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Analyst Corner| Final rating on OIL ‘hold’, final target price Rs 140

We are terminating coverage of Oil India Limited due to a reallocation of resources.

We are terminating coverage of Oil India Limited due to a reallocation of resources. Our final target price is Rs 140 (earlier Rs 90), and our final rating is ‘hold’.

ONGC Rating ‘Hold’; Downside risks to oil price a concern

Gas segment will drive growth in profitability; stock is a good dividend play; TP up to Rs 130 from Rs 70; ‘Hold’ maintained

This may prove challenging if prices stay firm, while the group may face difficulty absorbing at least 1.5mbd more Iranian exports in the event of sanctions being lifted.

Sun Pharmaceuticals Rating: Buy- Market trends augur well for Ilumya sales in US

No incremental hurdles for brand due to competition; better than expected rise in specialty sales would be key catalyst; ‘Buy’ maintained

After COVID-19 disruptions in H1, most of the brands saw strong recovery in H2CY20, which in our view implies strong demand and growing market size for anti-IL drugs.

Maintain ‘buy’ on GAIL with increased TP of Rs 173

Commissioning of customer projects, completion of pipelines, and rising oil prices all bode well for gas demand and GAIL We expect gas trading and LPG production to also show improved profitability.

GAIL

Petronet LNG rating: Buy; launch of pipeline likely to aid growth

Cash generation remains high; FY22-23e EPS down 5-7% given Kochi tariff uncertainty; ‘Buy’ retained

We value the company on a DCF of individual terminals to arrive at target price of Rs 290 (earlier Rs 300) and retain our Buy rating on PLNG as it is well placed to benefit from any increase in gas demand in the country in our view.

Apollo Hospitals rating – Buy: Recovery in hospital biz continued in Q3

Outlook remains steady; rise in out-station patients’ volume to be a catalyst; TP up to Rs 3,050; ‘Buy’ retained

Titan Company rating- Buy: PAT ahead of consensus estimates; TP revised to Rs 1,800

Q3 marks start of a strong growth phase; TP revised to Rs 1,800; ‘Buy’ maintained

Britannia Industries Rating: buy- Sales growth in quarter was below par

Volume revival, which is likely, will be key near-term catalyst for stock; TP down to Rs 4,000; ‘Buy’ retained

Britannia says that its market share has increased, rural growth remains strong, and disruption in Modern Trade and Institutional channels is temporary – as the situation normalises, revenue growth should recover.

Mahindra & Mahindra Rating: buy- A strong third quarter for the company

Consolidated margins were sound; monsoon to be next trigger; stock is ready for re-rating; TP up to Rs 980; ‘Buy’ maintained

On the other hand, the outlook for pick-ups is strong, led by the industry’s growth, while the SUV business continues to benefit from Thar demand and the likely launch of the new XUV5oo (W601) over the next few months.

Sun Pharmaceuticals Rating ‘Buy’; Lower costs boosted Q3 performance

Momentum in specialty sales likely to be sustained; FY21/22e EPS up 5.3/1.3%; Buy retained with TP of Rs 700

Improving patient flows on the broader market recovery and improved execution of marketing and promotional efforts led to a healthy pick-up in specialty sales during Q3.

Cipla Rating ‘Buy’; A robust performance by company

FY21-23e EPS up 8-12%; upgraded to ‘Buy’ rating with revised TP of Rs 1,030

PAT at Rs 7.5 bn grew 113% y-o-y (+12.4% q-o-q).

Asian Paints rating – Buy: Results beat estimates by a wide margin

Decorative volumes robust; firm’s execution stands out; Q4 outlook’s strong too; TP up to Rs 3,150; ‘Buy’ retained

Alembic Pharma rating – Hold: India sales bright spot of Q3FY21

Execution key for India and US sales; FY21-22e EPS up 3%; valuations factor in prospects; ‘Hold’ retained

After a strong showing in Q2 and Q3, Alembic expects to sustain momentum for India sales, and execution will be key amid rising competition in focused segments, in our view.

