Analyst Calls: Kotak Bank, Tata Steel, Maruti Suzuki

Good morning!

The domestic stock market on Friday showed early signs of a possible breakout from its consolidation range. And Nifty futures on Singapore traded 40.50 points down this morning, signalling a weak start for Dalal Street.

. CLSA has a buy rating on Kotak Mahindra Bank with a target price of ₹1,425 after the bank's board approved a capital raising plan. The proposed capital raise will help to reduce promoter stake by1percentage point to 29 per cent via dilution, said CLSA. The capital raise opens up possibilities for pursuing a tactical M&A opportunity currently when many financial firms are experiencing distress in their balance sheet given the fallout of Covid-19, said CLSA. The stock ended up 8.59 per cent at ₹1,249.85 on Thursday.

. Investec has maintained hold rating on Maruti Suzuki India and cut target price to ₹4,650 from ₹ 5,500. Maruti is trading at 28.8 times FY22 estimated core EPS, said Investec. Led by uncertainty around volume recovery, and an increase in competition, the risk of further earnings downgrades persist, it said. Further, PE de-rating cannot be ruled out due to increase in credible competition, the brokerage said. The stock ended down 0.39 per cent at ₹5,160.70 on Thursday.


. Edelweiss has maintained buy on Tata Steel with a target price of ₹335. The brokerage's fourth quarter performance was marred by Covid-19 woes, said Edelweiss. The brokerage expects sustained near term pressure on volumes and realisations and progressively lower export prices, said Edelweiss. The stock ended up 0.6 per cent at ₹16.80 on Thursday.

. IIFL has retained add rating on AIA Engineering with a target price of ₹1,588. AIA has not yet seen any major impact on offtake from miners, and healthy inventory should support volumes amid production disruptions, said IIFL. But as the slower demand growth begins impacting mining output, the IIFL sees increasing risk to existing client offtake and new-client addition. The stock ended down 0.88 per cent at ₹1,475.40 on Thursday.