Tag: CLSA

Hindalco, Vedanta shares rise as CLSA says demand recovery will support metal prices

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Global brokerage firm CLSA believes that outlook for aluminium is resilient, and that demand recovery will support metal prices. The Indian smelters they believe are well placed. The brokerage is positive on metals space and has issued ‘Buy’ calls on Hindalco Industries and Vedanta.

For Hindalco Industries, CLSA has recommended a ‘Buy’ call and raised its target price to ₹770 from ₹635 per share earlier, suggesting an upside potential of 20% from the stock’s current market levels.

The foreign brokerage has raised Hindalco’s FY24 and FY26 EBITDA estimates by 4% and 13%, respectively, on the back of higher aluminium price assumptions. CLSA also has raised profitability estimate for Novelis slightly.

So both on the domestic business and the Novelis business, the brokerage is fairly positive.

For Anil Agarwal-led mining giant Vedanta, the brokerage said the company is well placed to benefit from commodity upcycle given its diversified exposure.

Vedanta’s efforts to raise capacity and profitability augur well, the brokerage said in a note.

CLSA has a ‘Buy’ rating on the Vedanta stock, with a target price of Rs 430 per share. The stock price target indicates a further upside of 5% from the current market prices.

In an interaction with CNBC-TV18, Mitessh Thakkar of earningwaves.com said, “I like both of them, but in the short term, there could be some pullback happening in Hindalco though Vedanta still looks strong to me. Hindalco, I would be a buyer on this decline in case I can get fresh entry closer to about ₹620-610 zone. That is the buying area. If you get it over, extremely positive to go in here for medium to long term.”

Vedanta shares advanced 1% to trade at ₹415, while the Hindalco Industries stock was at ₹648.70, up 1.13% during Friday’s morning trade.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ICICI Lombard shares rally may not continue for long: Here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of ICICI Lombard rose over 3% on Thursday (April 18) after the company reported a 19% year-on-year (YoY) increase in net profit for the fourth quarter of FY24. Despite this bullish sentiment, some brokerages expressed reservations regarding the stock’s potential for continued growth.

They have maintained target prices in the range of ₹1,760 to ₹1,990 per share.

Brokerage firm CLSA’s downgrade to ‘Underperform’ echoes a note of caution.

The brokerage suggests that a strong rally in Q4 may limit future upside potential.

So far this year, ICICI Lombard shares have rallied over 16%, outperforming the 2% gain in the benchmark Nifty 50 index.

CLSA now anticipates a 15% slowdown in premium growth for FY25 and points out management’s tepid guidance on the motor segment as an area of concern.

Brokerage firm Morgan Stanley (MS) acknowledges that Q4 profits are slightly below estimates but remains cautious about the stock’s future trajectory.

While maintaining an ‘Overweight’ stance, MS trimmed its forecasts and anticipates the stock to remain rangebound with a positive bias in the near term.

On the other hand, brokerage firm Jefferies maintains a ‘Buy’ recommendation on the stock. However, it highlights potential risks that could impede ICICI Lombard’s continued growth.

While Q4 performance met expectations, Jefferies identifies catastrophe claims as a key risk factor.

Despite foreseeing health and commercial lines driving growth, Jefferies emphasises the importance of monitoring these risks closely to mitigate potential downsides.

In contrast, HSBC maintains a ‘Buy’ call, buoyed by Q4’s robust premium growth and gains in market share.

It highlights a significant improvement in the combined ratio as a key positive from the Q4 results.

Notably, the combined ratio for ICICI Lombard stood at 103.3% for FY24 compared to 104.5% for FY23.

Meanwhile, the company’s board of directors has proposed a final dividend of ₹6 per share for FY24, subject to shareholder approval.

This final dividend, combined with previous dividends, totals ₹11 per share for FY24.

At the time of writing this report, the shares of the insurer were trading 2.02% higher at ₹1,724.70 apiece on the BSE.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Maruti Suzuki’s market cap is now more than twice that of its parent Suzuki Motor Corp

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Maruti Suzuki, which was about half the size of its Japanese parent—Suzuki Motor Corp—about ten years ago, has not only overtaken its parent in market valuation but also has overgrown two-fold. As of Friday, Maruti Suzuki, the country’s largest automaker, commands a market capitalisation of $46.9 billion, against Suzuki’s market cap of $22.1 billion, Bloomberg data shows. Maruti overtook its parent’s market cap for the first time in January 2015.

Unsurprisingly, the rally in Maruti Suzuki stock has been on the back of solid fundamentals. While the net revenue of Maruti Suzuki has increased at a compounded rate of 7.6% over the last five years to ₹1.13 lakh crore, its parent clocked 4.3% growth in revenue during the same period.

