Analyst Calls: Asian Paints, ICICI Securities, Bajaj Finserv, Newgen Software

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 26.50 points higher this morning, signalling a good start for Dalal Street.

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

• Citi has maintained sell rating on GlaxoSmithKline Pharmaceuticals and revised target price to Rs 1330 from Rs 1240. GSK’s efforts to rationalise its portfolio by divesting multiple, tail-end brands and focusing on its priority brands portfolio have begun paying off – as reflected in low double digit topline growth and 20 per cent plus EBITDA margin, said Citi. The brokerage expects this trend to continue going forward but does not see a return to historical 30 per cent plus margin levels. Shares of GlaxoSmithKline Pharmaceuticals ended up 0.5 per cent at Rs 1490.60 on Wednesday.

• UBS has maintained buy rating on Asian Paints with a target price of Rs 2120. In the September quarter, Asian Paints grew decorative paint volumes by 15-16 per cent much ahead of expectations, said UBS. Given strong volume growth visibility for paints in the medium term and the competitive advantages, the stock will continue to trade at its premium valuation, said UBS. Shares of Asian Paints ended down 0.75 per cent at Rs 1766.40 on Wednesday.


• Jefferies has maintained buy rating on Newgen Software Technologies and revised target price to Rs 290 from Rs 372. The brokerage has cut EPS estimates for Newgen over FY20-FY22 to reflect weaker growth as well as resulting lower margins. Jefferies has retained buy as it expects growth to recover in FY21 which should also lead to sharp margin expansion. The brokerage is hopeful of traction in sales in the US market in particular which is a large opportunity for Newgen; India business should also grow better next year helped by a more favorable base. Shares of Newgen Software ended down 19.4 per cent at Rs 200.70 on Wednesday.

• CLSA has maintained buy rating on ICICI Securities and rolled forward target price to Rs 340 from Rs 320. The brokerage has raised earnings estimates to factor-in a better top-line and see a 15 per cent CAGR over FY19-22. Its valuation is reasonable and an improvement in its growth outlook could drive a rerating, said CLSA. Shares of ICICI Securities ended up 8.5 per cent at Rs 308.85 on Wednesday.

• Nomura has upgraded Bajaj Finserv to buy from neutral and retained target price of Rs 9500. The brokerage has upgraded the stock as lending business continues to deliver well on growth and asset quality and part of the disappointment in earnings for general insurance business is in the price. In the life insurance business, a tie-up with Axis Bank could lead to improvement in future business value, as the tie-up ramps up, said Nomura. Shares of Bajaj Finserv ended up 0.8 per cent at Rs 8066.15 on Wednesday.