Kotak Institutional Equities

Articles By Kotak Institutional Equities

455 Articles

Analyst Corner: Maintain ‘buy’ on Escorts; revised FV at Rs 1,300

Tractor upcycle to continue in FY2022 as well. We expect the farm equipment segment to remain robust in the near term driven by a normal monsoon (high correlation of monsoons with tractor sales), strong kharif sowing supporte

Analyst Corner,Escorts, EBIT, NBFCs, kharif crops, domestic tractor demand, MSPs

Mahindra and Mahindra rating: Stock significantly undervalued – Maintain ‘buy’ with fair value of Rs 650

Our bull-case fair value of the stock comes to Rs 950/share if the capital allocation concerns are addressed, while the current base-case fair value is Rs 650/share as we still model subsidiary losses to continue till FY2023.

Maintain ‘buy’ rating on the stock with fair value of Rs 650 (from Rs 640 earlier).

Analyst Corner: MRF rating ‘sell’ – Results were better than estimated

FY21-22 EPS down 22-25%; ‘Sell’ retained as valuations do not factor in risks to income; TP cut to Rs 55,000.

Analyst Corner: Maintain ‘buy’ on Tata Steel; fair value at Rs 400

Strong quarter but leverage stalls growth plans. Tata’s 4QFY20 EBITDA was higher than expected mainly led by a positive EBITDA in Europe.

Analyst Corner, Tata Steel, Tata Steel fair value, Tata’s 4QFY20 EBITDA, EBITDA in europe, market news

Coal India rating: Buy — Weak performance in the final quarter

Covid-19 to cast a shadow on FY21; FY21/22e EPS cut by 10/16%; ‘Buy’ retained as valuations are inexpensive

CIL reported revenues of Rs 256 bn (-4% y-o-y, +19% q-o-q), Ebitda of Rs 47.5 bn (-25% y-o-y, +42% q-o-q) and PAT of Rs 46.3 bn (-23% y-o-y, +18% q-o-q).

Analyst corner: Canara Bank – Maintain ‘rating suspended’

The bank has reported a decline in gross NPLs of ~20 bps to 8.2% while net NPLs declined 90bps qoq to 4.2% of loans on a sequential basis.

CASA ratio was unchanged at 33% while NIM was flat qoq at 2.3%.

Analyst Corner| PNB: FY21 should see headline ratios improve

Net NPLs at a 12-quarter low. PNB reported a loss led by higher provisions for bad loans.

Analyst Corner, PNB, Net NPLs, CASA ratio, CAGR, NCLT process, market news

General Insurance: Retail health, fire the bright spots in May

Standalone health insurers gained most; motor saw fall of 23% y-o-y; pressure in segment likely to continue

Negligible OEM volumes led to significantly lower volumes in both motor OD and TP segments.

Analyst Corner: Tata Motors – Downgrade to ‘sell’ with lower FV of Rs 90

We see limited visibility of the company reporting profits anytime soon due to a weak outlook on volumes and thus we downgrade the stock to ‘sell’ (from ‘buy’ earlier) and revise fair value to Rs 90 (from Rs 130).

Realised hedge losses came in at GBP112 million versus our estimates of GBP150 million in Q4FY20.

Mahindra & Mahindra rating: Maintain ‘buy’ with revised fair value of Rs 640

Net revenues came in at Rs 9,000 crore (-35% y-o-y), 9% above our expectations due to better-than-expected ASPs in both tractor and automotive business. Automotive division revenues came in at Rs 5,510 crore (-46% y-o-y).

Mahindra & Mahindra rating, Covid-19, Mahindra & Mahindra net revenue, kharif crops, Ebidta, Ebitda margin

Shriram Transport rating: Retain ‘buy’ with fair value at Rs 1,050

With m-o-m improvement, STFC collected EMIs from about 52% of its borrowers, translating to 33%+ collection efficiency (about 50% of its CVs were on road); this compares with typical 70%+ stage 1 collections.

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Life insurance: Private insurers’ premium collections fall 32% in May

However, individual sum assured was up 12% y-o-y on back of traction in protection policies.

