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Top brokerage calls for April 30: Macquarie, HSBC downgrade YES Bank; CLSA retains 'sell' on HeroMotoCorp

Top brokerage calls for April 30: Macquarie, HSBC downgrade YES Bank; CLSA retains 'sell' on HeroMotoCorp

Top brokerage calls for April 30: Macquarie, HSBC downgrade YES Bank; CLSA retains 'sell' on HeroMotoCorp
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By CNBC-TV18 Apr 30, 2019 8:08:21 AM IST (Published)

Among brokerages, Macquarie, Citi, and HSBC are all bearish on YES Bank post earnings and have cut their target price of the stock. Meanwhile, CLSA retains sell call for HeroMoto Corp and cut its target price to Rs 2,375.

Indian shares are likely to remain range-bound on Tuesday, following subdued Asian peers. Stock-specific actions will continue amid March-quarter earnings. Shares in Asia fell despite another record high close for US stocks, as investors await US Federal Reserve's policy decision for clues of whether it will continue to take a "patient" approach to interest rate policy.

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Indian markets were closed on Monday on account of the voting day in Mumbai. On April 26, the market ended at day's high but for the week it was a flat close. The BSE Sensex gained 336.47 points to end at 39,067.33, while Nifty was up 112.90 points at 11,754.70.
Among brokerages, Macquarie, Citi, and HSBC were all bearish on YES Bank post earnings and have cut the stock's target price. Meanwhile, CLSA retained a "sell" rating for HeroMotoCorp and cut its target price to Rs 2,375. Jefferies, on the other hand, has a "hold" rating on the stock and has raised its target. Here are top brokerage calls for Tuesday:
Macquarie on YES Bank
- Double-downgrade to "underperform", target cut to Rs 165 from Rs 231 per share
- Cut EPS estimate by 45 percent
- Incoming CEO flags large stressed pool
- Target 1 percent return on assets (RoA) by FY22; underestimated risks in structured finance
- Corporate segment should keep return ratios subdued for long
Citi on YES Bank
- Downgrade to "sell", target cut to Rs 180 from Rs 240 per share
- The compnay faces twin challenges of profitability and capital
- Lower FY20/21 earnings by 62 percent/41 percent as we factor in slower growth
- RoA likely to be lower for longer
HSBC on YES Bank
- Downgrade to "reduce", cut target to Rs 164 from Rs 243 per share
- Reported its first quarterly loss since FY06
- Asset quality deteriorated significantly
- New CEO’s strategy aims to lower volatility though dims near-to-medium term RoA outlook
- Cut FY20/21 profit estimates by 70 percent/56 percent
- Major exposure to stressed sectors to also weigh on stock in near term
CLSA on Hero Moto
- Retain "sell" call, target cut to Rs 2,375 from Rs 2,400 per share
- Subdued demand outlook and margin concerns
- Two-wheeler demand has weakened post the new insurance norms in September
- Cost push from regulatory changes over next 1-year will be a further drag
- Two-wheeler OEMs would find it tough to pass on the full cost impact
- Cut FY20-21 EPS estimates by 5-7 percent on lower volumes and margin
- Valuation not cheap for a 6 percent EPS CAGR in FY20-21
Jefferies on Hero Moto
- "Hold" rating, target raised to Rs 2,530 from Rs 2,550 per share
- Q4 result largely in-line with margin of 13.6 percent
- Marginally ahead of our estimate of 13.3 percent due to lower other expenses
- Management expects flattish H1 as inventory correction continues in Q1
- Margin is likely to remain rangebound
- Concerns on its medium-term growth prospects keep us cautious
Citi on Hero Moto
- "Buy" call, target cut to Rs 3,250 from Rs 3,350 per share
- Q4 modest operating beat
- FY19 market share remains solid
- Cut FY20 EPS estimate by 10 percent due to subdued volume growth expectations and lower margin
- FY21 EPS estimate are increased by 4 percent, reflecting effective pricing strategy
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