Similarly, the net profit of Maruti Suzuki grew at a compounded rate of 1% between FY19 and FY23, whereas Suzuki Motor saw just a half percent growth in its bottom-line during the same period. Suzuki Motor held 58.2% of Maruti Suzuki as of December 2023.

Shares of Maruti Suzuki added another 4% on Friday to take the year-to-date return to 20%. In contrast, the stock of Suzuki Motor has gained 13% so far this year. The benchmark Nifty50 is up just 2% so far in 2024.

Multiple factors drove the latest rally in Maruti Suzuki. In a recent note, CLSA observed that the company is likely to benefit from the rise in CNG vehicles. According to the brokerage, the market share of CNG passenger vehicles will rise from 15% in FY24 to 22% in FY30. It further added that the company will benefit from the introduction of new models.

Moreover, with a view to encourage the adoption of hybrid and electric vehicles, Nitin Gadkari, the Minister of Road, Transport & Highways, proposed a tax reduction for hybrid vehicles to 12% from 28% for sub-4 metre and from 43% for above 4 metre hybrid vehicles, respectively.

“If GST on hybrids were to come down to 12%, it would mark a sizeable win for Maruti Suzuki, as many peers are not investing in the technology,” said Morgan Stanley. The reduction in tax would make the total cost of ownership of hybrid vehicles more attractive.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CLSA upgrades Amber Enterprises, calls concerns around business ‘overdone’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Brokerage firm CLSA believes that the recent correction seen in Amber Enterprises is a good buying opportunity and upgraded the stock to “buy” from its earlier rating of “accumulate.”

CLSA also raised its price target on Amber Enterprises to ₹4,300 from ₹4,130 earlier.

Shares of Amber Enterprises are down 26% from their peak of ₹4,614.

#CNBCTV18Market | CLSA upgrades to buy call on Amber Enterprises. Says recent share price correction (-14% in 1 month) provides an attractive entry point pic.twitter.com/4Fyx34fOYY

— CNBC-TV18 (@CNBCTV18Live) March 22, 2024

CLSA said the weakness in the stock, which is likely driven by the ongoing subdued sentiments in the broader markets or expectations of modest near-term earnings, is overdone.

The brokerage also said that its medium-term thesis of growth in the non-room air conditioner segment remains intact. It also assumes that while RAC market share would fall 19% by financial year 2030 and another 10% by financial year 2040, other segments of the company will contribute to half of the company’s revenue in the next five years.

Last week, the Gurgaon-based solution provider for the heating, ventilation and air conditioner (HVAC) industry, told CNBC-TV18 that it is targeting doubling of electronic segments revenues within the next two financial years.

“We are quite optimistic in the electronic segment, and we have acquired Ascent Circuits 60% stake, which strengthens our electronic EMS portfolio for the backward integration,” said Jasbir Singh, Chairman & CEO, Amber Enterprises.

Singh anticipates total addressable market of printed circuit boards (PCB) to be at $25-30 billion in the next five years.

In the April-December 2023 period, the electronics segment contributed around ₹757 crore or roughly 19% to Amber’s overall sales of ₹3,924 crore. The share is expected to increase to 25-30% in the next two years.

The consumer durables segment remained the largest contributor to sales at 72% during April-December, while the balance 9% comes from the railways business.

The contribution of room air conditioners, which is currently around 38% of the consolidated revenue, will come down to 30% in the next financial year, he said.

Amber Enterprises shares were trading 3.3% higher at ₹3,523. The stock is up 87% over the last 12 months.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nifty IT poised for more downside? CLSA’s Laurence Balanco believes so

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Nifty IT index is currently down 4% for the week, and if chart patterns are anything to go by, the index may see further downside from current levels. CLSA’s Laurence Balanco believes that the IT index can see another 7% to 8% downside basis current chart patterns.

“At the sector level, it is worth noting that the NSEIT sector has broken down from its January / March topping pattern (head-and-shoulders) with this week’s break below 36,134 – 36,135,” Balanco said.

The Nifty IT index made a low of 35,697 on Wednesday, before snapping a four-day losing streak on Thursday.

According to the chartist, this breakdown supports a downside target of 33,272, 7.7% lower than Thursday’s closing levels.

IT stocks like TCS, Infosys, Wipro, HCLTech and peers will be in focus on Friday after Accenture reported its quarterly results overnight in the US and ended up cutting its financial year 2024 revenue growth guidance to 1% -3% from 2% – 5% earlier.

As a result, shares of Accenture ended over 9% lower on Wall Street on Thursday. This has already hurt Indian IT shares listed in the US. Infosys’ US-listed shares fell 4% overnight, while those of Wipro ended 2% lower.

Accenture further said it continues to see client caution on IT projects, especially on the smaller end.

