PSU banks and IT stocks are also on investors’ radar on Wednesday.
Brokerage: Macquarie | Rating: Outperform | Target: Rs 210
The global research firm said that the price-based auction would increase cost curve and benefit Coal India. Further, it believes there could be a record Q4 for this fiscal. The company should witness an all-time high EBITDA & should drive earnings upgrades, it said in report. Additionally, valuations at 6.7xEV/EBITDA FY20E makes risk-reward attractive.
Brokerage: Morgan Stanley
The global research firm said that from the company’s perspective, the key will be aggression in auction bids. Further, cost structure of these operations may be efficient relative to Coal India, it said, adding that still there could be a few years for mining to start.
Ambuja Cements
Brokerage: Credit Suisse | Rating: Underperform | Target: Raised to Rs 220
Credit Suisse said that it is cautious on the stock as demand trend is still weak. The stock is factoring in 3-yr upcycle whereas upcycle is yet to start, it said, adding that it has cut CY18 EPS estimate by 13% due to weak ASP.
Brokerage: Motilal Oswal | Rating: Neutral | Target: Rs 290
Motilal Oswal said that limited capacity addition could constrain volume growth. Further, volume is seen at CAGR of 5 percent over CY17-19. While it believes valuations appear expensive, it sees only 10 percent upside from current levels.
Brokerage: CLSA | Rating: Buy | Target: Rs 325
CLSA said that sharp sequential drop in unit costs is inexplicable and observed that some of the cost gains may not continue.
Punjab National Bank
Brokerage: Nomura
Nomura said that the alleged fraud highlights apparent flaws in PNB’s systems, controls, and audits. Further, the impact will not come only from write-offs, but also dilutions at low prices.
Hexaware
Brokerage: Credit Suisse | Rating: Neutral | Target: Raised to Rs 330
The global broking firm increased EPS estimates by 3-6% to account for Q4 results. Further, any potential stake sale by Baring could be an overhang, it said, adding that overall the company has good strategy execution, but have rich valuations.
IT
Brokerage: Nomura
Nomura said that over the last six years, tier-1 has not outperformed top end of Nasscom guidance. But it has retained its cautious stance on the sector and does not see material acceleration in growth in FY19.
Brokerage: Macquarie
Macquarie said that Nasscom’s FY19 guidance hints at marginal improvement. Further, it expects most large firms in India to grow at industry level in FY19. It expects headcount to remain lower than revenue growth rate.
PSU Banks
Brokerage: Nomura
The broking firm is positive on the sector and believes that worst of credit cycle is behind. Core PPOP performance for some banks will continue to improve. Having said that, nature of the alleged scam reduces our confidence level in PSU banks and recent developments may restrict a re-rating in the near-term. It expects operating performance of corporate banks to improve from H2CY18.
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Brokerage: Morgan Stanley
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