Monetary Policy Committee (MPC) of Reserve Bank of India (RBI) has kept the repo rate under the liquidity adjustment facility (LAF) unchanged at 5.15 percent.
Market rallied for fourth days in a row this week, recouping all the losses made on the Budget day.
Budget 2020 disappointed the market as Sensex and Nifty posted their biggest single-day falls in nearly five years. Nifty Bank also posted the second biggest one-day fall ever on February 1.
However, post Budget, market focus shifted to the fundamentals and earnings with strong PMI data, January auto sales numbers, RBI policy and decent Q3FY20 earnings.
In the last four trading session BSE Sensex rose over 1,500 points, while Nifty50 added more than 450 points.
"We believe the index is in a structural uptrend and is expected to conquer higher levels. The 11,900 level is a strong support level while resistance is now seen at 12,430. Buying on dips is advisable in the near term," said Sahaj Agrawal, Head of Research- Derivatives at Kotak Securities.
While action has once again become stock-specific, earnings are playing a very big role in investor interest.
Here are five stocks in which brokerages have cut target price after the companies reporting third quarter earnings:
Thermax | Brokerage: Jefferies | Rating: Underperform | Target: Cut to Rs 900 from Rs 930 per share
Jefferies has concerned about both revenue and margin over next 12-18 months. It has reduced FY20E-22 EPS estimates by 6 percent/6.5 percent/3 percent.
The company's Q3FY20 consolidated net profit rose 13.2 percent at Rs 85 crore versus Rs 75 crore, while revenue was down 1.8 percent at Rs 1,410 crore against Rs 1,436.6 crore, YoY.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 5.5 percent at Rs 113.2 crore and margin was up at 8 percent, YoY.
Bosch | Brokerage: Credit Suisse | Rating: Outperform | Target: Cut to Rs 15,800 from 16,700 per share
The company's Q3 number is a beat on the operational front; meanwhile there are a positive takeaways on diesel but await clarity on BS-VI.
It align estimates by cutting FY20-22 EPS estimates by 3-6 percent. It is a best play to negotiate tightening regulatory environment in auto industry, it added.
The company's consolidated Q3FY20 net profit was down 43.3 percent at Rs 190.2 crore versus Rs 335.4 crore and revenue declined 15.7 percent at Rs 2,536.6 crore versus Rs 3,008 crore, YoY.
The profit included the one-time loss at Rs 207.4 crore on the additional provision towards restructuring.
Its EBITDA shed 22.2 percent at Rs 320.2 crore versus Rs 411.6 crore, while EBITDA margin was at 12.6 percent versus 13.7 percent, YoY.
Cipla | Brokerage: CLSA | Rating: Sell | Target: Cut to Rs 410 from Rs 460 per share
The delayed in US approvals drives further earnings cut. The Q3 gross margin was at 2-year low results in weak operating performance.
The strong India sales growth of 13 percent was offset by flat QoQ US sales, however FY21 US growth could be muted if key approvals see delays.
CLSA has cut FY20-22 EPS estimate by 4-11 percent.
The company has reported a 5.7 percent year-on-year growth in consolidated profit at Rs 351 crore versus Rs 332.2 crore in the same period last year.
Revenue during the quarter grew 9.1 percent year-on-year to Rs 4,371 crore with India business showing a 13 percent growth and North America 11 percent.
At the operating level, consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) rose 7.2 percent year-on-year to Rs 758.3 crore, but margin contracted 30bps YoY to 17.3 percent during the quarter
Punjab National Bank | Brokerage: Credit Suisse | Rating: Underperform | Target: Cut to Rs 50 from Rs 55 per share
The operating performance remained weak, while credit costs elevated. The asset quality remained weak, with slippages elevated at 6.2 percent.
Given strong NCLT recoveries, net slippages were contained.
The company reported a standalone net loss of Rs 492.3 crore for Q3FY20 against a profit of Rs 246.50 crore in Q3FY19.
Net interest income (NII) came at Rs 4,355 crore. Total revenue climbed 7.49 percent year-on-year (YoY) to Rs 15,967.49 crore against Rs 14,854.23 crore in Q3FY19.
ITC | Brokerage: JPMorgan | Rating: Downgrade to neutral from overweight | Target: Cut to Rs 235 per share
The tax hike would impact volume growth and weigh on stock multiples. However, the strong economic franchise makes it attractive at 5-7 percent potential downside, said JPMorgan.
Research house forecast 12 percent price hike over FY21 to deliver cigarette EBIT growth of 5 percent.
It lower FY21/22E EPS estimates by 3 percent and EBIT growth forecast lowered to 5 percent in FY21.
The company registered a massive 29.07 percent year-on-year growth in Q3FY20 in the standalone profit at Rs 4,141.9 crore, increased from Rs 3,209.1 crore in corresponding period last fiscal.
Revenue growth of 5.1 percent YoY at Rs 12,103 crore.
At the operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 6.6 percent to Rs 4,612.6 crore and margin expanded by 60bps to 38.4 percent in the quarter ended December 2019 YoY.Exclusive offer: Use code "BUDGET2020" and get Moneycontrol Pro's Subscription for as little as Rs 333/- for the first year.
