Stock Market

Analyst Calls: Bharti Infratel, UltraTech Cement, Ashok Leyland, HDFC, Cadila Healthcare

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Good morning! The domestic stock market on Friday showed early signs of a possible breakout from its consolidation range.

And Nifty futures on Singapore traded 13 points lower this morning, signalling a tepid start for Dalal Street. As you head for the day’s trade, here is a compilation of overnight analyst calls on various stocks. CLSA has retained sell rating on Bharti Infratel with a target price of Rs 250.

Bharti Infratel’s merger with Indus Towers is likely in the coming months, said CLSA.

This partstock/part-cash merger will have limited opex synergies, though mergeco EPS will be boosted by Indus Towers, said CLSA.

Bharti Infratel’s elusive tenancy growth in the medium term underlines negative stock view, it said.

Shares of Bharti Infratel ended up 1.85 per cent at Rs 264.70 on Thursday. ICICI Securities maintained buy rating on UltraTech Cement with a target price of Rs 5,200.

Acquisition of Binani Cement resulted in creation of intangible assets of Rs 17.1 billion, goodwill of Rs 17.6 billion and assets held for disposal (to be monetised likely in FY20) at Rs 550 crore, said ICICI Securities.

With the integration and ramp-up of acquired assets largely behind, UltraTech's focus would shift to improving margins /return ratios and deleveraging the balance sheet.

Shares of UltraTech Cement ended up 1.3 per cent at Rs 4536.30 on Thursday. Kotak Institutional Equities maintained buy rating on Ashok Leyland with fair value of Rs 130.

Ashok Leyland reported strong revenue growth in FY19 led by strong volume growth in the domestic M-HCV and LCV markets, the brokerage said.

However, EBITDA margin declined due to intense competition and high discounting, it said.

The brokerage expects the M-HCV industry to grow at a healthy pace in the medium term led by strong growth in infra activities and prebuying due to BS-VI emission norms.

Shares of Ashok Leyland ended up 0.41 per cent at Rs 85.15 on Thursday. Investec Securities has reiterated its hold rating on HDFC with a target price of Rs 2,215.

HDFC remains the best quality housing finance company; however, growth and RoE of 16 per cent plus over the medium term seems difficult, said Investec.

HDFC is cautious on wholesale segment, which grew 8 per cent YoY in FY19, said Investec.

The focus on affordable housing was noted, but growth needs to pick up in medium/ high-income segment, said Investec.

Shares of HDFC ended up 1.5 per cent at Rs 2261.45 on Thursday. HSBC has retained buy rating on Cadila Healthcare and reduced the target price to Rs 260 from Rs 410.

The brokerage expects clarity to emerge on FDA status of Moraiya plant by early August 2019.

Looking at market dynamics and competitive scenario for key Heinz brands, growth of 6-7 per cent per annum looks reasonable, HSBC said.

India sales should see recovery from Q2 of FY20, HSBC said.

Shares of Cadila ended up 2.6 per cent at Rs 234.35 on Thursday.




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