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Tuesday, June 13, 2017

Buy, Sell, Hold: 4 stocks and 2 sectors are on the radar of investors today

SBI, Tata Motors and KEC, among others are being tracked by analysts on Tuesday.

Petronet LNG

Brokerage: Deutsche Bank | Rating: Buy | Target: Rs 550


The global financial services firm said that Torrent Power’s tender confirms about LNG demand in India if spot prices are subdued. This was based on its tender seeking supply of 36 LNG cargoes from January next year. It expects Torrent Power to import 0.5 mmtpa LNG In FY18 & 1 mmtpa From FY19.

In the broader sense, driven by rising global supply, it expects spot LNG price to remain under USD 6/mmbtu. A recovery in industrial activity should drive the company’s volume CAGR of 10 percent over FY17-19e and it expects LNG Demand from city gas distribution, refining, power sector to drive volume growth.

SBI

Brokerage: Bank of America Merrill Lynch | Rating: Buy | Target: Rs 393


The research firm said that the bank’s capital raising exercise should help it to raise tier-1 by 70 basis points to 11 percent. Further, the capital raise should allow banks to absorb any NPLs from associate, it added. The bank’s net profit estimates were raised by 2-3 percent by BofA-ML. It expects uptick in growth and synergies in merger from FY18.

Banks

Brokerage: Nomura


The farm loan waiver decision by the government sets the wrong precedent for future servicing, it said. There’s a possibility of increase in agricultural stress, especially poll-bound states. It highlighted that PSUs and regional rural banks hold over 85 percent of agri-based debt and hence the move is a negative for banks. It highlighted that SBI was its only buy-rated PSU bank.

KEC

Brokerage: Phillip Capital | Rating: Buy | Target: Rs 295


The brokerage highlighted management expectations of a pick up in transmission and distribution (T&D) revenues in FY18. The management also sees railway revenues doubling for the second consecutive year in this fiscal, it added. The revenue visibility for the company for FY18-19 has improved significantly and the brokerage now builds 15 percent revenue CAGR in FY17-19 against 1 percent in FY15-17.

It expects the company to benefit from strong order inflows even in FY18 and sees working capital intensity to further reduce in FY18. The brokerage raised FY18/19 earnings estimates by 5‐6 percent.

Tata Motors

Brokerage: Motilal Oswal | Rating: Buy | Target: Rs 635


The broking firm said that JLR May wholesale volumes at 47,131 units was below its estimates of 49,200 units. The stock trades at 15.2x/7.1x fy18/fy19e consolidated EPS, it added.

FMCG

Brokerage: Credit Suisse


The global brokerage firm expects GST-induced volatility to mask the real growth trends for three quarters. It expects distributors and retailers to down-stock before GST. Further, it observed that HUL and ITC have the leanest inventory & lower wholesale salience, while Colgate, with higher wholesale share, may see maximum down-stocking. Real demand growth will be hard to fathom for the next 3 quarters, it added.
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