Sensex, Nifty Erase Gains Led By Weakness In Auto Stocks

Goldman Sachs on Indian Steel

• Indian steel sector is in midst of a multi-year upcycle.
• Positives: higher spreads, rising capacity utilization and improving iron ore supply.
• Steel prices to be strong led by supply discipline in China.
• Elevated steel prices with softening input costs to drive profitability.
• Increased focus on infrastructure and rural spending to drive demand.
• Pick up durable/auto sales and real estate to drive demand.

Goldman Sachs on JSW Steel

• Initiated ‘Buy’ with price target of Rs 315.
• Best placed to benefit from shift in macro-economic landscape.
• Capex to drive growth and realisations.
• Expect strong free cash flow generation and deleveraging.
• Net debt to EBITDA to reduce to 2.6 times by March 2020.
• Expect revenue, operating income and net profit to grow at a compounded rate of 8.6 percent, 14 percent and 28 percent respectively over the financial years through March 2020.
• Expect return on equity and return on capital employed to expand to 23 percent and 13 percent respectively by March 2020.
• Expect dividend payout to remain stable at 15 percent over the medium term.

Goldman Sachs on Tata Steel

• Initiated ‘Neutral’ with price target of Rs 780.
• Phase 1 of Kalinganagar to drive near-term volume growth.
• India profitability to be impacted by narrowing spreads.
• European profitability to remain stable over medium term.
• Don’t take view on European JV deal materializing; Estimates don’t incorporate European JV.
• Positives have been fairly priced in.
• Expect volume, operating income and net profit to grow at a compounded rate of 6 percent, 10 percent and 21 percent respectively over the financial years through March 2020.
• Expect return on equity and return on capital employed to expand to 17 percent and 8 percent respectively by March 2020.
• Could turn constructive on visibility of timely execution of expansion plan.

BoFAML on Hindustan Zinc

• Initiated ‘Buy’ rating with price target of Rs 345.
• Elevated prices to coincide with revival in volume growth.
• Zinc - our favored exposure with strong fundamentals.
• Expect high dividend payout given significant cash needs of parent.
• Captive access to 100 percent of its requirements allows to capture the benefit of positive pricing outlook for zinc.
• Expect volumes to grow at a compounded rate of 13 percent over the financial years through March 2020.
• Premium valuations justified by strong zinc price outlook and superior profitability.

BoFAML on Hindalco

• Initiated ‘Buy’ rating with a price target of Rs 340.
• Combination of globally competitive upstream business and world-class downstream business.
• Uniquely positioned on cost leadership and technical expertise.
• Upstream cost positioning improved significantly with higher margins in downstream.
• Deleveraging to continue with 9 percent FCF yield.
• Earnings volatility to reduce providing strong case for upward re-rating.
• Expect Novelis to contribute more than 54 percent of operating income over the financial years through March 2020.

Ventura Securities on Sagar Cement

• Re-initiated ‘Buy’ with price target of Rs 1,715; potential upside of 89 percent over 24 Months.
• Enthused by company’s astute understanding of the cement cycle.
• Favorite way to play the cement growth story in south India.
• Strong revenue growth on the cards.
• Strategic capacity expansions to help lower freight costs.
• Significant cost savings initiatives to boost profitability.
• Expect EBITDA per ton to grow at a compounded rate of 20 percent.
• Expect volumes and operating income to grow at a compounded rate of 19 percent and 43 percent respectively over the financial years through March 2020.
• Expect net profit to rise to Rs 158 crore by March 2020 versus net loss of Rs 4 crore in the prevous financial year.

Jefferies on Punjab National Bank

• Maintained ‘Hold’ with price target of Rs 190.
• Capital boost to allow faster loan book growth.
• Growth to improve from the previous quarter with uptick in corporate loans.
• Stressed assets steady; Provision coverage to improve.
• NIM to improve with IBC or other resolutions coming through.
• Expect pre-provision operating profit to grow at a compounded rate of 22 percent over the financial years through March 2020.

JPMorgan on Titan

• Maintained ‘Overweight’; raised price target to Rs 890 from Rs 750.
• Significant opportunity exists to grow on account of market share gains.
• Expect 8-10 percent share possible over the next 3-4 years vs current 4-5 percent.
• Expect revenue and earnings per share to grow at a compounded rate of 19 percent and 27 percent respectively over the financial years through March 2020.
• Store additions pace could be accelerated for Tanishq.
• Reduction in GST rates for watches/sunglasses/frames bodes well.
• Operating leverage should kick in with scale.
• Premium valuations to sustain.

Goldman Sachs on Titan

• Maintained ‘Buy’ with price target of Rs 826.
• Trading update in the previous quarter was in-line with estimates.
• Previous quarter was driven by strong festival season, new collections and market share gains.
• Tanishq has increased focus on high ticket jewellery - more collections and lower making charges.
• Expect net addition of 17 new jewellery stores in the current financial year.

IDFC Securities on Indian IT Services

• Overweight as cyclical slowdown is bottoming, expectations remain modest and valuations turn attractive.
• Slowdown cyclical as not visible across all segments.
• Expect growth to improve led by improving U.S. economy.
• Play Infosys and TCS on cyclical recovery; Mindtree on micro growth.
• TCS: Initiated ‘Outperformer’ with price target of Rs 2,950.
• Infosys: Initiated ‘Outperformer’ with price target of Rs 1,250.
• Wipro: Initiated ‘Neutral’ with price target of Rs 290.
• HCL: Initiated ‘Neutral’ with price target of Rs 925.
• Tech Mahindra: Initiated ‘Outperform’ with price target of Rs 610.
• Mphasis: Initiated ‘Neutral’ with price target of Rs 750.
• Mindtree: Initiated ‘Outperform’ with price target of Rs 650.