Stock Views on HDFC, Bajaj Auto, Tata Steel

BNP Paribas on HDFC

BROKING house BNP Paribas Securities has reiterated its ‘buy’ rating on mortgage lender HDFC, but slashed price target to Rs 1,600 from Rs 2,250. “We expect HDFC to continue to enjoy a premium over its banking sector peers with its sticky customer base, better asset quality, a sector leading opex ratio and stable spreads,” the outfit said in a note to clients. “The company guided towards loan growth in the range of 18-20% for FY10. We are factoring for a loan growth of 16% for FY10 and we believe this growth will be more back end loaded in FY10,” the note added.

MERRILL Lynch on Bajaj Auto

MERRILL Lynch has retained its‘neutral’ rating on Bajaj Auto, but raised price target by 11% as it expects the stock’s valuation multiples to expand on improved earnings visibility. “Following positive customer response to XCD 135 cc motorcycle, we have greater confidence for four upcoming launches by September. We raise domestic two-wheeler sales estimates to 1.36 million units in FY10 (5% growth, earlier 5% decline), and retain 5% growth on higher base in FY11,” the Merrill note to clients said.

JP Morgan on Tata Steel

JP Morgan has retained its ‘neutral’ rating on Tata Steel, citing bleak outlook on the sector. “With European steel environment remaining challenging, end demand visibility low, term debt at $10 billion and FY10 (estimated) adjusted net debt equity at 2.3 times, we remain ‘neutral’ on the stock. Working capital release at Corus and the company’s intention to pre pay $450 million at Corus from asset sales at Teesside are key positives and while adjusted FY10E price/book at 0.9 times provides support, we would wait for some improvement in end demand in Europe before stepping in,” the JP Morgan note said.