Here’s how brokerages rate specific stocks and sectors
Jefferies on Consumer Staples:
Consumer staples have seen a sharp re-rating in the past 18 months.
Up-cycle has played out and see limited scope for earning upgrades.
Given stretched valuations, expect de-rating over the next 6-12 months.
Remain cautious with select buys; Like ITC, Dabur, Nestle and Asian Paints
Morgan Stanley On Glenmark Pharma:
Equal-weight call, target at Rs 567/share.
Target multiple of 17x represents a 15-20 percent discount to pharma industries.
See earnings CAGR of 7.6 percent over FY19-20.
Higher than expected competition in key products a downside risk.
Bank of America Merrill Lynch Fund Manager Survey:
Investors surveyed expect global growth to slow next year, up from net 7 percent in August.
Worst outlook on the global economy since December 2011.
Trade war remains the tail risk for the fourth straight month.
Long FAANG+BAT most crowded trade followed by short EM equity and long $.
Investors selling EMs, banks and materials in favour of Japan, healthcare & industrials.
Allocation to EM equities falls 9 ppt to net 10 percent Underweight, lowest since March 2016.
Allocation to EM equities sees a reversal from net 43 percent overweight in April 2018.
EM was the most favoured region among respondents in April.
Credit Suisse on Telecom:
Bharti and Vodafone Idea’s net subscriber additions remain weak
Acceleration in subscriber acquisition for Jio aided by a push for JioPhone.
Market share gains for Jio likely at expense of incumbent operators.
Expect ARPU and EBITDA pressures to continue for the incumbent operators.
Retains cautious stance on the sector.
Neutral call on Bharti Airtel, target at Rs 400/share.
Underweight on Vodafone Idea, target at Rs 45/share.
Credit Suisse on Bank of Baroda:
Downgrades to underperform from outperform, target cut to Rs 120 from Rs 184/share.
Could see an increase in NPAs and provisioning post-merger.
With multiple large/weak PSU banks, consolidation still an overhang.
Extracting synergies in PSU bank mergers would be difficult.
Macquarie on Pharma:
After 1.5 Years, domestic MAT growth is now in double digits.
Expect domestic sales growth for Indian pharma companies to settle at 12 percent YoY.
Amongst large caps, like Cipla, remain seller of Lupin.
Jubilant Life is our preferred pick amongst midcaps.
HSBC on M&M Finance:
Track well on growth and asset quality led by strong rural demand.
Rising interest rates could weigh on net interest margin.
Company has enough levers in P&L to sustain roe improvement.
Lower FY19/20 estimates by 3-5 percent on lower NIMs.
Reiterates buy call, target cut to Rs 569 from Rs 578/share.
Nomura on Reliance Nippon AMC:
Downgrades to neutral from buy, target cut to Rs 210 from Rs 315/share.
SEBI cuts total expense ratio for MFs by 20-25 bps.
TER cut is in addition to the recent 15 bps cut in lieu of exit loads.
In last 6 months, SEBI cut TERs by 40 bps vs industry profitability of 25 bps.
AMCs will also have to absorb some part of the impact.
Nomura on JSW Steel:
Buy call, target at Rs 484/share.
Indian steel on cusp of strong demand growth.
Balance sheet remains strong despite capex-intense phase.
Morgan Sanley on HDFC AMC:
Overweight call, target cut to Rs 1,765 from Rs 2,050/share.
Lowering EPS/PT materially on sharp TER cut by SEBI.
Cut estimates for equity and gross revenue/AAAUM by 20 bps and 11bps.
Expect some further near-term weakness.
CLSA on MF fee cut:
MF fee cut could impact sector earnings by 25 percent.
MF fee cut could lead to a 15-25 bps reduction in equity fees.
This will impact all funds & should be effective in 2-3 months.
See some knock-on impact for brokers and private banks.
Risk arises for life insurers in the case IRDAI reviews ULIP fee.