HDFC
Brokerage: JPMorgan | Rating: Overweight | Target: Hiked to Rs 1,975
The global research firm expects steady earnings growth and minimal asset quality risk. Further, it also expects earnings per share (EPS) to growh at 15 percenr CAGR over 3 years. It values HDFC Life At Rs 55,000 crore, implying price/embedded value of 4.4x (FY17). It views HDFC as a defensive stock.
Glenmark
Brokerage: Nomura | Rating: Buy | Target: Hiked to Rs 880
The global broking firm sees a potential upside of 45 percent in the stock and believe that US launches and out-licensing deals will positively impact earnings. Further, it said that approval of four key drugs will add USD 50 million with EPS impact of Rs 9 per share in FY19. It also said that the out-licensing will generate upfront payments of more than USD 100 million.
Somany Ceramic
Brokerage: IIFL Sec| Target: Rs 967
The brokerage house has initiated coverage on the stock with a potential upside of 20 percent. it expects revenue growth to bounce back to 18 percent in FY19 and sees acceleration in tile segment & ramp-up of brownfield capacity. it also expects consistent strong performance, healthy balance sheet and low leverage.
Pharma
Brokerage: Goldman Sachs
The global investment bank observed that the sector continues to underperform and new launches are the key to this. Further, it said that the stock is still not pricing in a bear or stress case. It likes Aurobindo due to continued momentum in product launches and valuations. Meanwhile, it has a sell on Cipla as it does not see disproportionate growth from the US.
Media
Brokerage: IIFL
IIFL said that digitization will help Zee and Sun. Further, it expects EPS to grow at CAGR of 23/16 percent for Zee/Sun over FY17-20. It sees Zee’s total revenue to grow 6%/17%/14% for FY18/19/20, while Sun’s total revenue could grow 9%/21%/16% for FY18/19/20. Having said that, Dish TV could face a bigger threat from 4G/FTTH and feels there is a need to reinvent.
Oil Marketing Cos
Brokerage: Morgan Stanley
Morgan Stanley has turned more bullish on gas utilities as it sees a multi-year growth cycle ahead. This view, it said, bodes well for oil refiners as well. In this sector, the research firm’s key picks include Reliance Industries, IOC, Petronet LNG, GAIL and BPCL. It also highlighted that OMCs have the balance sheet, scale and an intent to support gas in many ways. In fact, it estimates gas to replace half of fuel oil consumption in the industries by 2021.
On oil and gas companies, the company also sees OMCs as key enablers in raising India’s gas demand by 50 percent by FY22. It added that the OMCs were leading and have the capability to support USD 30 billion gas investment need.
Banking Sector
Brokerage: CLSA
The global research firm said that loan growth remains moderate with limited capex activity. Further, it said that private banks are seeing potential for market share gains from PSU banks. Retail continues to drive growth across banks, but share of unsecured lending is rising and said that lowering interest on savings deposits can bring down funding cost by over 15 bps.
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