10 stocks that saw target price revision, re-rating post Q2 nos
By Rahul Oberoi
Most sectors performed well in September quarter financial earnings. On an aggregate basis, Sensex companies posted high single-digit growth in adjusted net profit, which was highest in past few quarters.
Brokerage Sharekhan said Sensex companies posted 8.1 per cent year-on-year profit growth (which was better than topline growth) on better profitability posed by public sector undertakings (PSUs), banks and auto firms.
A couple of stocks saw rerating of outlook and target prices by top brokerage firms following Q2 earnings.
Here is a list of 10 such stocks.
Whirlpool of India | Buy | Target price: Rs 1,760 | CMP: Rs 1,488
Brokerage Edelweiss Securities maintained a ‘buy’ rating on Whirlpool of India with a revised target price of Rs 1,760 (Rs 1,511 earlier), maintaining its 33 per cent premium to the sectoral multiple of 35 times, which stands rerated in past six months. The brokerage believes the company’s vision of doubling top-line by FY20 seems achievable given its improving competitive profile. “We gain comfort from Whirlpool’s effective strategies which are already making a significant mark, as visible from strong top-line/OPM growth in past few quarters,” Edelweiss said in a research report.
Gayatri Projects | Buy | Target price: Rs 263 | CMP: Rs 210.85
Sharekhan believes Gayatri Projects (GPL) is on a strong growth trajectory with focus on its core EPC business. Improved growth outlook of the road sector over the next 3-4 years with upcoming projects like Bharatmala provide immense opportunities for pure EPC players such as GPL. The brokerage recently upgraded the stock to ‘buy’ with a revised price target of Rs 263.
Bank of Baroda | Buy | Target price: Rs 220| CMP: Rs 175.35
Maintaining a ‘buy’ rating on Bank of Baroda, Sharekhan revised its target price to Rs 220. “Overall performance of the bank was encouraging, especially on the growth front with improved asset quality performance,” Sharekhan said. Asset quality for the quarter improved as GNPA ratio and net NPA ratio declined by 24 basis points and 12 basis points sequentially to 11.16 per cent and 5.05 per cent, respectively.
Power Mech Projects | Buy | Target price: Rs 950 | CMP: Rs 732.90
Nirmal Bang Securities revised Power Mech Projects’ target price to Rs 950 from Rs 700 earlier. “The company posted 2QFY18 consolidated revenues of Rs 350 crore, up 6 per cent YoY and broadly in line with our estimate of Rs 360 crore,” the brokerage house said. With a strong order book and robust order inflow outlook, the brokerage expects 26 per cent consolidated earnings CAGR over FY17-FY20E. Shares of the company were at Rs 732 on November 27.
Sadbhav Engineering | Buy | Target price: Rs 461 | CMP: Rs 371
Sadbhav Engineering (SADE) outperformed on execution and profitability fronts in 2QFY18, and saw moderation in working capital (WC) and debt reduction during the quarter. The company enjoys revenue visibility of 2.7 times FY17 net sales after factoring in a total order book of Rs 9,500 crore. Equirus Securities said margins have improved along with working capital contraction. Going ahead, smooth hybrid annuity (HAM) project execution, margin expansion and WC improvements should play out. “We maintain a ‘long’ rating with an SOTP-based March 2019 target price of Rs 461 (Sep’18 TP of Rs 386 earlier),” the brokerage said.
Indian Bank | Buy | Target price: Rs 483 | CMP: Rs 413.35
Indian Bank’s stellar operating performance, improving asset quality, and robust capitalisation with tier-1 ratio at 11.7 per cent would sustain credit traction. Anand Rathi Financial Services upgraded its rating on Indian Bank from a ‘hold’ to a ‘buy’ with a target price of Rs 483. “The bank’s headline asset-quality parameters are improving. The stressed assets book is now below 10 per cent of overall loans and, with recoveries gaining traction, we expect the stressed assets ratio to further improve by around 200 basis points from around 9.8 per cent now,” Anand Rathi said in a report.
Vijaya Bank | Buy | Target price: Rs 87 | CMP: Rs 73.65
A steady shift to high-yielding secured RAM loans (retail, agri, MSME), along with moderating slippages and rising profitability augur well for Vijaya Bank. Anand Rathi Financial Services upgraded its rating on Vijaya Bank from ‘hold’ to ‘buy’ with a target price of Rs 87.
Pfizer | Buy | Target price: Rs 2300 | CMP: Rs 1926
Centrum Broking recently upgraded Pfizer’s rating to ‘buy’ from ‘hold’ and revise target price to Rs 2,300 from Rs 1,690 earlier, based on 23x March’19E EPS of Rs 100. Pfizer’s Q2FY18 results exceeded consensus estimates. The drug maker reported a 2 per cent YoY growth in revenues, while margin improved by 1,290 basis points to 29.3 per cent and net profit grew 90 per cent YoY. “We expect the company to deliver superior performance due to strong growth in its major brands. Recently, the company launched new line extension Corex-T. Pfizer would launch Meronem and Neksium in India, which are acquired from Astra Zeneca Pharma. “The key downside risk to our assumption is slowdown of in domestic pharma market growth and the additional brands coming under price control,” Centrum Broking added. Shares of the company were trading at Rs 1,926 on November 27,” the brokerage said.
Bata India | Sell | Target price: Rs 578 | CMP: Rs 753.30
Considering subdued revenue growth in 1HFY18, Motilal Oswal has cut Bata’s revenue estimates by 4 per cent for FY18 and by 6 per cent for FY19. The brokerage house expects revenue CAGR of 9 per cent and PAT CAGR of 19 per cent over FY17-19. The brokerage recently downgraded Bata India to ‘sell’ on rich valuations with a target price of Rs Read More…
Via:: Economic Times – Stocks