Analyst Calls: Sobha, HDFC Bank, Ashok Leyland

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The domestic stock market on Wednesday showed early signs of a possible breakout from its consolidation range. And Nifty futures on Singapore traded 134 points lower this morning, signalling a tepid start for Dalal Street.

. ICICI Securities has upgraded Godrej Properties to sell from buy and revised target price to Rs 721 from Rs 772. The brokerage expects the Covid-19 induced slowdown to have a significant impact on the company's FY21 sales. Godrej Properties with its strong execution track record, healthy balance sheet and counter-cyclical business development strategy will emerge stronger over the medium-term, said ICICI Securities. The stock ended up 15.6 per cent at Rs 701.90 on Tuesday.


. Kotak Institutional Equities has maintained buy rating on Ashok Leyland and cut fair value to Rs 90 from Rs 100. After a tough FY20 for the CV industry, the brokerage expects volumes to vome under pressure in the first half of FY21 due to price increase led by BS-VI transition and uncertainty revolving around the pandemic. ROEs will return to 15-20 per cent levels in the next upcycle, it said. The stock ended up 4.3 per cent at Rs 39.85 on Tuesday.


. Nomura has downgraded Dr Lal PathLabs to neutral from buy and increased target price to Rs 1,471 from Rs 1,245. Almost 40 per cent of Dr Lal PathLabs’ revenue comes from NCR, where the lockdown may get extended, given the large number of Covid-19 cases, said Nomura. The company has started testing in Delhi but it is unlikely to have a positive impact on FY21 earnings, said Nomura. The stock ended up 3.7 per cent at Rs 1,387.80 on Tuesday.

. Motilal Oswal has a buy rating on HDFC Bank with a target price of Rs 1,150. HDFC Bank's business growth remains robust in a tough environment, where economic activity is being impacted due to the Covid-19 outbreak, which kept lending activity muted in the last few days of March 2020. The brokerage expects overall loan growth over FY21to be affected due to the lockdown. The appointment of a new CEO is a huge event, the brokerage said. The stock ended up10.2 per cent at Rs 896.35 on Tuesday.

. CLSA has maintained buy rating on Sobha with a target price of Rs 438. Due to the lockdown, sales and construction at all real estate projects in India are halted, said CLSA. While medium-term residential demand is likely to slow sharply, a strong brand and execution record can benefit Sobha, said CLSA. Following a sharp decline, Sobha’s stock trades at favourable risk-reward, the brokerage said. The stock ended up 9.9 per cent at Rs 176.10 on Tuesday.