Kotak Institutional Equities

Articles By Kotak Institutional Equities

559 Articles

MRF rating – Sell: RM headwinds took a toll on performance

Margins are likely to remain under pressure; FY22-23e EPS down 11-16%; TP cut to Rs 69,150; ‘Sell’ retained

The stock is currently trading at 21.6X FY2023E consolidated EPS, which is expensive.

Divi’s Laboratories rating – Reduce: Growth momentum was maintained

FY22-23e EPS up 5%; TP raised to Rs 3,750 from Rs 3,300; valuations factor in prospects for growth; ‘Reduce’ rating retained

At 38X FY2023e P/E, valuations fully capture the superior growth in APIs, while ignoring the risks to the synthesis segment over the long-term. REDUCE

Vedanta rating – Reduce: A buoyant quarter for the company

FY22/23e Ebitda up 28/15% on strong commodity prices; TP raised to Rs 270 from Rs 180; ‘Reduce’ maintained

We increase our Ebitda estimate by 28%/15% for FY2022/23e on higher commodity prices and FV to Rs 270 (from Rs 180). REDUCE.

Bharti Airtel rating – Buy: Healthy numbers across key segments

Strong performance in FY21; FY22-23e Ebitda cut by 1-3%; outlook for medium term bright; ‘Buy’ retained with TP of Rs 700

We reiterate Buy with a revised SoTP-based FV of Rs 700 (Rs 710 earlier) seeing Bharti as a definite play on industry repair as well as consolidation; the visibility on either may improve in 12-18 months.

Analyst Corner: ‘Reduce’ on Gland Pharma, revised FV at Rs 2,550

Gland Pharma posted revenue growth of 40% yoy in 4QFY21, largely in line with our estimates. The US grew 26% yoy (in line vs KIE) led by ramp-up in micafungin, daptomycin and dexmedetomidine supplies.

Gland Pharma ended FY2021 on a strong note with new launches and expansion into other geographies driving robust revenue growth.

Analyst Corner: UltraTech Cement – Maintain ‘reduce’, revise FV to Rs 6,300

With a strong balance sheet and management’s focus on RoE expansion, dividend payout has upside risk.

Reliance Industries rating – Add: Final quarter results were a mixed bag

Operating performance improved across segments barring Jio, but concerns remain; FY22-23e EPS cut by 2-5%; ‘Add’ retained

Revise United Breweries fair value to Rs 1,365

UBBL reported 8% yoy growth in revenues to Rs 15.4 bn (3% above estimate) and 9% growth in volumes. On a 2-yr CAGR basis, volumes declined 7% (versus 11% decline in 3Q), and revenues declined 3% (versus 6% decline in 3Q).

Analyst Corner: Initiate CAMS coverage with ‘add’; DCF-based FV of Rs 1,850

We initiate coverage on CAMS with an ADD rating and Fair Value of Rs 1,850 (5% upside). CAMS has a dominant position in India’s registrar and transfer agent (RTA) market duopoly, which reduces risks of market share movement

We continue to be cautious about medium-term challenges to India’s mutual fund industry, which will likely pressure CAMS’ revenues, driving (moderate) 14% EPS CAGR during FY2021-24E.

CAMS: Start with ‘add’ and DCF-based FV of Rs 1,850

CAMS has a dominant position in India’s registrar and transfer agent (RTA) market duopoly, which reduces risks of market share movements.

We initiate coverage with an ‘add’ rating and DCF-based fair value of Rs 1,850 (5% upside).

Jubilant Foodworks Rating: Buy, execution to be key to pact with Popeyes

It will allow firm to tap into fast-growing QSR chicken segment; new aggression and portfolio approach is impressive; ‘Buy’ retained

jubiliant food works

Analyst Corner: ‘Buy’ on Hindalco, Novelis margins to be above guidance

Scrap spreads hit new highs, Novelis margins to follow. The scrap market remains tight due to seasonal collection issues in the West; however, scrap prices continue to underperform strong primary aluminium prices in 4QFY21.


ONGC Rating: Sell; Kotak Institutional Equities says lacklustre output trajectory a dampener

Dividend payout the only takeaway; EPS raised to reflect higher crude price and TP revised to Rs 90; ‘Sell’ rating maintained

ONGC’s consistent dividend payout has been the only takeaway for shareholders given lack of incremental value creation by the company through the activities in its control.

