Analyst Calls: Adani Ports, Rallis India, Ultra-Tech Cement

Good morning!

The domestic stock market on Friday showed early signs of a possible breakout from its consolidation range. And Nifty futures on Singapore traded 104.75 points higher this morning, signalling a good start for Dalal Street.

. ICICI Securities has maintained buy rating on Ultra-Tech Cement with a target price of Rs 4,725. After increasing its market share via acquisitions to 23 per cent from 16 per cent over the past three years, UltraTech Cement is likely to focus more on improving profitability of the acquired assets and deleveraging over the next few years, said ICICI Securities. Despite muted volume outlook in FY21 owing to Covid-19, the brokerage believes UltraTech can sustain its FY20 Ebitda margin led by turnaround of Century Cement, various cost efficiencies, benign input costs and firm pricing. UltraTech Cement shares ended down 2.3 per cent at Rs 3,251.85 on Thursday.


. Nomura has maintained buy rating on Kansai Nerolac Paints and cut target price to Rs 475 from Rs 500. Kansai Nerolac’s fourth quarter results were below estimates, largely impacted due to the Covid-19 related lockdown, said Nomura. While it expects turbulent times for Kansai Nerolac in the near term, the brokerage believes the company, with its strong R&D, will launch new products with health-protective features to drive higher-than-industry sales. Shares of Kansai Nerolac ended down 5.1 per cent at Rs 373.40 on Thursday.


. CLSA has a buy rating on Adani Ports with a target price of Rs 386. The company confirmed it has not seen any pricing pressure from shipping liners, and it hopes to hike tariffs by 2-3 per cent during FY21 and to add new efficiency-linked rail handling charges at the Mundra Port to improve realisations, said CLSA. This, coupled with cost cutting, will help it maintain its port margin in the 68-70 per cent range, said CLSA. Shares of Adani Ports ended up 4.4 per cent at Rs 282.40 on Thursday.

. Investec has maintained buy rating on Rallis India with a target price of Rs 280. Rallis’ revenue growth was broadly in-line with estimates but mark-to-market loss and Covid-19 related provisioning impacted March quarter earnings, said Investec. With a narrowed focus on a specific sub-segment of exports and the global major’s desire of de-risking from China, Rallis should be able to scale-up exports, said Investec. Shares of Rallis India ended down 3.6 per cent at Rs 214.15 on Thursday.

. Macquarie has maintained neutral rating on Persistent Systems and cut target price by 16 per cent to Rs 570. The brokerage said Persistent is undergoing a significant change in business focus under its new CEO. Stability in growth of the top client is necessary to improve revenue growth and margins significantly from current levels, said Macquarie. Shares of Persistent Systems ended up 4.7 per cent at Rs 528.10 on Thursday.