Brokers' call on GCPL, HCL Tech and PSU OMCs like Indian Oil, BPCL, HPCL

Nomura Retains Buy on GCPL

Nomura has maintained ‘Buy’ on Godrej Consumer (GCPL) and set a target price of Rs 800 as the company has delivered strong operational performances both on the domestic and international front over the past couple of years.

“We expect this performance to continue in the medium term, with management focused on delivering volume growth ahead of industry,” said a report by Nomura. International business is now a substantial part of the portfolio, where the inorganic route has worked well for GCPL. Nomura value GCPL in line with the sector average, as they believe consistent delivery should be rewarded with higher valuations.

HCL Tech a Buy: BofA-ML

Bank of America-Merrill Lynch has maintained a ‘Buy’ on HCL Technologies and raised the target price to Rs 675, at a target P/E of 13x 1-yr forward P/E. The stock is currently at 13x FY13E. “We believe HCL Tech impressive deal wins in December and March quarter s are ramping on track, with growth led by both its dominance in IT infrastructure management services and increasing market share in the discretionary enterprise solutions business,” said a report by Bank of America-Merrill Lynch.

“While margins beat our expectations last quarter helped by a115bp contribution from productivity improvements, we continue to assume that the bulk of these gains will be reinvested in the business in the form of wage hikes and building IP,” the report said.

Nomura Upgrades PSU OMCs

Nomura has upgraded India’s three public-sector oil marketing companies Indian Oil, BPCL and HPCL from ‘Neutral’ to ‘Buy’. After recent weakness, all of the oil marketing companies are at just 0.5-0.6x book exinvestments.

Although last week’s price change only helps a bit and the OMCs remain in dire straits, India’s government usually comes to the rescue near FY-end to ensure full-year profitability.