Stocks To Watch: Bharti Airtel, HDFC Bank, ITC, Kotak Mahindra Bank

Brokerage Radar

Equirus on Ajanta Pharma

• Initiated ‘Add’ with price target of Rs 1,648.
• Company’s relentless growth trajectory likely to pause in the financial years through March 2019.
• Growth recovery would only be back-ended.
• Domestic business – on a strong footing.
• Africa business - IPCA's re-entry should hurt.
• Asia business - Middle East Asia and Central Asia to remain a drag.
• US business - Bleak visibility over future launches.
• Expect revenue to grow at a compounded rate of 10 percent over the financial years through March 2020.
• Operating margins to contract by 250 basis points over the financial years through March 2020 on higher costs/overheads.
• With a moderate growth profile, we expect return on equity and return on capital employed to decline by 10 percentage points.

IDFC on Hindustan Zinc

• Maintained ‘Underperform’; raised price target to Rs 278 from Rs 267.
• Results could have been better with increase in zinc and lead prices .
• Higher cost of production offset pricing gain.
• Volume guidance maintained for the current financial year; positive commentary on zinc market.
• Cost of production to be 10 percent lower on a quarterly basis in the current quarter.
• Stock price factors in average zinc price of US$3,300/t in the financial year-ending March 2020.
• Comfort is dividend yield of 5 percent.

Citi on Yes Bank

• Maintained ‘Buy’ with price target of Rs 400.
• Strong growth, but margin and asset quality miss.
• CASA and fee momentum continue with gains in retail lending franchise.
• Slippages and credit costs remained relatively elevated.

Morgan Stanley on Yes Bank

• Maintained ‘Overweight’ with price target of Rs 450.
• Earnings in the previous quarter missed, driven by lower-than-expected net interest income and higher provisions, partially offset by higher non-interest income.

Emkay on UltraTech Cement

• Maintained ‘Accumulate’; raised price target to Rs 4,686 from Rs 4,585.
• Impressive volume growth, pricing pressure drags margins.
• Volume beats estimates, realisation lags.
• Management upbeat on volume growth on government initiatives.
• Company well positioned to generate superior profits.
• Positives: demand recovery, capacity expansion plans and under-utilized capacities.

Credit Suisse on UltraTech Cement

• Maintained ‘Underperform’; raised price target to Rs 3,500 from Rs 2,900.
• Weak results due to lower average selling price and higher costs.
• Weak ASP trend continues; No meaningful pick-up in January.
• JPA assets: Brand transition done; Focus on utilisation.
• Expect high supply pressure in the next financial year.
• Weak demand impacting pass through of cost increase.
• Stock already factoring in upside from demand pick-up over the next three years.

HSBC on Hospitals

• Regulatory overhang continues India.
• Private players focus on volume growth.
• Government continues scrutiny on healthcare services costs.
• Maintain Buy on Apollo and Fortis on long-term growth outlook.

HSBC on Fortis

• Maintained ‘Buy’; raised price target to Rs 225 from Rs 172.
• Outlook remains positive for hospital business with scope of margin improvement.
• Wait on update on SRL demerger progress.
• Rationalisation & higher focus on retail customers continue to grow margins.
• Fortis on track to focus on clinical excellence programs and hence improving case mix.

HSBC on Apollo

• Maintained ‘Buy’ with price target of Rs 1,300.
• Near-term challenges continue
• Expect operating leverage-driven gradual recovery to begin in the next financial year.
• Breakeven at Navi Mumbai expected by first half of the next fiscal year.
• Tariff hike and rationalisation at Chennai should offset low volume growth.
• Consolidation to benefit hospital business post capex expansion cycle.

Citi on Adani Ports

• Maintained ‘Buy’ with price target of Rs 575.
• Previous quarter was well-rounded and strong.
• Volume growth was strong and broad based across commodities and ports.
• Strong volumes led to strong headline numbers.
• Management guided for increase in free cash flow and increase in dividend payout.
• Prominent and strong position in Indian port services space.
• Adani Ports one of the top picks in India infrastructure/logistics.

Goldman Sachs on Infra

• L&T: Maintained ‘Buy’ and added to conviction List with a price target of Rs 1,600, implying a potential upside of 21 percent from last regular trade.
• Container Corp: Upgraded to ‘Buy’ with price target of Rs 1,660, implying a potential upside of 17 percent form last regular trade. Improving execution and cash flow to drive re-rating.
• Adani Ports: Maintained ‘Buy’ with price target of Rs 488, implying a potential upside of 15 percent form last regular trade. Successfully moving to cash generating mode from CAPEX mode.

Macquarie on Hindustan Zinc

• Maintained ‘Outperform’ with price target of Rs 329.
• Strong commodity prices drive previous quarter earnings.
• No risk to current fiscal earnings despite hedge losses and higher costs.
• Impressive growth pipeline with expansion on track.
• Hindustan Zinc remains in a sweet spot with a strong volume growth pipeline.