Global brokerages see up to 115% upside in Tata Steel, Vedanta, Gland Pharma

New Delhi: Despite strong volatility seen in sectors like metal, mining and pharma, global brokerage firms are bullish on select stocks from these pockets.

Global brokerage Citi remains bullish on Tata Steel, maintaining a buy rating on the counter. However, it has slashed its target price to Rs 1,085 from Rs 1,800, signalling about a 25 per cent rise in the counter from its previous close.

The brokerage believes that weakness in China's export prices will dent the company, leading to an EBITDA cut by 32-34 per cent on the back of lower realizations.

Tata Steel is trading at a P/B value of 0.8x, which is not below its mean of 0.7x. However, the stock may not hit 2020 levels of 0.5x, given the expectations of a stimulus from China.

Another global broking major, JP Morgan, remains overweight on Vedanta with a target price of Rs 499, expecting a 115 per cent rise in the counter from its previous close of Rs 232.25.

Vedanta has put its Tuticorin plant for sale lately after the backlash from locals over the violation of environmental norms. Following the update, shares of Vedanta plunged 12 per cent on Monday.

However, JP Morgan believes that the sale of the copper smelter would be a blessing in disguise for the company. "LME aluminium prices are back to Q1FY22 levels, which is a big positive," it said.

Hong Kong-based brokerage CLSA is bullish on select pharma counters as it believes that Indian pharma firms with global footprints are set to gain.

"Companies have expanded their product offering through both organic and inorganic routes," said CLSA. It sees a gradual margin expansion, leading to an improvement in return ratios.

It has initiated its coverage on Gland Pharma, an injectable specialist, with a target price of Rs 3,450 per share, hinting at an upside of 35 per cent in the counter.

It has also initiated coverage on Syngene International with a buy rating and a target of Rs 710 on the stock. However, it has trimmed its target price on Piramal Enterprises to Rs 2,250 from Rs 2,330.

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