Stocks To Watch: Swaraj Engines, CG Power, AIA Engineering, Lyka Labs

Brokerage Radar

CIMB on Hindustan Zinc

• Initiated with Reduce Rating and price target of Rs 251; implying a potential downside of 20 percent from yesterday’s close.
• Zinc demand-supply balance could turn to surplus in 2018
• Zinc fundamentals weakening now; Given the surplus prices could lower
• Hindustan Zinc’s operating income to decelerate in the next financial year as volume growth is offset by price decline.
• Expect metal production CAGR of 8 percent till March 2020, driving operating income of 6 percent and 4 percent in the next two financial years each.
• Expect company to remain in net cash position in over the financial years till march 2020; Dividend per share to remain elevated.

Motilal Oswal on Bata India

• Downgraded to ‘Sell’ from ‘Buy’; maintained price target at Rs Rs 578; implying a potential downside of 23 percent from yesterday’s close.
• Downgraded on rich valuations.
• With GST netted off from the topline, we expect similar growth of 6 percent year-on-year in the second half of the current financial year.
• Premiumization to support margin expansion of 70 basis points and 100 basis points in the currentand next financial year each.
• Store expansion plan on track, but expect muted same store sales growth.
• Revenue estimates cut by 4 percent and 6 percent for the current and the next financial years each, to factor in weak first half.
• Expect revenue and net profit to grow at a compound annual growth rate of 9 percent and 19 percent respectively, till March 2019.

HSBC on Gujarat Pipavav Ports

• Upgraded to ‘Hold’ from ‘Reduce’; hiked price target to Rs 144 from Rs 120.
• Maersk Line revises two of its services that would raise Pipavav’s annual container throughput by 15 percent.
• Raise earnings estimates over financial years till March 2019 by 4-16 percent, driven by higher throughput from the additional service.
• Long term challenge remains with PSA’s new terminal in Nhava Sheva coming by the end of 2017.
• Continue to prefer Adani Ports and SEZ.

UBS on Motherson Sumi

• Maintained ‘Buy’; hiked price target to Rs 405 from Rs 370.
• Expect strong earnings growth trajectory over next three years.
• Positives: ramp up of new facilities and continued margin expansion in international business.
• SMP has been investing in automation to increase productivity; PKC is well placed to grow.
• Mirrors business gaining share and rising .
• Global business to continue to trade at higher end of the space.

Jefferies on Info Edge

• Downgraded to ‘Hold’ from ‘Buy’; hiked price target to Rs 1,150 from Rs 1,118.
• Downgrade as risk-reward unfavourable.
• Target price hiked to factor in higher for Zomato.
• Prospects for Zomato have improved over the last 12 months, helped by strong momentum in online ordering and lower cash burn.
• Current stock price already reflects recoveries in Naukri and 99acres.
• Investors should wait for better entry points.

Citi on India Grid Trust

• Upgraded to ‘Buy’ from ‘Neutral’; hiked price target to Rs 102 from Rs 97.
• Acquisition of three power transmission asset to be accretive from distribution per unit and internal rate of return point.
• Target price hiked to factor in change in earnings per share and cost of equity.
• India Grid Trust increased its distribution period unit guidance by 4 percent for the next financial years.

Deutsche Bank on Life Insurance Companies

• Task force on direct taxes - may impact life insurance industry.
• Tax rehaul at a very preliminary stage now.
• Since the change is large, this may remain a slight overhang, until clarity emerges.
• Meaningful impact on embedded and of new business likely if tax rates raised.

Citi on Changes to Insolvency Code

• Some government banks have been anxious about allowing existing promoters to bid.
• Changes made could also mean that in some cases there could be low recoveries or resolution process could get extended due to lack of bidders.