Analyst corner: GSPL: ‘Sell’ stays with revised fair value of Rs 210

We expect tariffs to fall further by over 20% in FY2023, as PNGRB will prospectively adjust the surplus profits being realized by GSPL during FY2019- 22E period, due to volumes being substantially higher than PNGRB’s assu

Analyst corner: ‘Reduce’ on Aurobindo Pharma with FV of Rs 730

ARBP has been gradually moving up the complexity curve for sterile products, with range of approvals, including colored products, PFS products, large volume lyophilized products and complex API products.

Analyst corner: Maintain ‘sell’ on Info Edge with lower Target Price of Rs 2,130

99acres’ billings collapsed in April 2020 to Rs 1 crore, this is indicative of the sharp stress being seen by both developers and brokers.

IndiGo rating: Recommend ‘sell’ with revised fair value of Rs 925

The management seeks to replace most of the current fleet of 123 A320ceo aircraft in the next two years, prompting us to believe that the current fleet count may not change much over FY21-22.

IndiGo reported a decent quarter with revenues beating our estimates by 13%, driven by 5% higher RPKs and 7% higher yields.

Torrent: Cut to ‘reduce’, revise fair value to Rs 2,350 a share

The domestic formulations business had a strong quarter, growing at 11% yo-y, in line with our estimates, though, adjusting for delays in order dispatches, growth was higher at ~15%.

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Bajaj Finserv: Retain ‘buy’ with fair value of Rs 7,000

Bajaj General Insurance's management will continue to focus on long-term profitability and unlike ICICI Lombard, is willing to ride volatility - a key reason for its higher exposure to crop leading to higher claims ratio and

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Bajaj Auto rating: Retain ‘buy’ with revised fair value of Rs 3,000

Bajaj Auto reported Q4FY20 Ebitda of Rs 1,250 crore (+2% y-o-y), which was 15% above our estimates, led by better gross margin and improvement in product mix.

The near term will remain challenging for domestic and export markets; however, the company will maintain operating margins in these challenging times as well, a positive.

Ujjivan SFB rating: Upgrade to ‘buy’ with fair value of Rs 37

However, we believe Ujjivan should be able to navigate the situation better, given its well-diversified loan mix, comfortable liquidity situation and healthy CAR levels.

Ujjivan SFB reported a ~30% growth in PBT led by a 125% y-o-y operating profit growth but offset by higher provisions (up ~8X y-o-y, primarily Covid-related at 0.5% of AUM).

Analyst Corner: Maintain ‘sell’ on GPL with revised fair value of Rs 610

GPL reported revenues of Rs 1,160 crore (+10% y-o-y) on account of strong delivery of 1.9 mn sq ft during the quarter.

Analyst Corner, Godrej Properties, Ebitda margins, GPL

Analyst Corner: Maintain ‘buy’ on Kansai Nerolac; FV reduced to Rs 450

Lifting of the lockdown would release pent-up demand from incomplete repainting projects but we do not expect much new repainting work (especially in urban markets), nor a pick-up in fresh painting (construction activity).

Analyst Corner: SBI Life – upgrade to ‘buy’ with fair value of Rs 1,000

SBI’s focus on the insurance business during a challenging year and SBI Life’s technology push to improve digital agent and client engagements remain crucial.

Muthoot Finance Rating: Retain ‘add’ with FV of Rs 900

A solid security and appreciating asset prices will augur well for Muthoot Finance’s stable asset quality performance during a period when most NBFCs have negligible visibility on their recoveries.

ICICI Lombard Rating: Retain ‘sell’ with fair value of Rs 875

A sharp slowdown in the motor business and lower interest rates will put pressure on ICICI Lombard’s FY21E performance.

Colgate-Palmolive (India) Rating: Add; Present crisis a chance to raise market share

FY21/22e EPS down 14/9% due to Covid-19 impact; TP cut to Rs 1,485; ‘Add’ retained as valuations are reasonable

FY2020 was an eventful one for CLGT as the new CEO stepped up efforts to gain back some of the ground the company lost in the past few years.

Analyst corner: Retain ‘reduce’ on Dabur with unchanged FV of Rs 440

All put together, we now estimate a 4% year-on-year growth in Dabur’s domestic business in FY21E, down from around 12% earlier.

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