In case, the Nifty IT does end lower on Friday, it will be its fourth weekly loss in the last five weeks and mark its worst weekly performance since April 2023.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Aditya Birla’s Mahesh Patil expects marginal slowdown in earnings growth next year

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Mahesh Patil, Chief Investment Officer at Aditya Birla Sun Life AMC, anticipates marginal slowdown in earnings growth to low teens in the next financial year.

However, he believes a bulk of this earnings expectation is already priced in and therefore, they may not be any major earnings downgrades.

“There could be some downgrade because the top line growth what we’ve seen in the last quarter could slightly be lower than what one is expecting. And the margin recovery that was driving the bottom line, to some extent, is now fully there now; one should not expect any further margin improvement because the commodity price benefit and other things is largely been through,” he noted.  

Patil says the current market is one where it’s better to buy when prices fall rather than sell on declines.

On March 18, the Nifty dropped to 21,900 but bounced back after finding support at this level, which has been consistent for the past four trading sessions. It closed above 22,000.

The index has also maintained its 50-day Moving Average at 21,909, suggesting that 21,900 is a crucial support level for the Nifty in the future.

Patil also shared his views on various sectors including fast-moving consumer goods, cement, IT, among others.

FMCG will bank on a recovery in rural economy post elections, he said.

Cement sector might take a breather after the strong growth over the last couple of years.

Commercial vehicle (CV) sector is also likely to remain subdued.

Patil said the IT sector is one where there are expectations of a rebound into the next fiscal year, but it might take a quarter or two to see a meaningful recovery.

The global brokerage firm CLSA, in its recent report, has restated its careful approach to the IT industry. The firm has advised selling stocks of Wipro, HCL, TCS, and LTIMindtree. It also noted that the rate of new deal announcements in the current quarter has decreased compared to the periods of July to September and October to December in 2023.

Also Read | CLSA says ‘sell’ these IT stocks — Here are the reasons for the cautious stance

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Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

This brokerage firm has cut HDFC Bank’s target price to ₹1,650 per share — here’s why

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Global brokerage firm CLSA has downgraded HDFC Bank’s stock rating from ‘buy’ to ‘outperform’ and slashed the target price from ₹2,050 per share to ₹1,650. CLSA’s downgrade emphasises the challenges faced by HDFC Bank in deposit accretion, posing potential hurdles to loan growth.

HDFC Bank, India’s largest private sector lender, has experienced a decline in its stock value this year, plummeting over 15%. This contrast is evident compared to the mere 0.9% decline in the Bank Nifty index over the same period.

Analysts at CLSA highlighted the twin challenges on the deposit front, citing a high ask rate and a challenging overall economic environment.

The brokerage firm anticipated a manifestation of these challenges in the form of lower loan growth for the bank.

Despite efforts to improve yields, HDFC Bank’s margin recovery is expected to be gradual, with CLSA projecting a more ‘U-shaped’ trajectory than a swift ‘V-shaped’ rebound.

The offset between improving yields and muted CASA (Current Account Savings Account) accretion is anticipated to influence the gradual nature of the net interest margin (NIM) recovery.

“HDFC Bank’s expectations of high loan growth, and not deposits, are at the core of the debacle. Lowering the loan growth may be beneficial for the stock. It would be positive for its net interest margin (NIM) or return on asset (ROA) outlook,” the brokerage firm said.

CLSA further trimmed the earnings per share (EPS) estimates for FY25 and FY26 by 5%.

Last month, global brokerage firm Goldman Sachs downgraded ratings on banking majors State Bank of India (SBI), ICICI Bank and Yes Bank, saying that the headwinds are increasing for the Indian financial services sector. However, it had retained a ‘buy’ rating with a target price of ₹1,915 per share on HDFC Bank.

At the time of writing this report, HDFC Bank shares were trading 0.89% lower at ₹1,433.50 apiece on the BSE.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Here’s why Dish TV stock rallied 9% on Friday

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In Friday’s trading session, Dish TV’s stock witnessed increased activity after CLSA, a prominent brokerage firm, decided to maintain its outperform rating for the company.

Despite a lower-than-expected Q3 of FY24 revenue, CLSA remains optimistic about Dish TV’s future, albeit with some adjustments to their estimates for the fiscal years 2024 to 2026.

CLSA reported a downward revision of 18% in revenue and 37% in EBITDA estimates for FY24-FY26 due to Dish TV’s weaker performance in the third quarter. However, they simultaneously increased the target price for Dish TV from Rs 18 to Rs 24, emphasising the stock’s affordability at 8 times FY25 EV to EBITDA.

One significant factor contributing to CLSA’s positive outlook is Dish TV’s achievement of becoming net debt-free in Q1 of FY24. The brokerage firm also highlighted the potential positive impact of an upcoming IPO and fundraise in the sector initiated by Tata Play. They believe this could result in a favourable ripple effect for Dish TV, further aiding the stock price.

