Kotak Institutional Equities

Articles By Kotak Institutional Equities

566 Articles

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

Maintain ‘buy’ on APSEZ with revised FV of Rs 600

We reduce our cost of equity assumption for Adani Ports to 12.75% from 13.25% and bring monthly volume run-rate for FY2022 to levels reported in December 2020. Retain ‘buy’ with revised FV of Rs 600 (from Rs 535 earlier).


Mindtree: Maintain ‘sell’, impressed with cost management, efficiency improvement

However, elevated margins may not sustain as wage revisions, decline in utilisation and increase in costs start seeping its way through in the coming quarters.

We take cognisance of impressive operational performance and FX gains and raise FY2021-24E EPS by 9-14%.

HCL Technologies Rating: add- A good showing by the firm in third quarter

Guidance for March quarter a tad soft; FY21-24e EPS up 5-8%; TP raised to Rs 1,120 from Rs 1,040; ‘Add’ retained

HCLT’s guidance for the March 2021 quarter of 2-3% on revenues includes ~1.1% contribution from DWS acquisition, implying organic sequential revenue of 0.9-1.9%; the range appears a touch lighter than our expectations.

Analyst Corner: Maintain ‘buy’ on PVR with revised fair value of Rs 1,650

PVR’s 3Q results have limited relevance as cinemas resumed operations gradually with capacity restrictions and occupancy was negligible due to lack of content.

PVR has concluded rent/CAM renegotiations for 88% of its screen portfolio.

Maintain ‘buy’ on CESC with unchanged FV of Rs 800

CESC’s consolidated profits increased 23.2% yoy to Rs 3.2 bn led by profits of Rs 280 mn reported at Dhariwal compared to losses of Rs 150 mn in 3QFY20.

cesc shares

Analyst Corner: Retain ‘sell’ on Tata Motors; revised fair value at Rs 155

We retain ‘sell’ but revise fair value to Rs 155 (from Rs 135 earlier), noting cost-cutting initiatives and roll-over to March 2023E (from December 2022E earlier).

We have raised our JLR EBIT margin estimate to 6.0% (earlier: 5.3%) for FY23, yet well below the management guidance of ≥7% EBIT margin in FY24.

Metals & Mining: Q3FY21 Preview- Margins likely to rise to new highs

Strong FCF will accelerate deleveraging; uptrend likely to persist; valuations benign; TATA, HNDL & JSPL top picks

Coking coal prices corrected by 1% q-o-q in Q3FY21 but given the inventory lag, we estimate a $5-7/ton cost reduction for steel companies.

High spreads still shows reluctance to lend by banks

In a relatively low growth and heightened risk environment, especially after Covid, we note that the spreads have continued to remain high.

While the overall lending rates have declined when we look at the headline rates, the transmission is probably slower when we look at various products or risk segments.

Raise FV on L&T by 8% to Rs 1,410 on order buoyancy

With support from several large orders finalised over the past three years and benefits of share gains for L&T in FY 2021, we note prospects of FY2022 ordering hovering around FY2020 levels.

Key risks are delay in economic recovery, a sharp increase in commodity costs like steel and cement and a rise in working capital.

Analyst Corner – United Breweries: Beer volume recovery tracking well; FV raised to Rs 1,260

We expect UBBL’s new CEO to step up focus on market share defence in value segment and gain share in the premium segment.

We raise estimates and FV to Rs 1,260.

Analyst corner: Initiate with ‘add’ on SBI Cards with fair value of Rs 900

In this report, we discuss trends on retail payment behaviour across time periods and different geographies, stakeholders' perspectives on credit cards and the earnings model of the credit card business.

On a risk-adjusted basis, we believe that this business is quite profitable on a through-the-cycle basis.

Auto & Components: Prospects are strong for tyre makers

Volume estimates up; rise in rubber prices a worry; Apollo Tyres downgraded to Reduce; TP raised for MRF and CEAT

With economic activity picking up, we expect the OEM segment to grow by 6.2% CAGR and the replacement segment to grow by 5.5% over FY2020-25e.

Analyst Corner: Reiterate ‘buy’ on GAIL with revised FV of Rs 140

The recent increase in crude-linked, as well as spot LNG prices, will augur well for the gas marketing segment, as the respective differential with the US LNG price has reduced considerably in the past few months


Wipro Rating: Add Deal with Metro reinforces credentials

Firm likely to gain from strong momentum in digital foundation deals; valuations inexpensive; ‘Add’ retained

Analyst Corner: ‘Buy’ on InterGlobe Aviation with unchanged FV of Rs 1,870

We expect Indigo to report healthy and durable spreads from FY2023 given benign medium-term outlook for crude and competitive intensity.

It will also commence flights between Kolkata-Gaya, Cochin-Trivandrum, Jaipur-Surat, Chennai-Surat from March 28 onwards, the release said.

Analyst Corner: Double-digit revenue growth seen for Infosys in FY22 & beyond

Infosys is on track to report double-digit revenue growth in FY2022 and beyond. Even after the run-up, the stock offers reasonable upside.

Infosys has announced an IT infrastructure transformation deal with Daimler.

Analyst Corner: Maintain ‘add’ on GCPL; firm gaining share in soaps space

GCPL expects HI portfolio to deliver high single-digit to low double-digit growth on normalised basis.

Oberoi Realty Rating ‘Add’; deal value’s small in overall NAV

While showing could be soft in near term, outlook is positive; TP up to Rs 570 from Rs 450

Oberoi Realty has an extant commercial portfolio of 1.7 mn sq.

Reiterate ‘buy’ on Tata Steel with fair value at Rs 800

After a potential exit from Europe, India business would generate Rs 130-140 billion FCF before growth capex in FY2022E/23E. With ~20% FCF yield, growth plans would not increase leverage.

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Varun Beverages Rating: Buy; poised for strong growth in earnings

Volumes have recovered steadily; margins likely to rise; CY21/22e EPS up 10-11%; TP raised to Rs 1,000; ‘Buy’ maintained

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