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Analyst Calls: Tata Steel, Abbott India, Jyothy Labs, PSP Projects

Motilal Oswal has maintained ‘neutral’ rating on Tata Steel with a target price of Rs 450.

ET Bureau|
Last Updated: Feb 10, 2020, 07.28 AM IST
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The brokerage has also cut its earnings estimate by 3-4 per cent over FY19-22 on lower revenue assumptions.
Good morning!

The domestic stock market on Monday showed early signs of a possible breakout from its consolidation range. And Nifty futures on Singapore traded 28 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.

• Motilal Oswal has maintained ‘neutral’ rating on Tata Steel with a target price of Rs 450. While steel margins are likely to improve in the near term, the impact of carbon costs would keep Tata Steel Europe margins under check, said Motilal Oswal. Successful completion of the announced Tata Steel Europe business restructuring and the turnaround of the acquired Bhushan assets hold the key to achieve the guided $1 billion net debt reduction in FY21, said Motilal Oswal. Shares of Tata Steel ended down 1.5 per cent at Rs 470.95 on Friday.

• Kotak Institutional Equities has retained ‘sell’ rating on Godrej Agrovet and revised fair value to Rs 470 from Rs 450 earlier. Godrej Agrovet’s results were below estimates yet again in the third quarter, led by weak margins across all segments except oil palm, which recovered from a blip, said Kotak. Godrej Agrovet's valuations remain expensive at 34 times on FY21 EPS estimate, which is predicated on a normal environment across business segments, said Kotak Institutional. Shares of Godrej Agrovet ended up 0.2 per cent at Rs 560.5 on Friday.


• CLSA has retained ‘buy’ rating on Abbott India and revised target price to Rs 16,850 from Rs 15,810. The brokerage said Abbott India’s net profit for the third quarter was 30 per cent ahead of estimate due to record EBITDA margin on higher gross margins and lower operating expenditure. Abbott India has a strong balance sheet with ROE of 27 per cent despite cash of Rs 793/share and this lends a defensive characteristic to Abbott, said CLSA. Shares of Abbott India ended up 7.8 per cent at Rs 14,133.20 on Friday.

• Macquarie has maintained its ‘outperform’ rating on Jyothy Labs but cut its target price from Rs 227 to Rs 218 citing margin miss on high staff costs and lower operating leverage in December quarter. The brokerage has also cut its earnings estimate by 3-4 per cent over FY19-22 on lower revenue assumptions. JYL standalone gross margin expanded by 230 bps YoY led by benign input costs. However, higher staff costs and operating deleverage impacted the EBITDA margin which is down by 50bps YoY. Staff costs were up 13 per cent YoY on account of higher sales force strength. Shares of Jyothy Labs ended half a percent higher at Rs 144.9 on Friday.

• HDFC Securities has maintained its ‘buy’ rating on PSP Projects with an increased target price of Rs 607 citing better than expected results for the December 2019 quarter on back of robust execution in SDB project. PSP has secured orders worth Rs 1,550 crore during nine months ended December 2019 and is well place to surpass Rs 1,500 crore guidance. The company current has an order book pipeline of Rs 1000 crore for 4QFY20. Shares of PSP Project closed at Rs 511 on Friday.
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