Despite the overall optimism, CLSA emphasised a couple of caveats that investors should consider. They pointed out that a change in promoter ownership and sustained profitability could act as key catalysts for a re-rating of Dish TV’s stock. However, the presence of a significant number of pledged promoter shares introduces an element of risk, potentially leading to heightened stock volatility.

On Friday, Dish TV’s stock closed at ₹23.40 per share, marking an uptick of nearly 9%. The Mumbai-based company currently holds a market capitalization of ₹4,326 crore and has delivered robust returns of around 23% in the last six months.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

CLSA’s Laurence Balanco expects short-term market volatility, sees Nifty support at 21,000-21,300

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Laurence Balanco from CLSA has observed a slowdown in the upside momentum of the Nifty 50 index and expects a pause and consolidation in the benchmark before any further upmove.

In a conversation with CNBC-TV18, Balanco said the key levels for the market are identified between 21,000 to 21,300 levels. While 21,300 is the 50-day average, 21,000 is the lows made in December and early January, he noted.

Balanco believes a breach below 21,000 points towards a deeper correction, with the next support zone around 19,800 to 20,000, aligning with previous highs.

“But at this stage, looking at how the markets trended, it’s taken the time based correction, meaning you go sideways in a trading range. So that would be our base case,” he said.

Balanco also discussed his outlook on specific stocks. HDFC Bank, he said, has declined significantly from its three-year trading range, adding that “A strong support comes through at ₹1,260-1,300 area – that is the bottom end of the three-year trading range, but we do expect to see a test of that level.”

In contrast, Reliance Industries has surpassed a two-year trading range, and CLSA has set an optimistic target of ₹3,400-3,500 per share for the company. Additionally, CLSA anticipates robust momentum in stocks such as Tata Motors.

Also Read | Trade Setup for February 5: Has Nifty entered a sustained upmove again after a new record?

The Nifty50 was trading almost flat at 2.35 pm at 21,851 points. Despite the index reaching a new peak of 22,126 on February 9, a day after Budget 2024, the index was unable to sustain the levels, subsequently retreating by 170 points to conclude at the 21,850 mark. All eyes are now on the Reserve Bank of India’s monetary policy scheduled later this week.

Also Read | Tata Motors hits record high to become top Nifty 50 gainer, analysts expect stock to rally up to ₹1100

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Catch all the latest updates from the stock market here

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

ICICI Bank jumps 6% after Q3 results, brokerages set target prices in range of ₹1,190 to ₹1,350

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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ICICI Bank shares rose nearly 6% on Tuesday, January 23, after the lender reported a 23.5% increase in standalone profit and a 13% rise in net interest income (NII) on Saturday, January 20. At 9:38 am, the shares were 3.58% up at ₹1,044.35 apiece on BSE.

Key brokerages expressed bullish sentiments on the bank, pegging target prices between ₹1,190 and ₹1,350 per share.

Here’s a look at the target prices given by brokerages on ICICI Bank:

Morgan Stanley has assigned an overweight call to ICICI Bank. It highlighted the bank’s third-quarter Profit After Tax (PAT) growth of 24%, accompanied by a Return on Assets (RoA) of 2.3% and a Return on Equity (RoE) of 18.5%.

The firm remained optimistic about the bank’s strong balance sheet growth, expecting it to stay well above pre-COVID levels.

Despite projecting a potential moderation in RoA as margins adjust, Morgan Stanley foresees profitability remaining robust, making ICICI Bank an attractive investment prospect.

Macquarie, while maintaining an outperform call, acknowledged that the third-quarter PAT was in line with expectations.

Despite facing challenges such as high provisions and operating expenses, Macquarie noted that the bank’s performance was offset by fee income.

The Net Interest Margins (NIMs) decline, as anticipated, has not deterred Macquarie’s positive outlook, with the bank’s FY24 guidance being upheld.

CLSA, with a buy call on ICICI Bank, emphasised that the bank’s business performance is in line across all parameters, making it poised for rerating.

While acknowledging the ongoing moderation in Net Interest Margin, CLSA pointed out that the levels are still 40 basis points above those recorded in Q4FY22.

The bank’s loan growth, coupled with robust asset quality and an average Return on Equity of 17% over the medium term, contributes to CLSA’s positive stance.

CITI maintained a buy call for ICICI Bank, asserting that the bank’s third-quarter performance exceeded expectations. Notably, Net Interest Margin (NIM) experienced a modest decline of only 10 basis points, compared to the estimated 16 basis points decline.

Operating expense (opex) growth was contained at 2%, contributing to the bank’s overall positive financial outlook.

The loan growth, aligning with expectations, recorded 19% year-on-year and 4% quarter-on-quarter, while deposit growth slightly fell below expectations at 3% quarter-on-quarter, CITI said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow