Brokerage Calls: Why Credit Suisse upgraded Titan and CLSA picked SBI

Credit Suisse upgraded Titan Company to 'outperform' from 'neutral' post December quarter results and has also raised its 12-month target price for the company to Rs 1,175 from Rs 935 earlier.

Jewelry-to-watch maker Titan Company has reported a healthy 43.5 percent on year growth in the third quarter consolidated profit to Rs 413.2 crore, driven by revenue growth and strong jewellery business during the festive season.

The global brokerage firm also increased its earnings estimates by 3-10 percent. Credit Suisse sees tailwinds from a strong wedding season. Higher gold prices are aiding an already strong growth trajectory for Titan, Credit Suisse said in a note.

SBI: Buy| Raised Target: Rs 380

CLSA retained its buy rating on SBI post December quarter results but raised its 12-month target price to Rs 380 from Rs 370 earlier. It is also its preferred stock pick in the PSU banking space.

The profit was ahead of estimates aided by higher treasury gains. The key positive was the decline in slippages. The global investment bank sees scope for credit costs to halve over the next two years.

The global investment bank further added that the CASA franchise is the bank’s key strength, and improvement in growth will be key to support lending opportunities, said the note.

Dr Reddy’s Laboratories: Outperform| Raised Target to Rs 3,200

CLSA maintained its outperform rating on Dr. Reddy’s Laboratories post December quarter results and has also raised its target price to Rs 3,200 from Rs 2,850 earlier.

The cost controls deployed by the pharma major continue to deliver. Going forward, the revival of the US growth in FY20 will act as a key catalyst. The earnings beat was largely driven by cost-control initiatives.

The US sales improved 4 percent on a QoQ basis and US pricing dynamics remained stable. CLSA increased FY19-21 EPS estimates by 2-9 percent.

Petronet LNG: Sell| Target: Rs 225

CLSA retained its sell rating on Petronet LNG post-December quarter results with a target price of Rs 225. The Kochi volume ramp-up is delayed, while a tariff cut is a risk. The global investment bank slashed EPS estimate by 2-3 percent.

Any cut in Kochi’s tariff is a near-term risk, added the CLSA note. The company missed on volumes but delivered a beat on net profit.

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