Myiris reviewed dozens of analyst research reports daily to find new stock ideas. We have listed below stock upgrades and downgrades by analysts at the brokerage firms during the week:
Stock upgrades
1. Voltas
Upgrade to Buy
Target price: 350
Brokerage: Religare Research
Voltas's Q4 results were ahead of estimates (Rs 859 million) led by higher UCP business margins. The key highlight of the quarter however was the sustained strength in growth and margins profile of the UCP business, which leads us to upgrade our FY16/FY17E EPS by 11%/17%. Further, capital employed in the EMPS segment continued to decline-a key positive in our view. We upgrade the stock to Buy (from Hold) with a revised Mar'16 TP of Rs 350 (from Rs 280).
2. Indian Bank
Upgrade to Buy
Target price: 201
Brokerage: Reliance Securities
Indian Bank reported healthy growth in operating profit driven by higher treasury and core fee income. PAT declined by 24% yoy and 25.7% qoq to Rs 2.1 billion due to tax write back of Rs 1.6 billion in 4QFY14 vs tax pay out of Rs 485 million in 4QFY15. Amidst the challenging interest rates and macroeconomic regime, Indian Bank has been delivering reasonable operating and asset quality performance. With strong capitalization, the bank is well positioned to benefit from the revival in the economic activities. With most of the negatives priced in, the bank is trading at mere 0.63x FY16E and 0.55x FY17E P/Adj. BV. As a result, we upgrade the stock to Buy from Neutral.
3. Torrent Pharma
Upgrade to Buy
Target price: 1,450
Brokerage: ICICIdirect
Revenues de-grew 5.8% to YoY to Rs 11.54 billion, on account of 44% decline in US sales to Rs 2.24 billion. EBITDA margins declined 1453 bps to 14% against I-direct estimate of 21% on account of higher employee expenses and other. expenditure. The US, Brazil and domestic formulations remain the troika for future growth based on new product launches and an improvement in market share. The US remains in good shape despite the exclusivity sunset of gCymbalta as the pipeline remains promising, which includes products like gAbilify. The management also remains optimistic on Elder’s portfolio, which is likely to improve margins scenario considerably. Brazilian growth is crawling back to normal with a recalibrated approach. We upgrade our rating to Buy.
4. GSK Consumer Healthcare
Upgrade to Neutral
Target price: 6,150
Brokerage: Nomura Financial Advisory and Securities
For FY15F, we estimate that nearly 30% of the company's net income should be derived from 'other income'. We upgrade SKB to Neutral based on a higher target multiple (35x vs. 25x earlier), despite some earnings downgrades (due to FY15F EBITDA margins being lower than earlier expectations), as we believe operating performance is likely to see an improvement over the next year. Our SOTP-based valuation of Rs 6,150 implies 1.1% downside from current levels, but any sharp correction should be seen as an opportunity to buy. Our preference in order within the Food space now stands at Britannia (BRIT IN, Buy) Nestle India (NEST IN, Buy) and SKB.
5. Tata Power
Upgrade to Hold
Target price: Rs 81
Brokerage: Emkay Global Financial Services
Tata Power APAT at Rs 2384 million was above our estimate mainly due to higher profitability at CGPL and Indonesian coal mining business. Indonesian coal mining business reported significant improvement in the operations in spite of a USD 5/trillion decrease in the realizations QoQ and Profit at CGPL was supported by lower fuel charges. We have revised upwards our FY16/17 estimates by 43%/40% and upgraded our rating on the stock to Hold from Sell earlier.
Stock downgrades
1. Bharat Forge
Downgrade to Reduce
Target price: 1,154
Brokerage: Nomura Financial Advisory and Securities
Bharat Forge (BHFC) Q4FY15 result was the first quarter of earnings misses over the past 8 quarters. Over the last 7 quarters, as BHFC's earnings kept surprising positively, earnings estimates got revised upwards and the stock re-rated significantly. We thus maintain our target multiple of 20x FY17F P/E and downgrade the stock to Reduce.
