Analyst Calls: ACC, Thermax, Sun Pharma, NTPC

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 147.50 points higher this morning, signalling a good start for Dalal Street.

• Credit Suisse has upgraded ACC to outperform from neutral and revised target price down to Rs 1,450 from Rs 1,700. The brokerage has built in the impact of the lockdown with 70-75 per cent demand impact in April, 30 per cent in the first quarter of FY21 and 5 per cent in FY21 in total and lower prices for a few quarters post the January-February price hike. ACC is trading attractively on absolute basis also given very strong cash generation, said Credit Suisse. Shares of ACC ended down 2.5 per cent at Rs 933.25 on Monday.


• Investec Securities has upgraded Hero MotoCorp to buy from hold and cut target price to Rs 2,200 from Rs 2,400. Hero MotoCorp with its high rural exposure, should benefit from the prospect of relatively strong rural demand, said Investec. This also makes the company less vulnerable to the impact of likely slower discretionary spend as an aftermath of Covid-19, said Investec. Shares of Hero MotoCorp ended down 6.5 per cent at Rs 1,551.80 on Monday.


• Kotak Institutional Equities has retained buy rating on Thermax and revised fair value down to Rs 870 from Rs 1,140. Thermax’s recent concall suggests a virtual shutdown of operations, constraints to restarting work and a demand profile that may take long to stabilise, the brokerage said. From a competitive perspective, the brokerage takes comfort from (1) large cash position and commitment to prioritise cash over revenues, (2) recent entry into new markets and (3) ability to scale-up execution as seen over the past few quarters. Shares of Thermax ended down 0.6 per cent at Rs 757 on Monday.

• Jefferies has retained buy rating on Sun Pharmaceutical Industries and cut target price to Rs 440 from Rs 480. US FDA has classified Halol as OAI (warning letter to follow) which is a negative and will delay approvals, said Jefferies. The brokerage has cut EPS estimates by 4-8 per cent . The brokerage believes the stock already factors in no improvement and values ex-India business at distress level. Shares of Sun Pharmaceutical Industries ended down 1.3 per cent at Rs 333.65 on Monday.

• CLSA has maintained buy rating on NTPC with a target price of Rs 157. NTPC gave a clear message of its intent of moving towards non-fossil based power with the $1.5 billion acquisitions of unlisted hydro majors THDC India and North Eastern Electric Power Corp, said CLSA. The brokerage likes NTPC’s M&A strategy, which focuses on acquiring operating regulated assets with option value that will help it reach its goal of 31 per cent renewable by FY30. Shares of NTPC ended down 1.5 per cent at Rs 81.80 on Monday.