Kotak Institutional Equities

Articles By Kotak Institutional Equities

489 Articles

Analyst Corner: Retain ‘sell’ on DMart with revised FV of Rs 1,475

Dmart reported 12.3% yoy decline in 2QFY21 largely on account of slow recovery in footfalls, partial store shutdowns due to local lockdowns and sluggish sales in general merchandise and apparel category.

Kotak Securities maintains ‘buy’ on Federal Bank with unchanged fair value of Rs 80

Federal Bank reported ~25% YoY earnings decline mainly driven by high provisions with most of the provisions used to improve coverage ratio and build contingent provisions for Covid.

Operating profits grew ~40% YoY led by 22% YoY growth in operating income and 7% YoY cost growth.

Wipro Rating ‘Add’; A good performance in second quarter

Q3 guidance a positive surprise; FY21-23e EPS up 6-11% with TP rising to Rs 380; upside is modest after rally; ‘Add’ retained

Sobha showing resilience in pandemic; maintain ‘buy’

Blended realisation for the quarter increased 17.5% yoy to Rs 7,737 per sq. ft (Rs 7,494 per sq. ft in 1QFY21) reflective of change in sales mix across cities.

Analyst Corner: Maintain ‘reduce’ on TCS as stock valuations are punchy

Buyback through the tender route is essentially an alternative form of dividend distribution; hence the discussion on EPS dilution due to buyback is not relevant.

Downgrade Eicher Motors to ‘sell’ with Fair Value of Rs 1,920

We would like to highlight that the mid-size motorcycle segment has outperformed the commuter motorcycle segment in these geographies over CY2012-19, which bodes well for RE.

Analyst Corner: Retain ‘constructive’ view on L&T Infotech, demand recovery healthy

LTI’s CEO indicated that the number and quality of conversations with clients have increased in the past few months, suggesting meaningful demand recovery.

Analyst Corner: ‘Add’ on Mindspace REIT with FV of Rs 330/share

NOI of the portfolio will likely grow at 15% CAGR between FY2020 and FY2023E to Rs 17 billion.

Mindspace REIT, CAGR, Mindspace REIT revenues, Mindspace REIT shares

Maintain ‘buy’ on ITC with unchanged FV at Rs 260

FY2020 Ebitda growth print (+4% y-o-y) was impacted by higher taxation and Covid outbreak. FCF grew 30% to Rs 117 billion led by reduction in W-cap and tax rate cut

Analyst Corner| Retain ‘buy’ on Hindalco with fair value of Rs 285

Scrap spreads play a significant role in Novelis’ margins as scrap forms 60% of its raw material.

Hindalco, Novelis, Hindalco fair value, aluminum price, market news

HCL Tech FV raised to Rs 900 on mega deal wins in core its areas

Separately, we move HCLT’s valuation to SoTP to capture differing growth dynamics of products and services businesses

"Our business practices will be sustainable and our growth will continue to be inclusive and diverse. Digital transformation for our clients and within our enterprise will continue to drive our business agenda.

Analyst Corner: Retain ‘sell’ on Dmart, revise DCV-based FV to Rs 1,530, says Kotak Institutional Equities

Due to higher competition its price gap versus competitors has shrunk, and in September, Dmart was the lowest priced retailer for only seven products.

Competitive intensity would ensure that Dmart's margins may not expand significantly going forward.

‘Buy’ on Bharti Airtel; firm needs a positive trigger

Little movement on the expected floor tariff regulation — Trai hasn’t conducted the requisite open house discussion yet; has reservations doing it online — has only added to the anxiety on pricing.

Bharti Airtel, Sterlite technologies

Analyst Corner: Upgrade InterGlobe to ‘Buy’ from ‘Sell’ with FV of Rs 1520

The past few years have seen the sector and the market leader making losses due to the twin impact of higher fuel prices and eagerness of airlines to increase their network coverage to explore new growth opportunities.

We also expect Indigo to benefit from uptick in fuel-cost savings with increasing share of A320neos in the fleer over FY2021-23 and reduction in maintenance cost related to retiring of the old A320ceos.