Analyst Corner: ‘Buy’ on Tech Mahindra as it acquires Irish BPO firm

Tech Mahindra (TechM) has announced acquisition of Perigord, which provides niche packaging supply-chain BPO services for global clients in the life sciences vertical. Specifically, the firm offers digital workflow and artwor

Perigord’s revenue growth has been healthy in the last couple of years and does not seem to have been impacted much by Covid.

Analyst Corner: Initiate with ‘add’ on Aditya Birla Capital

We initiate coverage on Aditya Birla Capital (ABCL) with ADD rating and SoTP-based FV of Rs 145.

Analyst Corner| InterGlobe Aviation: Domestic growth driven by non-metros

Opportunity beckons. We hosted Mr Ronojoy Dutta, CEO of Interglobe Aviation for investor meetings.


Analyst Corner| Wipro bets big on Capco; reduce fair value to Rs 450

Wipro announced a fairly large acquisition of Capco, a financial services-focused management and technology consulting firm for US$1.4 bn.

Wipro acquisition, Capco, financial services focused management and technology consulting firm, Valuation paid for the acquisitio

Analyst Corner: ‘Buy’ on Max Financial with fair value of Rs 1,000

Max-Axis transaction approved by IRDA; reinitiate with buy. IRDA has approved the much-awaited (12%) stake sale in Max Life to Axis Bank.


Maintain ‘buy’ on Infosys; deal pipeline reasonably strong

Infosys’s key digital bets — experience, data and cloud — have all benefited from this trend, leading to strong growth in digital revenues even during the pandemic.


Maintain ‘buy’ on Sobha, revised fair value at Rs 480

Planned launches of 10 mn sq ft in the next three quarters will help maintain the sales momentum even as contractual business is expected to recover fully by March 2022.


CIL: Maintain ‘buy’ with revised FV of Rs 185/share

Weak realisations. Coal India (CIL) reported weak performance as realisation for raw coal (contributing 80% by volumes) declined to Coal India1,354/tonne (-4% yoy) leading to flat revenues of Rs 217 billion despite 8.7% y-o-y

coal india

Coal India: Maintain ‘buy’ with revised FV of Rs 185/share

CIL reported revenues of Rs217 billion (+1% yoy, +11% qoq), ebitda of Rs32 billion (-5% yoy, +38% qoq) and PAT of Rs30.8 billion (-21% yoy, +4% qoq) against our estimates of Rs223.8 billion, Rs32.5 billion and Rs36 billion, r

Maintain ‘buy’ rating and revise FV to Rs185/share (from Rs180/share) based on March 2023E earnings.

Muthoot Finance: Retain ‘reduce’ with FV of Rs 1,250

High growth phase behind us. Muthoot Finance’s 3QFY21 performance was supported by strong gold price rally during 9MCY20, improving funding environment and efficient cost controls at the company.

muthoot finance

Phoenix Mills: Initiate coverage with ‘buy’ and FV of Rs 960/share

In our view, retail malls cater to the rising aspirations of an increasingly urbanised India.

We initiate coverage on Phoenix Mills with a ‘buy’ rating and fair value estimate of Rs960/share.

Hindustan Unilever Rating: add- Focus on volumes showed in results

Investing in business despite margin pressure likely to pay off; estimates tweaked; ‘Add’ retained with TP of Rs 2,625

Home care revenues declined 2% y-o-y as continued weakness in fabric wash more than offset upside in household care (double-digit growth)

Analyst Corner: Retain ‘add’ on HDFC Life with fair value of Rs 705

VNB growth was strong at 27% year on-year (YoY) in 3QFY21 led by 18% YoY growth in APE and 180 bps yoy expansion in VNB margin to 26.5% (up 110 bps QoQ ).

HDFC Life, strong APE growth andVNB margin expansion, VNB growth in 3QFY21, long-tenure participating policy

Downgrade Bajaj Finance to ‘sell’, fair value Rs 4,000

We raise our FV to Rs 4,000 (4.5X book) from Rs 3,000 to reflect higher estimate, rollover to March 2023E and marginal reduction in cost of equity.

bajaj finance, bajaj finance shares
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