Stocks To Watch: BSE, Bajaj Finance, Delta Corp, Federal Bank

Brokerage Radar

JM Financial on Cochin Shipyard

• Initiated ‘Buy’ with price target of Rs 700.
• Indomitable player in the Indian shipyard industry.
• Large dock size and strategic location place Cochin Shipyard in sweet spot.
• Investing in both capacity and capability to the pave way for the next leg of growth.
• Government policies to enable sustained flow of orders.
• Outpaced peers in a shrinking industry.
• Defence, inland waterways and O&G to offer next leg of growth.
• Robust order book provides revenue visibility over next eight years.
• Expect order inflow momentum to sustain as Navy orders jump three times over the next decade.
• Healthy cash flows and a negative working capital cycle to keep company debt free.
• Expect revenue and operating income to grow at a compounded rate of 18 percent over the financial years through March 2020.
• Expect dividend payout to be 25 percent in coming years.

UBS on Reliance Industries

• Initiated ‘Sell’ with price target of Rs 870.
• Reliance Industries’ capex to expand operating income, but deleveraging to be delayed.
• Refinery-petchem integration to boost returns and reduce cyclicality, but stabilisation to take time.
• GRMs on upward trajectory, boosted by petcoke gasification benefits.
• Expect petchem Ebitda to almost double over the financial years through March 2020, and a compounded growth rate in volume of 8 percent over the financial years through March 2022.
• Expect retail business revenue and operating income to grow at a compounded rate of 22 percent and 24 percent respectively over the financial years through March 2022.
• Jio's market share to expand, but ARPU could be low.
• Expect subscriber and ARPU to grow at a compounded rate of 13 percent and 6.5 percent respectively over the financial years through March 2022 and that will support Jio’s growth in revenue and operating income.
• Expect upstream capex to pick-up and steady telecom capex to continue.
• Expect operating income and earnings per share to grow at a compounded growth rate of 19.3 percent and 14.1 percent respectively over the financial years through March 2022.
• Share price factors in all benefits from the refining and petchem projects.

IIFL on Persistent Systems

• Initiated ‘Add’ with price target of Rs 835.
• Persistent is in middle of an investment phase.
• Continuous investments to keep margin expansion under check.
• Digital to drive growth, Alliance and Accelerite pose upside risks.
• Expect $ Revenue and earnings per share to grow at a compounded rate of 10.5 percent and 11 percent respectively over the financial years through March 2020.
• Remain positive on long-term story
• Believe that investments made are in the right direction.
• Market is already pricing in significant margin expansion.
• Valuations fair but rerating may take time.
• Earnings upgrade cycle may take time to kick in.

JPMorgan on Metals

• Steel, Zinc and Aluminum are preferred commodities.
• Positives: Chinese supply rationalisation, improving India demand and strong global demand.
• Vedanta most attractively positioned in terms of growth.
• TATA and JSW for domestic steel exposure and Hindalco for aluminum.
• Remain Underweight on NMDC and NALCO.
• SAIL offers an interesting option play on India demand recovery.
• Coal India remains a yield play with limited upside..
• Vedanta: Raised price target to Rs 415 from Rs 350; Stressed asset acquisition in steel would be positive given attractive economics.
• Tata Steel: Raised price target to Rs 1,015 from Rs 880.
• JSW Steel: Raised price target to Rs 325 from Rs 285.
• Hindaco: Raised price target to Rs 335 from Rs 300; Little volume growth, re-rating to continue.

Credit Suisse on Sadbhav Engineering

• Maintained ‘Outperform’; raised price target to Rs 480 from Rs 360.
• Positives: Improving execution, ordering pipeline and traffic.
• Execution will continue to keep up the momentum in the next financial year.
• Stronger execution to drive earnings on leverage.
• NHAI bidding pipeline is much stronger now.
• Sadbhav still trades at a relatively attractive.

UBS on Info Edge

• Downgraded to ‘Neutral’ from ‘Buy’; cut price target to Rs 1,370 from Rs 1,500.
• Believe positive market expectations have already driven the stock higher.
• Current valuation appears full.
• Believe market is pricing in an accelerated earnings trajectory for Naukri and undermining risk.
• Expect 15-16 percent/18-20 Revenue CAGR over near to medium term.
• Expect increase in advertisement to limit margin expansion.
• Expect strong delivery and subscription revenue growth at a compounded rate of 50 percent over the financial years through March 2020 for Zomato.
• Expect a $50-100 million fund-raising by Zomato at a valuation of about $1.5 billion.

Macquarie on ITC

• Maintained ‘Neutral’ with price target of Rs 304.
• Cess decision for the next financial year critical for re-rating.
• No cess increase in fixed cess rate for the next financial year will be best.
• Cigarette business continue to be under pressure.
• Expect 1 percent compounded growth rate in cigarette volume for the next two years.
• Profitability focus important for re-rating of FMCG business.

Centrum on Aarti Drugs

• Initiated ‘Buy’ with price target of Rs 940.
• Aarti Drugs is a leading domestic player of APIs.
• Positives: good growth of existing products, new product launches and over 75 percent utilisation.
• Aarti Drugs is profit-making, dividend paying company poised for good growth.
• See strong scope for re-rating.
• Expect to perform well due growth across geographies and economies of scale.
• Expect revenue, operating income and net profit to grow at a compounded rate of 14 percent, 15 percent and 19 percent respectively over the financial years through March 2020.
• To benefit from its presence over the entire pharma value chain.
• Expect company to generate healthy return ratios in future.
• Outperform peers’ due to its efficacious presence in the domestic and emerging markets.