HDFC Bank Rating: Buy- A resilient performance by the company

PAT grew 18% y-o-y ; asset quality outlook is stable; FY21-23 estimates revised marginally; TP up to Rs 1,680; ‘Buy’ maintained

Disclosures on RBI resolution book and portfolio quality suggest a stable asset quality outlook.

Titan Company Rating ‘Buy’; start of a stronger growth phase for firm

Jewellery sales went up by 15% y-o-y, as per Q3 update; Covid-19 has consolidated Titan’s position; TP raised to Rs 1,750; ‘Buy’ retained

Jewellery sales grew c15% y-o-y, sustaining the strong growth trend even after the festive season.

Analyst Corner: Retain ‘buy’ on Larsen & Toubro with target price of Rs 1,540

Shares of L&T have under-performed Nifty not just in the previous year, but in many of the last 5 years as 2014 expectations of a revival in infrastructure remained elusive.

This is the third significant contract awarded by NHSRCL for the project.

TCS Rating: hold- A robust third quarter for the company

40bp margin expansion q-o-q a surprise; FY22e growth raised to c14%; TP up to Rs 3,200; Hold retained given limited upside

NTPC Rating ‘Buy’; doing better on ESG front is not difficult

Firm has begun efforts in that direction; stock has underperformed despite earnings growth; TP up to Rs 165; ‘Buy’ maintained

This is despite feeling minimal COVID-19 impact (we expect FY21 reported earnings growth of 23% y-o-y and 20% earnings CAGR over FY20-23e).

Indian Hotels Rating: Buy; structural changes boost firm’s prospects

Vaccine approval will be a positive; pick-up in leisure demand and banquet biz to aid Q3; TP raised to Rs 151

ICICI Lombard Rating: reduce Ban on health product would dent income

Move on credit-linked group policies would cut net profit by c6%; ‘Reduce’ rating maintained with target price of Rs 1,065

Shriram Transport Finance Corporation Rating: hold Improvement in core business continues

Cost of risk likely to go down; TP raised to Rs 1,100 from Rs 950; downgraded to ‘Hold’ given recent spike and regulatory uncertainty

General Insurance Corp Rating: Buy; recovery is slower than expected

Fire segment still a worry; estimates lowered to factor in Q2 showing; TP down to Rs 188; ‘Buy’ maintained

Gujarat Pipavav Ports rating – Buy: Decline in container volumes took its toll

Outlook has improved in Q3; FY21-23e Ebitda up 8-14%; TP raised to Rs 110 from Rs 90; ‘Buy’ maintained

However, we reflect the tariff increase of about 5- 6% for containers, which more than offsets the lower container estimates.

ITC Rating ‘Buy’; FMCG-Others business drove sales beat

Valuation’s undemanding due to the performance of cigarette business; margin growth in FMCG-Others is key; TP revised to Rs 230

Maintain ‘hold’ on Cadila Healthcare with TP at Rs 425

Trials ongoing for Covid-19 vaccine and other Covid treatments, though financial benefits not clear at present Maintain Hold; raise TP to Rs 425 (from Rs 405). Key catalyst - regulatory approval for Covid-19 vaccine in India.

Larsen & Toubro Rating: Buy; Q2 earnings largely met estimates

Sequential improvement likely to continue; market’s undervaluing stock; ‘Buy’ retained

HRRL is a joint venture between Hindustan Petroleum Corporation (HPCL) and the government of Rajasthan with an equity participation of 74% and 26% respectively.

HSBC upgrades TVS Motors stock to ‘buy’ from ‘hold’; raises TP to Rs 480

TVS reported its highest quarterly margins (ebitda margin of 9.3%) in over a decade, despite, nearly 20% lower volumes compared to the peak (in 2Q19); a headwind from the BS-VI-led cost increase, and higher commodity prices.

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