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Jefferies

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Telecom: Subscribers fell by 21 mn m-o-m in September

Jio led in active subscriber numbers while Bharti added most 4G customers; VIL continued to lose subscribers

3G/4G subscribers fell by 19m in Sept due to 19m subscriber decline reported by Jio.

Bharti Airtel Rating ‘Buy’; Quantum of tariff hike a positive surprise

India mobile estimates up 8-15%; Ebitda CAGR of 21% is expected over FY22-24e; TP up to Rs 925 from Rs 860; ‘Buy’ retained

We raise our India mobile estimates by 8-15% to factor in tariff hike and expect Bharti to deliver 21% Consolidated Ebitda CAGR in FY22-24. Maintain Buy with a revised PT of Rs 925.

Apollo Hospitals: Maintain ‘buy’ with ₹6,510 target price

We stick to Healthco guidance of $2.3bn revenue by FY27. Our hospitals division’s EV valuation is unchanged at $7.2bn, while for HealthCo we build out three scenarios.

Reliance Industries Rating: buy: Nixing of Aramco deal a disappointment

Move to have no impact on balance sheet; valuation of O2C business cut to $70 bn from $80 bn; TP lowered to `2,880; ‘Buy’ maintained

Ashok Leyland Rating – Buy: Volumes up, but margins disappointed

Truck upcycle is a positive, mkt share loss a concern; TP up to Rs 175; FY22e EPS cut by 6%; ‘Buy’ maintained

We expect further improvement as operating leverage comes back and commodity cost pressures peak out. We expect margins to recover to 10.0/10.8/11.1% in H2FY22/FY23/FY24.

Analyst Corner: Maintain ‘buy’ on L&T with TP of Rs 2,405

Any ESG rating upgrade would be an added sweetener.

ESG rating agencies have raised concerns as L&T is associated with work on India’s nuclear submarine Arihant and Pinaka missiles.

Bharat Forge: Rate ‘buy’ with Rs 1,050 PT

Stock is still at 5.1x FY23E PB vs past peaks of 6.7x/7.6x. We rate 'buy'.

New EV components, vehicle light weighting, defence, and US infra package can fuel further growth. Stock is still at 5.1x FY23E PB vs past peaks of 6.7x/7.6x. We rate 'buy'.

Tata Steel Rating: buy-Another strong quarter for the company

Ebitda at a new peak; steel prices face risk but India margins to hold well above past levels; FY22-23e EPS up 6-15%; ‘Buy’ retained

tata steel

Petronet LNG: Maintain ‘buy’ with DCF-based PT of Rs 330

Kochi volumes were flattish q/q in 2QFY22 after volumes had risen in 1QFY22 helped by full impact of pipeline connectivity in early 2021. But utilisation remains low at ~ 23%.

We cut EPS 2% for FY22E and maintain ‘buy’ with an unchanged DCF-based PT of Rs 330.

Maintain ‘buy’ on IndusInd Bank with Rs 1,400 TP

We maintain our Buy call and price target of Rs 1,400 based on 1.9x Sep-23E adjusted PB.

IndusInd Bank also informed the exchanges about the resignation of Ashish Damani, executive director and chief financial officer at BFIL.

Divi’s Labs Rating ‘Hold’: Results were a slight miss on estimates

Pfizer’s Covid drug and RM prices pose challenges; TP cut to `5,563; downgraded to ‘Hold’ given valuations

Analyst Corner – Hindalco: Retain ‘buy’ with Rs 610 PT

Novelis still generated healthy FCF after interest payment of $235 million in 2Q (1H: $158 million). Net debt declined 4% QoQ to $5.0 billion.

Novelis is also embarking on a $130-million investment in the US, which will add ~124kt capacity (3% of total).

Analyst Corner| ITC: Stock under pressure on proposed tobacco tax policy

ITC stock has been under pressure on reports that the gov't has formed an expert panel to develop a comprehensive tax policy on tobacco

ITC stock

ITC: Stock under pressure on proposed tobacco tax policy

India is currently at c.55%; there are countries on either side i.e. lower as well as higher, with some even at c.80%.

Way forward: The expert group will analyse the existing tax structure on all forms of tobacco, including smoking & smokeless. The intent is to also develop a roadmap for tax policy and recommend immediate steps to make India compliant with regard to the 'R' component.

