Analyst Calls: DRL, BoB, Hindalco, Finolex

Good morning!

The domestic stock market on Thursday showed early signs of a possible breakout from its consolidation range. And Nifty futures on Singapore traded 26 points lower this morning, signalling a weak start for Dalal Street.

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


• Emkay Global has a sell rating on Dr Reddy's Laboratories (DRL) with a target price of Rs 2,580 after Prasco announced the authorised generic launch of Nuvaring. This is the second generic launch for the product within a week’s time, the brokerage said. The drug is one of the key expected launches for DRL in FY21, but launches by competitors earlier than the company could affect the product economics, it said. Shares of DRL ended up 1.6 per cent at Rs 2,873.75 on Wednesday.

• Morgan Stanley has an equalweight rating on Bank of Baroda with a target price of Rs 100 after the bank disclosed its divergence details on asset quality and provisioning for FY19. The remaining provisioning divergence at Rs 2,600 crore amounts to 2.7 per cent of FY20 book value (post tax basis) and around 55 per cent of FY20 PBT, said Morgan Stanley. The bank hasn’t provided details on the nature of this provisioning divergence, it said. Shares of Bank of Baroda ended down 3.3 per cent at Rs 98.9 on Wednesday.


• Anand Rathi has initiated coverage on Dixon Technologies (India) with a target price of Rs 5,822. Ideally placed to cater to mounting demand across multiple categories in the rapidly growing consumer durables sector, Dixon’s scale and size give it an edge, said Anand Rathi. The brokerage has modelled 24 per cent and 32 per cent CAGRs over FY20-22 in revenue and PAT, respectively, resulting in the RoCE expanding from 26 per cent in FY19 to around 36 per cent in FY21 and FY22. Shares of Dixon Technologies ended up 2 per cent at Rs 3,623.65 on Wednesday.

• Haitong Securities India has initiated coverage on Finolex Industries with a target price of Rs 700. Finolex enjoys a dominant position in India’s agri pipe market due to its competitive edge in backward integration (PVC resin), established brand image and strong distribution network in rural market, said Haitong. While Ebitda is projected to remain relatively stable over FY19-FY22, the quality of profit could improve on rising contribution from product business, it said. Shares of Finolex ended down 1.55 per cent at Rs 541.45 on Wednesday.

• HSBC has retained buy rating on Hindalco Industries with a target price of Rs 260. The management clearly stated its intention not to infuse further capital in Idea, said HSBC. The management believes the issues marring the telecom sector are too big to be solved by further capital infusion, it said. Rising contribution from Novelis and potential merger with Aleris, which is not in the base case, make Hindalco a compelling investment case, HSBC said. Shares of Hindalco Industries ended down 0.1 per cent at Rs 213.50 on Wednesday.