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Thursday, April 13, 2017

Buy, Sell, Hold: Here are 7 stocks that analysts are watching today

Liquor, power and banks, among others, are on the radar of analysts on Thursday.

United Spirits

CLSA has recommended a sell call on the stock with a cut in target price to Rs 1,400 from Rs 1,600. The research firm highlighted the Chhattisgarh government’s announcement which showed an intention to have a phased liquor ban. It said that the state has banned liquor in villages with a population of more than 3,000 and that it will be sold in the state only through government outlets.

Goldman Sachs has a neutral rating on the stock with an increased target price of Rs 1,857. It believes that investor concerns around prohibition in additional states is likely to increase and the valuations of the stock reflect the risk of margin miss.

Meanwhile, Jefferies has maintained an underperform rating with a target of Rs1,812. It also sees anti-liquor rhetoric to increase in other states.

Adani Power

Citi has a sell call on the stock with a target of Rs 25. The Supreme Court’s order on compensatory tariff is a big blow for the firm and the research firm sees significant downside risks to the earnings per share (EPS) estimates. For now, there are no changes to EPS and target price as CERC’s relief calculation is still awaited.

Macquarie has maintained an underperform rating on the stock with a target price of Rs 20, implying a 46 percent downside. It foresees a likely breach in debt covenants and sees that firm’s net worth being completely wiped out. It also expects an annual loss run rate of Rs 1,200 crore and will require continued equity infusion.

Tata Power

Citi has downgraded the stock to sell from neutral on the back of SC’s ruling. The target price too has been cut to Rs 79.9 from Rs 83.3. The court’s order will significantly impact return ratios going forward, it said. It prefers NTPC and Power Grid in large caps and CESC in midcaps.

IIFL has downgraded the stock to reduce as fair value of UMPP and coal SPV is cut by Rs 15. The firm will have to utilize cash flows from other assets to service debt of UMPP. It has a target price of Rs 77.

Macquarie, meanwhile, has maintained a neutral rating on the stock and a target of Rs 77. The SC verdict has ruled out possibility of Mundra UMPP turning around. The impact appears limited when compared to Adani Power, it added. Furthermore, it believes the valuation at 1.6 times P/B is more than justified.

Reliance

CIMB sees FY18,FY19F earnings cuts for project delays and rupee appreciation for the firm. For FY18, it also saw lower refining and petchem EBITDA from USD 7.6 billion to USD 7 billion. The FY19 EBITDA estimate is unchanged at USD 8.1 billion, it added. Furthermore, the brokerage estimates standalone Q4 net profit of Rs 7,750 crore.

Likely earnings cuts in core petchem and refining business are being ignored, analysts at the firm said.

(Disclosure: Reliance Industries owns Network 18 that publishes Moneycontrol.com.)

HDFC Bank

Bank of America Merrill Lynch has reiterated its buy call on the stock with an increased target of Rs 1,800 from Rs 1,600. Rapid market share to drive in more than 20 percent EPS growth. Digital will drive in faster growth, cross selling and cost benefits, the research firm added. The stock remains one of its top picks.

Reliance Communications

Deutsche Bank has downgraded the stock to sell with a reduced target price of Rs 30 from Rs 57. The firm could lose around 100-150 basis points (bps) revenue share over the next two years and a merger with Jio in the medium-term cannot be ruled out. It has reduced revenue estimates for FY18/19 By 14% & 21% and EBITDA estimates by 17% & 21%. It also forecasts a loss for FY18/19 of Rs 1,600 crore and Rs 2,250 crore, respectively.

(Disclosure: Reliance Jio is a part of Reliance Industries that  owns Network 18 Media & moneycontrol.com)

Adani Ports

Macquarie has downgraded the stock to neutral rating with a target price of Rs 347. There are possible headwinds to business related to iron ore volumes, it said and recommends waiting on sidelines and evaluate next steps by promoters.
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3 comments:

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