INSUBCONTINENT EXCLUSIVE:
The bulls and bears have been engaged in a tug of war on Dalal Street for most part of this year, testing investors' patience
While most midcap and smallcap stocks have tumbled up to double digits, many of the heavyweights from top industries too have failed to hold
up, giving mixed returns.
Data showed that five top stocks of India Inc from 10 major industries have failed to deliver positive returns
despite a 4.76 per cent jump in Sensex in the first six months of the year.
But analysts continue to be bullish on most of the largecaps and
believe select sectors, including IT and pharma, can be good contra bets in a tepid market.
Blue chip companies that underperformed the
benchmark equity index, telecom major Bharti Airtel has plunged 27.86 per cent during January 1 to June 29, followed by real estate company
DLF (26.50 per cent) and auto major Maruti Suzuki (down 8.73 per cent).
A cut throat tariff war has kept the pressure on telecom majors this
Telecom revenues (adjusted gross revenues, AGR) fell 7 per cent quarter-on-quarter (QoQ) during January-March, and are down 25 per cent from
the fourth quarter of 2015-16 levels, revealed a report by Jefferies.
It said telecom revenues are now back at the 2012-13 levels
"The fall was precipitated by price cuts at end-January by Jio and incumbents
Industry ARPUs (average revenue per users) fell another 11 per cent QoQ and now stand at Rs 70/sub/month."
Ambar Ambani, Head of Research,
IIFL said, “Telcos face an acute dilemma as bundled plans raise volumes but do not provide commensurate revenues due to low ARPU regime
Hence, the near-term pressure on margin may persist as incumbents will need to invest to stay relevant
We retain overweight stance with a bullish bet on Bharti Airtel based on inexpensive 6 times FY20 EV/EBIDTA.”
Even the country’s largest
carmaker, Maruti Suzuki, has been underperforming the broader market due to concerns about fuel price inflation, Yen appreciation, and
slower-than-expected progress so far in parent Suzuki’s alliance with Toyota.
Maruti reported a 26 per cent increase in total sales at
1,72,512 units in May against 1,36,962 units in the year-ago month
The firm’s domestic sales stood at 1,63,200 units, up 24.9 per cent from 1,30,676 units in May last year
Brokerage firm Motilal Oswal has a buy rating on Maruti with a target price of Rs 10,525.
“The stock underperformance was despite
stronger-than-estimated volume growth at around 15 per cent in CY18YTD
We expect the earnings upgrade cycle for Maruti Suzuki to continue, driven by higher volumes and margins,” Motilal Oswal said in a
report.
Many of the smaller real estate players have gone out of business post the implementation of RERA, which should help big players,
especially the cash-rich realtors
But DLF continues to lag.
Yogesh Mehta of Motilal Oswal in a chat with ETNow has earlier said that, “For DLF, there will be a lot more to
understand into the balance sheet and lot of many things to be watched out
We do not have a comfort level to evaluate this company on the balance sheet.” DLF recently reported a consolidated net profit of Rs 244
crore for the fourth quarter of 2017-18.
State-owned power transmission behemoth Power Grid Corporation and drug major Sun Pharmaceutical
Industries are super powers in their own domains, but their shares are down 6.81 per cent and 2.28 per cent, respectively, in 2018.
Most
analysts are bullish on pharma
Independent analyst Anand Tandon told ETNow that profitability still has to come through in this sector
There may be some profit taking in the near term
But if you look at it on a one or two-year timeframe, there is reasonable headroom on the upside for the pharma companies to continue to do
well.
“We have just seen the initial news flow coming through in terms of some approvals as well as from the fact that there is just that
initial bit of less pricing pressure in the US
But a lot more needs to be done and the road ahead is quite long,” he added.
Global brokerage firm CLSA has a ‘buy’ call on Sun Pharma
with a target price of Rs 600, whereas Elara Capital has a ‘buy’ rating on Power Grid with a target price of Rs 245.
IT major Tata
Consultancy Services and FMCG major Hindustan Unilever have rallied 38 per cent and 21.87 per cent, respectively, this calendar
Private sector lender HDFC Bank, oil and gas major Reliance Industries, and engineering major Larsen Toubro are up 13.52 per cent, 6.74 per
cent and 0.75 per cent, respectively
HDFC Bank and Reliance Industries are among the stocks on Morgan Stanley’s focussed list.
Morgan Stanley said, “LT is a beneficiary as
India's capex journey accelerates and the company is the best way to play the acceleration.”
On June 15, Tata Consultancy Services became
the first listed company in India to hit a market capitalisation of over Rs 7 lakh crore after the firm's board approved a share buyback for
about Rs 16,000 crore, which was larger than expected in terms of price and quantity.
CLSA has a ‘buy’ rating on TCS with a target price
of Rs 1,850, whereas Motilal Oswal is ‘neutral’ on the IT major with a target price of Rs 1,750
The scrip ended at Rs 1,847.20 on June 29.
Motilal Oswal is also positive on HUL with a target price of Rs 1,840.
