BROKERAGE RADAR

IIFL on Hexaware
Initiate Add with TP of Rs 520
Hexaware uniquely positioned to participate in structural trend of IT spend
Positives: healthy deal wins, steady growth in top accounts and stable margins
Expect $ revenue/EPS to grow at a CAGR of 14%/20% over CY17-20
An attractive long term story; Margin expansion key for re-rating

JPMorgan on L&T
Maintain Overweight with TP of Rs 1,600
If everyone participate in buyback, then ratio would be 4.29:100 for tendering shares
Buyback to reduce FY19 EPS by 2% and increase net debt-to-equity to 2.1x
RoE would improve to 15.0% and FY19 yield could be 6%

BoFAML on L&T
Maintain Buy; Raise TP to Rs 1,589 from Rs 1,528
Buyback marginally EPS dilutive; leverage not a concern
Buyback re-affirms Co.'s strategy of returning excess cash
RoEs to expand; Divestments provide upside risk

CLSA on L&T
India’s fourth largest buyback ever to boost RoE and support stock
Buyback to lower EPS but improve quality of earnings
Believe L&T is a good proxy for domestic Capex

JPMorgan on India Steel
Prices could move higher post October on China and domestic environment
Demand driven by combination of local and global factors
Strong pricing environment creates upside risks for TATA, JSW and SAIL

Credit Suisse on Steel
Stabilising raw material costs drive steel price rebound
Indian steel price to rebound with rising China domestic prices and export
Steel spreads may widen further from here

UBS on ONGC
Maintain Buy with TP of Rs 245
Deleveraging through potential listing of OVL and non-core asset sales
Upside risk as stock currently discounting less than $50/bbl of net realisation
Strong earnings trajectory and potential of stake sales would be positive for ONGC

Macquarie on Bandhan Bank
Maintain Outperform with TP of Rs 560
Bidding for PNB Housing Finance may not be an ideal move
Deal would significantly dilute RoE and introduce several integration risks
RBI mandate of taking down promoter stake would have been a bigger motivator

Macquarie on ICICI Lombard General Insurance
Maintain Underperform with TP of Rs 585
Kerala floods: Impact on P&L to be insignificant
Premiums from Kerala form a very small proportion of overall premiums
Worst case impact could be 3-4% of profits

CLSA on M&M
Maintain Buy with TP of Rs 1,120
Success of new MPV and SUV could boost growth and lift valuations
Expectations low from new SUV; Success can boost franchise in a key segment
Expect M&M to deliver healthy 13% volume and 21% EPS CAGR in FY19-20

Citi on Sun Pharma
Maintain Neutral with TP of Rs 600
Positive CHMP opinion for Tildrakizumab has played out
This to translate into EMA approval soon, which is priced in
Sun has made good progress in transitioning to a specialty play

Citi on Eris Lifesciences
Maintain Buy with TP of Rs 850
ERIS believes that the Indian market has a long growth runway
Company intends to keep its focus on specialty segments
ERIS maintains that it can grow at 30-40% higher than industry growth

CLSA on Colgate
Colgate’s acquisition of Bombay Shaving Co. raises concerns on governance due to category overlap
Acquisition by listed Colgate India would have made more sense
Marico and Emami have acquired stake to augment their understanding of evolving business

HSBC on India Non-Life Insurance
Non-life insurers are keenly awaiting the insurance regulator’s response to Supreme Court ruling
Insurers expect the regulator to allow comprehensive long-term policies
Vehicle OEM’s and banks could benefit whereas agents and online distributors could be negatively affected