International brokerage firm CLSA has maintained a ‘buy’ rating on IndusInd Bank, Ultratech Cement, and Star Health and Allied Insurance Company stocks, according to the reports released earlier this week. The research firm has a ‘sell’ rating on the automobile major Maruti Suzuki with a revised price target of Rs 6,533 per share, up slightly from its previous target of Rs 6,430 apiece. It has maintained an outperform rating on Supreme Industries, and Wipro.
On IndusInd Bank, CLSA said that the results of external audit of its MFI book was a relief and 4QFY22 trends indicate asset quality is clearly turning and could trigger a partial reversal of the de-rating due to the MFI issue. “Its current 1.25x Mar 24CL book is reasonable for a 15 per cent ROE, and hence we maintain our ‘buy’ rating to it,” it said. It also added that the bank carries a contingency buffer of Rs 33 billion (1.5 per cent of loans) which should suffice to provide for any slippage in its restructured book of Rs 62 billion and stressed telecom exposure (down from Rs 30 billion to Rs 18.5 billion).
For Maruti Suzuki India, CLSA noted that despite a stronger-than-expected quarter, rising dealer inventory remains a concern. On the back of lower discounts and a richer product mix, Maruti Suzuki posted better-than-expected results. It added that retail volume declined sequentially despite a rise in production in 4QFY22 and its SUV market share declined.
CLSA has recommended to buy UltraTech Cement shares, but slightly lowered the target price to Rs 7,990 from Rs 8,050 apiece earlier. The brokerage firm said that while the demand in April was higher on-year, it expects Ultratech Cement to grow faster than the industry. It has given a buy rating on the back of industry leading growth outlook.
CLSA said that Wipro made steady execution but margins remained under pressure. It has given ‘outperform’ rating to the stock, revising down its target price to Rs 580, from Rs 650 earlier. It said that Wipro stock is down 29 per cent so far in the year, and trades at a 21x 12-month forward EPS. This should lend downside support given a potential 6 per cent FY23 FCF yield. “The announcement of large deal wins and a potential buyback could be key upside triggers for the stock over next 2-3 quarters.
Analysts at CLSA have recommended to buy Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company shares with a target price pegged at Rs 832, a potential upside of 17 per cent. Thye brokerage firm said that while the third covid wave in January 2022 did drag down profitability. Star Health’s gross premiums for FY22 was up 22 per cent on-year, and retail health premiums came in at Rs 101 billion.
The brokerage firm has also given ‘outperform’ rating to Supreme Industries, with target price of Rs 2,310 apiece. CLSA expects its margin to moderate to 15 per cent from 16 per cent in FY22 due to a likely moderation in PVC prices.
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