.
Rakesh Patil
first published: May 28, 2020 01:11 pm

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