What global brokerage said about IndusInd, AU Bank, Wipro and Havells:
Credit Suisse has maintained an underperform rating on Au Small Finance with a target of Rs 510 as the core profitability remained muted, but asset quality was healthy.
"Capital levels, with Tier-I at 19 per cent, are comfortable and the lender may look to raise growth capital in FY23," the brokerage said. It increased EPS estimates for FY23 by 2 per cent, but slashed for FY24 and FY25 by 1-2 per cent on higher expenses.
AU Small Finance Bank reported a 32 per cent year-on-year (YoY) growth in net income to Rs 268 crore in the June quarter on better asset quality and higher loan sales that grew more than fourfold.
The biggest boost to the bottom line of the private lender has come from a massive improvement in the asset quality, with gross steeply falling to 1.96 per cent.
However, the global brokerage is bullish on IndusInd Bank with an outperform rating and Rs 1,150 as the target as it believes that the lender is steadily moving towards ROE normalisation.
The brokerage expects ROEs to improve by 16 per cent."Capital levels remain strong with CET at 16.1 per cent and expect growth pick up and credit cost normalisation," it said.
IndusInd Bank reported a 60 per cent rise in its first-quarter net profit to Rs 1,631 crore on lower provisioning for bad assets. The Hindujas-promoted lender had reported a profit of Rs 1,016 crore for the April-June 2021 period.
Another brokerage, JPMorgan maintained an overweight rating on Havells India, despite the disappointment in Q1 on the margin front but revenues did better.
"EBITDA margin was at 8.5 per cent, which hit a multi-year low," it added. "Even gross margin dropped to lowest levels in multiple quarters."
Havells India reported an increase of 3.13 per cent in consolidated net profit to Rs 243.16 crore for the June quarter. The consumer electrical goods maker posted a consolidated net profit of Rs 235.78
crore in the April-June quarter a year ago.
However, CLSA upgraded ICICI Lombard General Insurance to outperform with a target of Rs 1,470 as it has increased the FY23-25CL EPS estimates by 4 to 9 per cent.
"Momentum pick in motor books, '' it said. "Market share in group health and scaling up retail health is the key." The company's combined ratio remains elevated at 104 per cent as the loss ratio is in a healthy state.
ICICI Lombard General Insurance reported a jump of about 80 per cent in its profit at Rs 349 crore in the quarter ended June. The leading private insurance firm had posted a net profit of Rs 194 crore in the same quarter last year.
On the contrary, Citi has downgraded Wipro to sell with a target of Rs 385 after a flop show in Q1, leading to EPS cuts. It slashed its FY23 and FY24 EPS estimates by 10-11 per cent, along with a target multiple of 17x.
There are questions around companies' ability to manage growth and profitability together, the brokerage said. "Utilization will improve but wage hikes are yet to come," it added.