Markets: Stocks to buy or sell when share bazaar opens today
On Tuesday, the benchmark Sensex finished at 39,031.55 down by 0.09% or 35.78 points. While NSE ended lower by 0.06% or 6.50 points at 11,748.15.
Trading in Dalal Street will resume on Thursday at around 0930 hours, after remaining closed on Wednesday on the occasion of Maharashtra Day and International Labour Day. Banks and the majority of firms were also had a public holiday on Wednesday. A background check: On Tuesday, the benchmark Sensex finished at 39,031.55 down by 0.09% or 35.78 points. While NSE ended lower by 0.06% or 6.50 points at 11,748.15. Markets remained volatile due to the dampening of shares in major stocks like Yes Bank, IndusInd Bank, Maruti Suzuki, Hero Motocorp, Power Grid and M&M. On the other hand, Indian rupee jumped by 46 paisa closing at 69.56 against US dollar benchmark index at interbank forex market.
Now that markets will once again resume its functioning on Thursday, here's a list of stocks which you should buy or sell.
According to Yes Securities:
While Biocon has covered a large biosimilars and is on its way to unlocking value, believe near term upsides have been capped in the stock at 28x FY21PE which leaves no room for disappointment. 12 months target price of Rs 500 is set.
According to Motilal Oswal:
Kotak Mahindra Bank!
Experts at Motilal said, “We continue believing in KMB's capability to deliver in a challenging environment and appreciate the progress the bank is making in building a strong liability franchise. We expect the bank to maintain traction in loan growth (FY19-21 CAGR of 22%) and gain market share across product segments. Maintain Neutral with a revised target price of INR1,450 (3.8x FY21E ABV for the lending business).”
“For CY19, we increase our EBITDA estimate by 5% to factor in the likely reduction in freight cost/t and other expenses. Consequently, our PAT growth estimate for the year is raised to 6%. Alongside, we also raise our EBITDA/PAT estimate by 4%/7% for CY20. The stock trades at 11.7x/10.3x CY19/20E EV/EBITDA. We value ACEM at 10.5x Jun’21 EBITDA, while ACEM’s stake in ACC is valued at a holding company discount of 20% to arrive at a target price of INR211. Maintain Neutral,” said Motilal.
Analysts here say, “we expect valuations to sustain driven by (a) strong standalone PAT CAGR of 25% over FY19-21E, driven by Westside and improved profitability in Zudio as it achieves scale, (b) lower losses in Star as the recent rejig in footprint and focus on profitability should reduce losses, (c) positive FCF in FY20, and (d) improved RoIC at 15% v/s 11% (on consol. basis) due to better profitability in Star and Zudio. We value Trent on SOTP basis ascribing 25x EV/EBITDA to both standalone and Zara EBITDA, and 1x to Star’s revenues to arrive at a TP of INR440. Maintain Buy.”
According to Reliance Securities:
Looking ahead, analysts here said, “we expect MSIL’s volume to clock ~8% CAGR over FY19-FY21E. Company’s BS-VI pricing appears lower than expectation, accordingly, we lower our revenues and also lower our margin estimates due to margin pressure. We cut our EPS estimates by 10% and 7% for FY20E and FY21E respectively. In view of better visibility on company’s BS-VI products and its affordable incremental pricing, we expect market share gain and margin improvement for MSIL going forward. Therefore, we increase our valuation multiple for MSIL from 21x to 22x. We reiterate our BUY recommendation on the stock with a revised Target Price of Rs7,570 (from Rs7,750 earlier), valuing the stock at 22x FY21E EPS.”
“Higher credit costs, revised growth assumptions and lower fee income will have a bearing on the bank’s medium-term earnings and valuations, even as they are positive for sustainability of earnings over the longer term. Trimming our earnings estimates by 42%/37% for FY20E/FY21E to factor in lower balance sheet growth, weaker other income and higher provisioning, we revise our recommendation on the stock to HOLD from BUY with a revised Target Price of Rs220 (from Rs 290 earlier), based on 1.7x FY21E adjusted PB. We have factored in a capital raise of Rs50bn in FY20 at Rs220,” said Reliance Securities.
While the share buyback should provide downside support to the stock, we believe material upside is not likely. The new CEO appointment could be a critical event, even as we await further clarity on long-term growth strategy and margin outlook. Reliance Securities downgrade Persistent from BUY to HOLD with a revised TP of Rs672 (Rs745).
According to HDFC Securities:
Cholamandalam Investment & Finance!
CIFC outperformed peers on growth and asset quality in 4QFY19, meriting an upgrade in our valuation multiple. Maintain BUY with a TP of Rs 1,671 (3.5x Mar-21E ABV). Strong parentage gives it steady access to funds. The sustained improvement in HE asset quality (aided by SARFAESI) is an additional positive.
Amidst a challenging demand environment and rising competition (particularly from Bajaj), Hero has defended market share due to its brand franchise. The stock is trading at attractive valuations of 14.5x on FY20E estimates and it offers a dividend yield of ~3.3%. With a full year dividend of Rs 87 (~3.3% yield) and steady market share, HDFC gives BUY stands. TP is Rs 3,080 (at 16x FY21E EPS), with estimates falling by ~4%.
Appointment of a transformational leader at the helm along with a near complete top management rejig make AXSB stand out vs. peers. This is supported by change in credit/ risk practices. (1) Improving margins, (2) Reduction in LLPs and (3) Improving operating efficiency will facilitate the achievement of the guided RoEs (~18%) by FY21E. While numerous strategic changes and the qtr’s performance lend credibility to this target, analysts here have conservatively factored in RoAEs of 15.5% over FY19-21E. AXSB remains our preferred bet amongst private banks.
Maintain BUY with a TP of Rs 896 (2.8x Mar21E ABV of Rs 310+Rs 30 for subs).
ICICI Prudential Life!
Post the recent run up in price, we rate IPRU a NEUTRAL with a TP of Rs 400 (FY20 EV + 19.3x FY21E VNB). FY19 was flat on new business written but VNBM at 17.0% after assumption changes is a tad bit below expectations. Expect growth to return on a more comfortable base.
Recommend BUY on UltraTech (UTCEM) with a TP of Rs 5,140 (15x FY21E EBITDA). Analysts said, “We ascribe premium valuations to the stock owing to UTCEM’s capacity leadership (25% mkt share in India) and superior op profits outlook (Rs1000/MT+), and stable balance sheet.”