Analyst Calls: Avenue Supermarts, Colgate, NMDC, Bandhan Bank

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 13 points lower this morning, signalling a tepid start for Dalal Street.

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


. ICICI Direct has recommended reduce rating on Avenue Supermarts with a target price of Rs 1450 citing new challenges ahead. Wafer thin margins and intense competition characterise the food & grocery business wherein several players still continue to struggle, said the brokerage. Over the years, D-Mart, through its proven business model, has been able to maintain consistent profitability and remains an exceptional performer in its peer group. Shares of Avenue Supermarts gained 1.82 per cent to Rs 1,598.

• Edelweiss has maintained its hold recommendation on Colgate-Palmolive with a target price of Rs 1,356. The company was slow in reacting to the ayurveda wave that swept through India’s oral care market. Colgate’s late response to this disruption along with heightened competition from Dabur and HUL has led to it losing 580 bps market share since FY16. However, now with an Indian at the helm expectations are high, said the brokerage. Shares of Colgate gained 5 per cent to Rs 1,316 on Monday.


• CGS CIMB has resumed coverage on NMDC with a reduce rating and set target price of Rs 72. Dividend yield is a better metric to assess NMDC’s valuation versus conventional valuation metrics like EV/ EBITDA and P/E, however despite an optically attractive dividend yield, the brokerage believe there is significant possibility of capital loss. The upside/downside scenarios yield valuation per share of Rs 150/45 and steel plant divestment is an upside risk, according to the brokerage. Shares of NMDC declined 0.29 per cent to Rs 86 on Monday.

• Investec has reiterated buy rating on PI Industries with a target price of Rs 1,300. PI Industries executed an offer to buy Isagro Asia, a 100 per cent subsidiary of Isagro S.p.A (Italy), for a consideration of Rs 350 crroe implying a valuation of 10x EV/EBITDA and 1.2x P/S, on a TTM basis. With the requisite approvals already in place, this acquisition would fast-track capacity expansion leading to growth, said the brokerage. However, margins & return ratios could moderate in the near term, it added. Shares of PI Industries declined 1.77 per cent to Rs 1,262 on Monday.

• Emkay Global has maintained its buy rating on Bandhan Bank but reduced its target price to Rs 600 from Rs 660, factoring in a marginal earnings cut and also multiple cut. The bank has a good track record of managing disruptions due to its strong customer connect, credit monitoring/recovery mechanism; however, we remain watchful in the near term, said the brokerage. Shares of Bandhan Bank declined 1.19 per cent to Rs 450 on Monday.