Infosys, TCS enjoy best prospects to deliver growth outperformance
Overall our price targets for 5 top-tier companies rise by 2-10%, as a result of the changes.
Jeffries: Maintain ‘buy’ on UPLL with revised PT of Rs 745
UPLL has dipped 17% from its Jul'19 highs, post a sharp uptick of 70%+ from Oct'18 lows. Q1FY20, first full quarter post Arysta, was erratic as it factored PPA* effect (inventory, depreciation).
Car sales slump: No let-up in pain across segments
Auto stimulus fell short of providing a material boost; retails in the festive season are key in the near term.
Mega bank mergers serve no immediate purpose, could have been implemented in phases
Despite long-term vision, this can’t be good at a time liquidity flow is severely constrained
Consumer finance: Growth at NBFC/HFCs still decelerating
Risk aversion may take time to ease; HDFC/LICHF among HFCs and BAF/MMFS among NBFCs are preferable
Jeffries: Retain ‘buy’ on SBI with price target of Rs 370
Our FY20E EPS is well above consensus (factoring IBC recovery of ~ Rs 15,000 crore).
Fiscal constraints preclude any meaningful stimulus, says Jeffries
They may help little in the near-term but it is still encouraging to see the government engage on issues with more steps likely too, especially in housing.
Analyst Corner: Reiterate ‘buy’ on LIC Housing Finance
With LICHF's GNPA's rising 80 bps to 1.98% over last year in Q1FY10 led by a sharp increase in developer GNPA, a key concern is around potential further rise in developer GNPA given broader stress in the real estate sector.
ONGC Rating: Buy; Higher costs impacted Q1 numbers
ONGC’s standalone Q1FY20 net fell 4% y-o-y (+46% q-o-q) to Rs 59.04 bn. Lower other income and higher interest, survey expenses (Rs 8.8 bn) & dry-well write-offs (Rs 14.5 bn) were reasons but Ebitda (Rs 146 bn) was also 7%
Sun Pharma rating | Buy — A strong showing in first quarter
EPS for FY20/21e down 4/3% owing to FX change; risk reward is favourable; ‘Buy’ retained with TP of Rs 520
Petronet LNG Rating: Buy; Net slipped but volumes at a high
Volumes were well ahead, though, with 4.21mt at Dahej and imports in July trending even higher, boding well for the near term.
SBI rating: buy; Not much to cheer about in results
FY20/21/22e EPS down 7.8/3.2/5.5% due to slower loan growth; valuations below historical average;‘Buy’retained.
Axis Bank rating | Buy — Asset quality cast shadow on results
Credit cost trajectory is intact; capital raising should aid NIMs; FY21-22e EPS cut by 6-8%; TP revised to `885
Maruti Suzuki Rating ‘Buy’: Weak Q1 was largely in line with estimates
The near-term remains challenging; ‘Buy’ retained owing to more advanced PV down-cycle, lower BS-6 risks and strong franchise.
L&T rating | Performance was ahead of estimates
Given strong visibility for FY20-21e, company should stand out; risk-reward is favourable; ‘Buy’ maintained
Analyst Corner: Maintain ‘hold’ on TVS Motor with a target price of Rs 460
Even as we expect TVS to continue outperforming the industry on both volume & Ebitda growth, we maintain Hold given our concerns that consensus expectations are too high given the ongoing challenges in the industry.
Avenue Supermarts Rating Hold: Margins bottoming out for company
FY20/21e Ebitda up 3/6%; risk-reward balanced post-correction; upgraded to ‘Hold’ with TP up to Rs 1,430.
Analyst corner: ‘Hold’ on Colgate-Palmolive, price target Rs 1,365
Cibaca franchise has also done well during Q1.
Analyst corner | Pharma: Expect growth to remain below 10%
Pricing contribution remained steady at 5%, as did new product contribution at 2%. A majority of the corporates saw a y-o-y decline in volumes, as did 12 of the 20 therapies.
Analyst corner: Proposed 20% tax bane for IT companies using buybacks
In the Budget, the finance minister has announced a levy of 20% tax on buybacks effective immediately (5th July, 2019).
Stock corner: ‘Hold’ Whirlpool of India, risks remain despite good Q1 prospects
In terms of consumer usage, most appliance categories in India are under-penetrated, leaving notable headroom for growth. However, the competitive landscape in durables is characterised by high organised penetration (75%+).
Consumer diary: Demand was tepid in first quarter of FY20
Overall cautious stance on staples maintained, with ‘Buy’ rating on APNT, NEST DABUR and ITC
Energy: Yet another month of soft demand, refining remains a challenge for OMCs
Refining remains a challenge for OMCs; ONGC, PLNG and GAIL offer best prospects
Analyst corner | Maintain ‘buy’ on HDFC with price target of Rs 2,310
HDFC’s buying out Apollo's stake in Apollo Munich (fourth largest private health insurer) is expected to scale up its general insurance business, making it second largest private health insurer (post merger with HDFC ERGO).
Voltas Limited Rating: Buy; FY20 begins on a good note
Negative impact of weak Q1 and Q4 AC demand, Voltbek JV expenses and lower than expected engineering margins all hit Voltas in FY19.
Havells Rating | Buy — Steady quarter for the core business
Company poised for multi-year growth trajectory, justifying valuations; ‘Buy’ retained
ONGC Rating | Buy — Operational performance was resilient in Q4
FY19 consolidated EPS was up 38%, with high likely to be sustained in FY20e; TP raised to Rs 205; valuations are modest; ‘Buy’ retained
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- PM Modi announces Rs 1,000 crore Startup India seed fund, launches weekly TV show Startup Champions
- Rakesh Jhunjhunwala on selling spree; big bull cuts stake in Titan among other stocks
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