Maintain ‘buy’ on Coal India with fair value of Rs 195

Improvement in eauction premiums as well as a more healthy 9.6% yoy growth in dispatches in August 2020, lend hope for an improved earnings profile from hereon.

Coal India, Coal India fair value, Aluminum prices, US dollar, Covid-19, global economy

Retain ‘buy’ on TechM due to reasonable growth potential

TechM’s telecom vertical has grown at a modest pace in the past 4-5 years.

TechM, M&E, TechM telecom vertical, TechM revenues, TechM stocks

Indraprastha Gas rating ‘sell’; Results in Q1 FY21 were below par

Volumes plunged amidst lockdown; FY21e EPS down 10% due to slower recovery and lower margins; ‘Sell’ retained.

CNG, PNG, Dharmedra Pradhan, gas distribution

Buy IRB Infrastructure with unchanged FV of Rs 150

Order inflow revival is critical for maintaining EPC revenues. The company has sufficient liquidity to meet near-term requirements. Revise estimates by 1%/3% and retain fair value of Rs 150. Buy.

Toll revenues have now reached 78% of pre-Covid levels.

PNB rating: Reinstate ‘reduce’ with a fair value of Rs 33

We reinstate coverage on the stock with a ‘reduce’ rating and Rs 33 fair value, as we think SBI (buy) and BoB (add) offer better margins of safety within PSU banks.

Among the PSU banks undergoing mergers, PNB’s relatively higher CET-1 and CASA ratio stand out.

Petronet LNG rating: ‘Buy’; Q1FY21 results were modestly above estimates

Healthy earnings CAGR of 10-11% expected over the next 3-5 years; estimates fine-tuned; valuations are attractive; ‘Buy’ retained

HCG rating: Maintain ‘buy’; revise fair value to Rs 150

HCG had announced an issuance of preferential shares and warrants to CVC Capital at Rs130/share, resulting in CVC acquiring 36.5% stake and infusion of Rs6.5 billion in the company.

HCG posted revenue decline of 28% YoY, largely in line with our expectations.

Tata Power rating: Maintain ‘buy’ with revised fair value of Rs 70

Tata Power laid out its five year target to double its revenues (Rs 289 bn in FY2020) and triple its profits (Rs 12 bn in FY2020), while nearly halving its debt to Rs 250 bn (from Rs 436 bn as of March 2020).

Maintain ‘buy’ with revised fair value estimate of Rs 70/share (from Rs 62/share).

Adani Ports rating: Buy – Growing heft on display in Q1

It reflects the impact of a 2.5% constant currency realisation increase APSEZ was still able to take in the quarter. We also note that the sharp volume decline was led by coal and crude, verticals impacted the most by Covid-1

economic growth, world bank, economic revival, forecast

Analyst Corner| Maintain ‘buy’ on Hindustan Zinc with fair value of Rs 290

We revise earnings factoring the recent price buoyancy and increase Fair Value to Rs 290 (from Rs 225) with a revised SOTP based valuation. Maintain ‘buy’.

Analyst Corner, Hindustan Zinc, Hindustan Zinc fair value, silver producer in India, CAGR, Hindustan zinc, silver volumes

Mahindra and Mahindra rating: Buy — Auto business weakness hit performance

Tractor demand expected to be good; tighter capital allocation could lead to a re-rating; FY22-23e EPS down 1-2%; ‘Buy’ retained.

IIP, industrial production, factory output, manufacturing

IOCL Rating: ‘Buy’; Strong underlying showing in Q1FY21

Elevated marketing margins to offset refining weakness; FY21-22e EPS cut by 2%; ‘Buy’ retained with TP of Rs 110.

Retain ‘add’ on Embassy Office Parks REIT with fair value of Rs 400/share

Embassy was able to achieve 14% contractual escalations on 1.8 million sq. ft along with leasing of 0.5 million sq. ft with a spread of ~20% in 1QFY21 on re-lease/ renewals.

Embassy Office Parks, REIT, covid 19 pandemic, NDCF, Embassy Office Parks revenue growth
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