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Jefferies

Articles By Jefferies

541 Articles

Analyst Corner: Initiate ‘Buy’ on Crompton, product mix to aid growth

Further, secular industry opportunity aided by demand traction from unbranded segment, higher penetration and up-trading, augurs well for Crompton’s long-term prospects.

Crompton's four-pronged strategy, product development, new launches — ~44% of sales emanate from new products.

Emphasis on digital likely to keep spending on IT services robust over the next five years

Recovery is expected from FY22; despite premium valuations, further re-rating possible; Infosys is top pick.

HDFC Bank rating: Buy — New leadership looks to double market share

Quality of moratorium loans holding up, limiting risk of slippages; retail is expected to revive from Q3FY21; ‘Buy’ maintained

Management believes market share gains from PSU (60%+ of sector ) to private banks will continue and offers scope to double share in credit from 7-8% now.

Retain ‘buy’ on Eicher Motors with target price of Rs 25,000

Royal Enfield's 1Q volumes fell 69% y-o-y while Ebitda came in at just Rs 12 million as the Covid-related lockdown took a big toll on operations.

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Analyst Corner: ‘Buy’ on Ashok Leyland with price target of Rs 75

Stock is trading at 2.4x FY22E PB, which is in-line with long-term average and attractive in context of an impending up-cycle; past peaks were 5.7x/2.7x/3.7x in 2018/2010/2006.

ASPs rose 13% QoQ led by the cost push for BS6 emission norms.

Analyst Corner: Maintain ‘buy’ on Voltas with target price at Rs 687

Company has embarked on cost reduction with fixed costs in other expenses at 3.9% of sales in FY20 vs 5.1% in FY17 and 4.7% y-o-y.

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Kotak Mahindra Bank rating: Buy — Conservative lending in the face of odds

Fall in moratorium loans encouraging; while FY21e earnings may be weaker, asset quality is likely to hold up; ‘Buy’ maintained

Bank has accelerated downgrade of some stressed cases to NPLs which lifted NPLs by 12% q-o-q to 2.7% of loans. NPL coverage is at 68%.

Analyst Corner: Maintain ‘buy’ on IndusInd Bank with target price of Rs 680

Our current estimates factor 3%/2% of credit cost in FY21-22, a 20 bps lower credit cost will lift FY21 estimates by 21% (on low base) and FY22 estimates by 8%; or the bank may use this to improve coverage.

Capital raise of Rs33 billion lifts net worth by 10% and may have strategic partnerships.

HDFC Bank rating: Buy — Weathering the Covid storm well

Corporate growth offset weak retail; risk to asset quality likely to go down; estimates raised; ‘Buy’ retained with TP of Rs 1,350

Bank delivered 38% growth in corporate loans as it leveraged on deposit franchise and refinancing of capex and working capital loans.

Analyst Corner: ‘Buy’ rating on Axis Bank with a target price of Rs 530

Will de-risking of corporate book pay off? Axis Bank has been de-risking its corporate loan book for over the past two-three years, and this is evident from loans rated ‘A-‘and above forming 90-95% of incremental loans.

Shorter duration of liabilities can lift NIMs in times of low rates.

Analyst Corner | ICICI Bank among top picks in financials with target price of Rs 460

Monetisation of gains on stake in subsidiaries helped mobilise Rs31bn — that may abate risk of dilution. Valuations are attractive at 1.4x FY21 adj. PB and it is among our top-picks in sector.

Analyst Corner: Narayana Hrudayalaya – retain ‘buy’ with Rs 330 TP

Gross debt rose by Rs 30 crore in Q4. Dharmshila was Ebidta positive. Ahmedabad, Jamshedpur and Guwahati had Ebitdar margins of 9% in FY20.

After cost rationalisation, it expects break-even at 70% pre-Covid revenues.

Eicher Motors rating: Buy — A weak performance by the company

Sharp rebound in retail demand; FY21e EPS cut by 4%; outlook over long term bright; ‘Buy’ retained with TP of Rs 20,000

Hero Moto Corp rating: Buy — Numbers in final quarter were weak

While FY21 outlook is dull, FY22-23 should see rebound; valuations reasonable; ‘Buy’ retained with TP of Rs 2,725

Mahanagar Gas: Retain ‘buy’ with higher TP of Rs 1,390

Q4FY20 PAT was up 25% y-o-y (higher Ebitda, lower tax rate) but fell 11% q-o-q. Management has indicated volumes to be ~ 25-30% of normal in lockdown (Apr/May).

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Gateway Distriparks: Rail margins led to beat on Ebitda

FY21e EPS down 15% due to Covid-19; ‘Buy’ retained as DFC will boost market share.

Voltas rating: Buy — Maintain‘buy’ with revised target price of Rs 625

Margins improved by 424 bps y-o-y to 14.6%, driven by operating leverage, product mix and pricing. The management was clear on not compromising on margins by giving huge discounts.

Bharti Airtel Rating: Buy — Q4 results came as a positive surprise

Growth in data subscribers should raise market share; FY21-23 estimates up 3-6%. TP revised to Rs 660 from Rs 585; ‘Buy’ retained

Govt bailout lowers NPL risk from SME loans

Pick-up in demand will be key; aid for NBFCs indequate; PSUs have higher SME and IIB & SHTF, CV/SME loans.

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Havells India Rating: Buy; a subdued showing in the final quarter

Covid-19 pain was visible in results; balance sheet is robust; ‘Buy’ maintained with target price of Rs 660

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Analyst Corner| Blue Star: Target price revised down to Rs 630

Lockdown 1.0 in India began on 25 March 2020. AC demand slowed down from March 15, i.e. 17 days (19% of the quarter) and projects business (MEP) impact for 10-12 days (12%).

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Adani Ports Rating: Buy — Cash flow has improved, volumes expected to go up as operations normalise

Margins impacted due to cargo mix; FY20 volume up 8% y-o-y; traffic likely to rise gradually; FY21-22 EPS down 5-7%; ‘Buy’ retained

The coal price claimed by Adani is also higher than the price reported by Tata Power’s Coastal Gujarat Power for similar quality of coal imported from Indonesia.

Analyst Corner: Property sector – initiate ‘buy’; Godrej Properties top pick

The bright spot in the Indian real estate market viz leasing is likely to see an abrupt end to its rental uptick cycle.

Godrej Consumer Products (GCPL) posted weak numbers for Q4FY20 results.

Analyst Corner: VBL – retain ‘buy’; may stay range-bound in near term

Varun Beverages (VBL) reported a strong growth in volumes, Ebitda and earnings during Q1CY20. This was, however, led by the acquired territories of south & west not there in the base.

Marico Rating: ‘Buy’, risk-reward attractive

Marico's Q4FY20 was expectedly weak on topline but margin beat (lower RM & A&P) drove a positive earning surprise.

Gas Utilities – Industrial PNG, CNG volumes likely to be hit

FY21/22e EPS lowered by 22-33/9-13%; softer LNG prices a positive; GUJGA and MGL are to be preferred.

Natural gas prices cut by steep 26 pc; likely to translate into lower CNG and piped cooking gas prices, huge dent in ONGC revenues

Axis Bank Rating: ‘Buy’ — Provisions against Covid-19 cast shadow

Showing of moratorium book will be key; outlook for earnings in FY21 is weak; ‘Buy’ maintained with TP of Rs 530

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