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Analyst Calls: Ashok Leyland, Polycab, Thomas Cook, IndusInd Bank

Axis Securities has maintained its buy rating on Ashok Leyland with a target price of Rs 79.

ET Bureau|
Oct 15, 2019, 07.28 AM IST
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HDFC Securities has maintained a buy rating on IndusInd Bank with a target price of Rs 1904.
Good morning!

The domestic stock market on Tuesday showed early signs of a possible breakout from its consolidation range. And Nifty futures on Singapore traded 27 points higher this morning, signalling a good start for Dalal Street.

As you head for the day’s trade, here is a compilation of overnight analyst calls on various stocks.

. Axis Securities has maintained its buy rating on Ashok Leyland with a target price of Rs 79 as the stock is been trading at its lower end of its PE based valuations for past several months and even a mean reversion to its historic valuation translates to a 10-15 per cent upside in the stock, according to brokerage. With the CV cycle going through its trough, government focused on demand revival and other demand impetus such as discounts, festive season and pre-BS6 buying should lead to a rebound in prices to its mean PE valuations, said the brokerage. The stock declined 1.53 per cent to Rs 67.55 on Monday.

• Edelweiss has initiated coverage on Polycab India with a buy rating and set a target price of Rs 845. The brokerage believe the company’s healthy prospects in C&W, driven by government’s sustained focus on infra; and strengthening retail business through ramp up in the FMEG segment, will drive healthy 23 per cent earnings CAGR and 20 per cent plus ROCE over FY19-21. Shares of Polycab gained 1.3 per cent to Rs 674.20.

• IIFL has maintained a buy rating on Thomas Cook with a target price of Rs 235. Despite a challenging external environment, Thomas Cook expects its travel and forex segments to hold steady in FY20 and report modest growth in combined Ebit, said the brokerage. The newlyacquired DEI is also expected to clock a steady performance, however, Sterling Holidays is likely to remain unprofitable for at least the next couple of years, said the brokerage. Shares of Thomas Cook lost 1.4 per cent to Rs 137.50.

• Centrum has initiated buy rating on Ashoka Buildcon with a target price of Rs 180. Ashoka Buildcon’s execution, despite a healthy order backlog, continues to be held back by delays in land acquisition. While debt levels are likely to rise, ABL’s leverage at 0.3x D/E and 1.5x debt/EBITDA should remain comfortable, said the brokerage. ABL and SBIMacquarie have initiated the process of monetising their investments in Ashoka Concessions and target to complete it by March 2020. Shares of Ashoka Buildcon gained half a percent to close at Rs 98.15.

• HDFC Securities has maintained a buy rating on IndusInd Bank with a target price of Rs 1904. Earnings estimates fall by 6 per cent over FY20-22E, with slower growth, higher NPAs and credit costs. Significant slips on asset quality, broader macro stress and the upcoming leadership change preclude lofty valuations, said the brokerage. With its top-drawer private banking franchise is intact, the brokerage believes the bank can pull back from this slip. Shares of IndusInd Bank gained 2.23 per cent to Rs 1250.50 on Monday.

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