Citi has a buy rating on the stock with a target price of Rs 429. It believes ‘below normal’ monsoon forecast will help room air conditioners (ACs) industry to do well and will continue to stay in vested in the stock.
However, structural theme continues to be low AC penetration and hotter weather. The move to 4-5 percent EBIT margin band in EMP business and beyond is not far away.
Motilal Oswal has initiated coverage with a buy call and a target price of Rs 210. The brokerage house believes that it is well poised to gain market share in the growing CBSE market. Change of syllabus provides strong growth triggers over two years.
In terms of market positioning, it feels that Navneet dominates the market for supplementary educational material and this domineering position makes it a key beneficiary.
The brokerage house expects 22 percent revenue CAGR and 26 percent PAT CAGR over FY17-19.
Kotak Mahindra Bank
Citi has a buy call on the stock with a target of Rs 930. It has cited the company’s aim to double 8 million customer base in 18 months with the help of ‘811’ facility. However, the intent behind raising additional capital does remain unclear, it said.
CLSA foresees strong premium growth in the insurance sector for FY17 and expects 15-20 percent CAGR growth to stay. While the underwriting profit remains low, divergence is high, the research firm observed. A hike in premiums could improve profitability along with investment income, but lower yields remain a risk for the sector.
The research firm sees better participation by PSU insurers in crop insurance from FY18. Moreover, PSU listings could be a boon for private players, it feels. On deals in the sector, the space has seen M&As worth USD 700 million with valuations at 30-40 times PE and 4-5 times PBs.
CLSA sees no overall greenshoots visible for Indian generic companies in the US market. In fact, US IMS data for February shows a month on month decline in T3M sales for most Indian generics. The data decline is due to continued pricing pressure in the US market.
Among companies, Aurobindo’s sales declined 4 percent MoM due to loss in market share of key products. Meanwhile, Lupin’s decline in top two products led to 4 percent sales decline MoM. Sun Pharma’s products are stable, but sales of Taro continue to decline due to competition. Furthermore, Glenmark’s gZetia sales show no pick up MoM and is tracking weaker than expectations.
Kotak Institutional Equities believes the ban by the Supreme Court will see minimal impact on two-wheelers and limited impact on three-wheelers. The loss to the entire industry is difficult to estimate.
On a sectoral basis, total loss for two-wheeler sector will be a moderate Rs 110 crore, while maximum revenue loss to commercial vehicles’ industry will likely be around Rs 2,700 crore.
Among companies, the brokerage house sees Hero MotoCorp to be most impacted, but on a smaller scale. Meanwhile, Bajaj Auto and Eicher Motors do not have any unsold BS-III inventory.
Commercial vehicle firms can now sell the inventory to SAARC and African countries and it also sees companies giving significant discounts to clear the inventory.
Meanwhile, Bank of America Merrill Lynch (BofA-ML) has an underperform rating on Ashok Leyland and Hero MotoCorp based on the developments around Supreme Court’s judgement. The apex court on Wednesday ordered a ban on sale of BS-III vehicles from April 1, 2017. It sees both the companies to be most impacted.