Select stock brokerages have come out with research reports on stocks namely AU Small Finance Bank, Redington India, Ashok Leyland and Crompton Greaves Consumer Electricals. The brokerages have retained 'Buy' rating on three stocks, even as they trimmed their price targets on the stocks. The fourth stock, AU Small Finance Bank, has been downgraded by Kotak Institutional Equities to ‘Sell’. Here's what brokerage said about these stocks.
Nuvama Institutional Equities maintained its ‘Buy’ rating on Redington India, but cut its target price to Rs 209 from Rs 214, as the brokerage sees recent macro data points such as electronics imports as well as a persistent dip in mobile and PC shipments hurting Redington India’s growth going ahead.
Redington India rode the crest of the accelerated digitalisation wave post Covid when work-from-home trends and enterprise digital transformation led to a huge uptick in demand for IT products, the brokerage said. Redington faced headwinds in the customer business in the last quarter, which was more than offset by growth in the enterprise business, it said.
Kotak Institutional Equities downgraded AU Small Finance Bank to 'Sell' from 'Reduce' with a revised fair value at Rs 600 apiece. The bank reported a 23% YoY jump in earnings, led by 18% operating profit growth and 55% YoY decline in provisions, culminating in a RoA of 2%.
Having demonstrated consistent execution capability in the past few years, AU SFB continues to position itself as a franchise for the long term, Kotak Institutional Equities said. The brokerage, however, felt that valuation for the stock remains high.
ICICI Securities has maintained its ‘Buy’ rating on Crompton Greaves Consumer Electricals, but has slashed its target price to Rs 325 from Rs 495 earlier, as the brokerage believes concerns related to the change in directorate may impact valuation multiples structurally.
"While there are concerns related to the change in directorate, we believe the stock offers healthy risk: reward to investors at current valuation. With Shantanu Khosla remaining on board till December 25, there is some stability to the management. The business moats also remain largely intact. We cut FY24E earnings to factor in muted demand for durables," said ICICI Securities.
In view of the strong products basket, new launches across segments and CV up-cycle over the next 1 year, Reliance Securities recommended a 'Buy' rating on Ashok Leyland with a target price of Rs 185. Softening of commodity cost and operating leverage would benefit the company’s margins in near term, it said.
Ashok Leyland has launched a number of new products in various categories including CNG variants over the last 1-2 years. Due to lower differential in fuel prices, CNG contribution is lower now but the brokerage expects it to bounce back in FY24E. Ashok Leyland’s four new CNG products in FY23 would help the company to gain market share, Reliance Securities said.
Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today. Investors should consult their financial advisors before taking any position.