2. Deepak Fertilisers & Petrochemicals
Downgrade to Accumulate
Target price: 160
Brokerage: Emkay Global Financial Services
Revenue for the quarter at Rs 9.3bn was down 13%yoy, though higher than our estimates on the back of higher trading revenues for both segments and higher own manufactured chemical segment revenues. Resumption of gas supply to act as a key catalyst for earning upgrades. We have revised our FY16 revenue estimates higher by 14% on the back of higher trading revenues while increasing our FY16 earnings estimates higher by 2% aided by improvement in chemical segment margins. We have however, reduced our rating to Accumulate while reducing our target price lower to Rs 160.
3. Asian Paints
Downgrade to Accumulate
Target price: 770
Brokerage: Emkay Global Financial Services
Muted volume mars results performance, consolidated revenues +6.6% yoy to Rs 35.4 billion. Domestic decorative volume growth moderate at ~3-4% yoy impacted by muted demand environment. Sounded cautious on demand revival, but highlighted volume uptick rests on GDP revival. Gross margin expansion healthy aided by lower input and mix led. Cost-led benefits seems be been factored in. Hereon, volume uptick and mix improvement pivotal for further EBITDA margin expansion. We downgrade the stock to Accumulate with revised target price of Rs 770; we feel meaningful stock price correction should be used as buying opportunity.
4. Lupin
Downgrade to Hold
Target price: 1,770
Brokerage: Religare Research
Lupin reported a dismal Q4 with its sales/EBITDA/PAT missing RCMLe by 3%/ 13%/10% on weakness across markets, barring India. With key product launches (Nexium, Renagel, Renvela, Welchol) deferred to H2FY16 (from H1), earlier-than expected competition in generic Suprax and likely higher R&D spends. We expect FY16 growth to moderate off a higher base. Valuing the stock at 24xFY17E EPS, we see limited upside potential from here on. Downgrade to HOLD (from BUY) with a Mar'16 TP of 1,770 (from Rs 1,515).
5. NCC
Downgrade to Hold
Target price: 89
Brokerage: Emkay Global Financial Services
Revenue came in at Rs 22.1 billion +15.5% YoY, higher than our expectation of Rs 19.4 billion led by better than expected execution run rate followed in the power segment. Increased our E&C multiple to 14x (Previous 12x) on improved operational profitability and continued focus on de-leveraging however given the current valuations factors the improvement in the operational performance, we do not see any near term catalyst for the stock and continuous delivery in terms of growth and margin expansion will be key for re-rating Downgrade to Hold.
6. Prism Cement
Downgrade to Hold
Target price: 101
Brokerage: Emkay Global Financial Services
''Prism Cement's Q4 results largely in-line with estimates with OPM at 5.5% (vs est. 5.5%) and EBITDA at Rs 838 million (vs est Rs 869 million). Miss in revenues in the TBK segment led to slight miss in Revenues and EBITDA estimates. Expect profitability of TBK and Cement segments to improve led by cost saving measures initiated by the company. However, valuations at 8.9x FY17e EV/EBITDA appears rich. We downgrade stock rating to Hold with a revised TP of Rs 101 from earlier: Rs 106.
7. Pidilite Industries
Downgrade to Accumulate
Target price: 580
Brokerage: Emkay Global Financial Services
Miss on Revenue and PAT, Revenues +5.3% yoy to Rs 10.4 billion, EBITDA margins improved 240bps yoy to 12.8% and APAT at Rs 806 million, up 10.2% yoy. Domestic volumes mutes to 3.1% yoy. Consumer & bazaar posts 5.5% volume growth; industrial decline by 1.6% impacted by pricing action and tepid demand. Expect demand sentiments to be muted in H1FY16, but expect pick up in second half. While, we are positive on long term growth & brand prospects of Pidilite, given interim demand weakness, we downgrade stock to Accumulate with revised target price of Rs 580/share.
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