NEW DELHI: BPCL , Power Grid , United Spirits and Amara Raja Batteries are among the top five stocks on which brokerage firms such as CLSA, Jefferies, Motilal Oswal and Prabhudas Lilladher have given buy ratings after their March quarter results.
In separate notes to clients, these brokerages have, however, tweaked their 12-month target prices for these stocks.
BPCL: Buy | Target price Rs 1,130
CLSA maintains a buy rating on BPCL post March quarter results with a 12-month target price of Rs 1,130. BPCL was fully reimbursed for all subsidies from Q3, implying NIL subsidy burden for full year FY16, which aided margin growth.
Major positives from the March quarter results were healthy refining margins and reasonable marketing margins. A strong domestic demand is a clear supportive factor for the company. The start of Kochi refinery expansion in H1 of FY17 is also an important trigger which could support the stock in near future.
Power Grid: Buy | Target price Rs 185
CLSA maintains a high conviction buy on Power Grid post March quarter results with a 12-month target price of Rs 185. The FY16 supports the thesis that a strong capitalisation over capex will accelerate earnings growth, said the CLSA note.
The strong capitalisation over capex will also reduce the risk of equity dilution. FY16 was the first year in a decade when capitalisation (over 45 per cent YoY) exceeded capex (flat YoY), the note said.
The leverage has peaked at 2.4 times net debt/equity, which is above regulated 2.33 times. The stock valuation looks compelling in the Indian and global context.
L&T: Buy | Target price Rs 1,750
Jefferies maintained a buy rating on L&T post March quarter results and has raised its 12-month target price to Rs 1,750 from Rs 1,250 earlier.
The global brokerage firm believes L&T is at an inflection point post strong 4Q results. The next 12 months should see E&C execution recovery and multiple re-ratings, said the Jefferies note.
The global investment bank is of the view that over 15 per cent underperformance in the last 1-2 years captures the near-term concern for the stock. However, key risks include extensive price competition and a slowdown in West Asia.
J Kumar Infraprojects: Buy | Target price Rs 360
Prabhudas Lilladher maintains a buy rating on J Kumar Infraprojects post-March quarter results with a 12-month target price of Rs 360.
The stock is trading at 13.7 times FY17E earnings. “We believe that a well-funded balance sheet and strong track record will help JKIL to capitalise on a huge opportunity in urban infrastructure over the next few years,” the brokerage said.
“We expect the stock to deliver sales and PAT CAGR of 23% & 24%, respectively, over FY16-18E. We have cut our earnings by 6 per cent for FY17/18 to factor in lower margins in the quarter. We maintain ‘BUY’ with revised target price of Rs 360,” said the brokerage note.
Amara Raja Batteries: Buy | Target price Rs 975
Motilal Oswal maintains a buy rating on Amara raja Batteries post-March quarter results with a 12-month target price of Rs 975. The aftermarket segment continued to witness high growth, driven by new products, network expansion, and marketing support which will get a fresh leg up to the stock, said the brokerage firm.
The auto OEM business also recorded growth due to supply to new platforms and recovery in PV volume. The company has strengthened its core management team, with a focus on making its management systems and processes more robust.
“The brokerage firm lowered their EPS estimate for by 7-8% in order to factor in the weaker sales growth and higher other expenses. The stock trades at 23.8 times/19.6 times FY17/18 EPS,” the brokerage said.
(Views and recommendations given in this section are the analysts’ own and do not represent those of EconomicTimes.com . Please consult your financial adviser before taking any position in the stock/s mentioned.)