Hindustan Unilever rating – Buy: Weak volumes cast shadow on results

Overall results met estimates; margins likely to be under pressure; FY22-24e EPS cut marginally; ‘Buy’ retained

However, we expect HUL to benefit from a pick-up in economic activity ahead and retain our Buy rating with 12M view.

HDFC Bank Rating: Pick-up in growth could aid re-rating

Slippages were manageable & restructured loans rose from 0.8% of loans to 1.5%. Subs’ performance rebounded led by HDB-FS.

hdfc bank

Analyst Corner — Kotak Mahindra Bank: Retain ‘buy’; TP revised at Rs 2,340

While bank has scaled up liability franchise well with Casa ratio of 60%, it has been rather conservative about growing the large corporate book due to concerns over lower yields.

Bank also seems open to lend to better-quality SMEs in select sectors.

Bharat Electronics rating – Buy: Prospects are strong for the company

Govt’s ‘Make in India’ focus likely to sustain growth; margin delivery will reverse de-rating; ‘Buy’ maintained

Mgmt highlighted that 692 items have been uploaded on the Ministry of Defence indigenisation portal. EOIs for 69 items have also been published under Make-II.

Analyst Corner: Maintain ‘buy’ on Gujarat Gas, cut FY22E EPS by ~28%

Assuming (~ 2 mmscmd), total industrial volumes for GUJGA could be ~ 7 mmscmd in September. With the help of newer HPHT dom gas contracts, the exposure to pure Spot LNG could be reduced to ~ 15% of industrial volumes only at

In order to keep Spot LNG exposure for GUJGA at ~ 25%, Morbi volumes could be capped at ~ 6 mmscmd such total overall I/C volumes (requiring LNG) is at ~ 8 mmscmd.

SBI Life insurance Rating ‘Buy’; Momentum is expected to be sustained

Margin outlook remains positive; VNB estimates up 7-9%; target price raised to Rs 1,380 from Rs 1,240; ‘Buy’ maintained

Indus Towers rating – Buy: Key overhang on tenancy dispelled

VIL survival due to govt relief vital; FY23/24 estimates up 2-5%; TP raised to Rs 310; upgraded to ‘Buy’ rating

Despite the 20% move over past month, the stock trades at an undemanding 6.5x EV/Ebitda and offers an attractive 7% dividend yield.

Reiterate ‘buy’ on Godrej Properties with TP of Rs 1,974

We believe GPL's strong positioning (Top-4 in Bangalore, Pune, NCR) would provide it good leverage to the housing cycle uptick. We reiterate Buy with a target price of Rs 1,974.

Strong rankings in leading metros provide gearing to the up-cycle.

ITC Rating: Buy – Status quo on tax is a positive for firm

Cigarette volumes likely to recover in coming quarters; valuations are attractive; TP raised to `300; stock is a high conviction ‘Buy’

Bharti Airtel rating – Buy: Govt relief to help firm gain market share faster

20% CAGR in India mobile Ebitda estimated over FY22-24; TP raised to Rs 850 from Rs 685; risk-reward is favourable; ‘Buy’ retained

We raise our PT to Rs 850 on higher multiples to factor in potential growth acceleration. BUY

Hindalco Industries rating – Buy: Rally in aluminum prices boosts outlook

Any bauxite-led cost push could help firm; Novelis on sound footing; EPS for FY22-23e up 7-13%; TP up to Rs 610; ‘Buy’ retained

HNDL also started 0.5-mtpa Utkal alumina refinery in July and has plans to replace the higher cost alumina from an older facility; however, it is possible it might sell this alumina in external market if prices remain elevated.

Analyst Corner: Maintain ‘reduce’ on Shree Cement with TP of Rs 24,140

While SRCM investors will appreciate the much-awaited capex; at CMP, we believe there is little to cheer given: i) the announcement is along expected lines; ii) benefits will accrue only in FY25; and iii) with capex cost/t b

With valuation being expensive, maintain ‘Reduce’. (Representative image)

Gujarat Gas: Retain ‘buy’ with unchanged Rs 920 PT

Asian LNG prices expected to moderate from recent highs but very unlikely to fall below US$ 12-13/mmbtu: Fesharaki still expects low Europe storage levels as we head into Winter.

The current Spot LNG price is equivalent to crude > $ 100/bbl.
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