Kotak Institutional Equities

Articles By Kotak Institutional Equities

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Analyst corner: PVR fundamentals intact despite near-term hiccups

PVR’s gross/net debt is about Rs 15 billion/Rs 10 billion as of date; equity fund raise would reduce leverage enabling PVR to invest in organic and inorganic growth opportunities post-Covid.

‘Buy’ TechM as outlook for biz is healthy post Covid

TM has a presence in other areas of manufacturing, rail transportation and medical devices. Service capabilities are comprehensive and include mechanical, embedded, chip design, digital and device engineering.

Analyst corner: ICICI Bank our top idea in banks, revised FV at Rs 600

ICICI Bank’s analyst meet gave yet another glimpse of the efforts it is taking to rebuild itself as a bank which would enable it come closer to the current best-in-class peers.

ICICI Bank revises FD interest rates for select maturity periods, ICICI bank cuts Fixed deposit rates by 10 bps for select maturity periods

Analyst Corner: Indigo exits Nov at closer to 65% of pre-Covid levels

Load factors for air travel have also likely crossed 80% levels recently, suggesting return of business travellers

Under the UDAN initiative, the government promotes the airlines to connect smaller cities of the country and subsidises the airline for incurring the losses during the initial phase of its operations.

Analyst Corner: Indigo exits Nov at closer to 65% of pre-Covid levels

Our assessment of the change in number of domestic air travellers per flight suggests that daily average load factors for air travel as a whole have potentially crossed 80% levels in the exit week of November

Scheduled domestic flight services were suspended in India from March 25 to May 24 due to the lockdown. The domestic flights resumed operations from May 25 but in a curtailed manner.

Analyst Corner: Laurus Labs’ strength is adding new revenue streams

Laurus has announced acquisition of 72.55% stake in Richcore Lifesciences, a Bangalore-based company for a consideration of Rs 2.5 bn, valuing Richcore at Rs 3.4 bn.

Laurus, in the past, has successfully established new revenue streams (Hep-C, formulations) to diversify its sales mix away from LMIC ARV APIs.

Cochin Shipyard’s FV at Rs 520 on weakness in execution

An MoU with Italian shipbuilder brings some assurance while the wait for new orders for the under-construction dry dock continues.

Petronet LNG Rating: Buy- A robust showing by the company

Higher dividend payout was comforting; FY21e EPS up 7%; valuation is attractive; Buy retained with TP of Rs 300

Utilisation at Dahej terminal increased to a robust 109% from 81% in Q1FY21 reflecting a strong rebound in LNG demand, partly aided by lower cost of long-term as well as spot LNG in the quarter.

Initiate ‘reduce’ on Divi’s Labs with FV of Rs 3,000

At ~35X FY2023E EPS, we believe the stock fully captures the generics growth, while ignoring the emerging headwinds to the higher valued synthesis business.

IRB Infrastructure rating – ‘Buy’: Jump in toll collection the highlight

Higher debt, SPVs’ losses hit earnings; FY22/23 estimates down 9/3%; ‘Buy’ retained

Retain ‘sell’ on ONGC with unchanged FV of Rs 60

Reported net income was lower at Rs 28.8 billion including an impairment loss of Rs 12.4 billion recognised on producing fields on factoring lower natural gas price.

Retain ‘add’ on Grasim with revised fair value at Rs 875

Margins should expand in 2HFY21 further led by higher prices. Chemical sales volumes increased to 236 kt (-2% yo-y, +71% q-o-q) on improved demand.

Coal India rating – Buy: A much improved earnings performance

FY21/22 EPS down 11/3% on weak e-auction prices & revision in coal prices in FY22; TP cut to Rs 180 from Rs 195; ‘Buy’ maintained

Moderation in employee cost (-5% q-o-q), as well as contractual expenses were compensated by increase in consumption of stores (+14% q-o-q).

Analyst Corner: ‘Add’ rating on LIC Housing Finance with FV of Rs 400

Niitailwnds: Provisions,remain low. Improving growth in retail home loans coupled with falling funding costs will support LICHF’s NII

Analyst Corner: Retain ‘sell’ on Bharat Forge with revised FV of Rs 320

Retain SELL rating as valuations are too expensive with revised FV of Rs 320 (from Rs 340 earlier) based on 20X September 2022E EPS for the standalone business.

‘Sell’ on Berger Paints with revised FV of Rs 505

We increase our FY2021E EPS by 12% as we incorporate better-than-estimated recovery in the business and raise FY2022-23E EPS by 5%.

Berger capex, Berger Paints, Berger Paints market share, Asian Paints, covid 19 pandemic, latest news on Berger Paints

Analyst Corner: ‘Sell’ on Voltas; revise fair value to Rs 655

UCP segment revenues were below estimates, but 9% yoy revenue growth was still healthy in the context of revenue decline for the industry.

voltas, EMP and EPS segments, VOLT’s 2QFY21 revenue growth, markets latest news

Maintain ‘neutral’ on Bosch with TP of Rs 13,000

Bosch’s (BOS) 2QFY21 performance was impacted due to adverse forex, product mix and non-recurring cost. We expect faster growth on account of strong tractor demand, addition of 2W segment and content increase.

Analyst Corner: Retain ‘add’ on HDFC with revised FV of Rs 2,240

Collection efficiency in September was strong (96% in individual business) and on expected lines although the performance of its moratorium book was a tad weak and may need to be monitored over the next few months.

Analyst Corner: Maintain ‘sell’ on Maruti Suzuki; revise FV to Rs 5,200

Ebitda was lower than our estimates because of lower ASPs and higher other expenses. Even as the volume growth outlook is quite strong for 3QFY21, we believe it is more due to pent-up demand and the strength may not sustain p

Analyst Corner: Retain ‘sell’ on Tata Motors, revise fair value to Rs 120

Reported Ebitda margin was 11.1% in 2QFY21 (down 230 bps y-o-y and up 760 bps q-o-q) as compared to our estimate of 9.2%.

We retain ‘sell’ but revise Fair Value to Rs 120 (from Rs 90 earlier), noting cost-cutting initiatives.

Analyst Corner: Retain ‘reduce’ on HDFC AMC with unchanged FV of Rs 1,950

On a qoq basis, QAAUM was up 5% (on the back of 12% growth in equity AUMs) leading to 3 bps rise in yield and 4 bps expansion in core PBT.

Analyst Corner: Retain ‘reduce’ on Bajaj Finance with FV of Rs 7,600

Business tracking expected lines, reflected in price. Bajaj Finance’s performance seems to be broadly tracking its guidance with likely bottoming out of loan book, building adequate buffers for the year and control over exp

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.

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