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Stock Analysis, IPO, Mutual Funds, Bonds & More

Analyst Calls: Bajaj Auto, Mindtree, Lupin, DB Corp

Jefferies has an underperform rating on Bajaj Auto with a target price of Rs 2,650.

ET Bureau|
Oct 18, 2019, 07.29 AM IST
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Shares of Federal Bank ended up 2.7 per cent at Rs 84.40 on Thursday.
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 36 points lower this morning, signalling a weak start for Dalal Street.

As you head for the day’s trade, here is a compilation of overnight analyst calls on various stocks.

• Jefferies has an underperform rating on Bajaj Auto with a target price of Rs 2,650. Gradual ramp up means limited near-term financial impact, said Jefferies. Establishing a strong brand will be key but is not easy (return to "Chetak" brand notwithstanding) as Hero's case in ICE scooters suggests, said Jefferies. Shares of Bajaj Auto ended up 3 per cent at Rs 3,110.30 on Thursday.

• Morgan Stanley has maintained underweight rating on Mindtree and revised target price to Rs 725 from Rs 705. Revenue growth in Q2 was better than expected but margins were soft, leading to weaker earnings, said Morgan Stanley. Management did not comment on its growth outlook, though it indicated the deal pipeline is healthy. Upside risks include strong execution and significant improvement in margins, said Morgan Stanley. Shares of Mindtree ended down 1.9 per cent at Rs 729.35 on Thursday.


• Equirus has retained reduce rating on Lupin with a target price of Rs 684 by December 2020. The brokerage said its analysis of Lupin’s pipeline indicates that its near termpipeline is thin and its US business growth is contingent upon (a) an on-time launch of generic of ProAir and generic of Apriso and (b) timely resolution of USFDA issues at four facilities. The Street has built in a 2 times increase in earnings over FY19-FY21. Shares of Lupin ended down 0.8 per cent at Rs 726.40 on Thursday.

• CLSA has maintained buy rating on DB Corp and revised target price to Rs 185 from Rs 220. DB Corp stock has underperformed the market over the past due to concerns over ad-revenue growth; with the stock trading at 6.5 times FY21 PE and offering arpund 7 per cent dividend yield, the brokerage believes that the stock offers value. CLSA has cut its FY20-21 estimates by 2-7 per cent and expect company to deliver 6 per cent earnings CAGR over FY20-FY22. Shares of DB Corp ended up 2.2 per cent at Rs 156.50 on Thursday.

• Kotak Institutional Equities has maintained buy rating on Federal Bank with a revised fair value of Rs 120. Federal Bank reported a strong earnings growth print of 55 per cent YoY led by 13 per cent YoY decline in provisions as operating profit growth was weak at 3 per cent YoY, the brokerage said. Loan growth slowed to 15 per cent YoY while NIM declined QoQ (15 bps), which coupled with higher provisions on staff costs resulted in a weaker costincome ratio, the brokerage said. Among mid-tier banks, Federal Bank has executed relatively well but it has had its own challenges as well, said Kotak Institutional. Shares of Federal Bank ended up 2.7 per cent at Rs 84.40 on Thursday.


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