Global brokerages give thumbs up to CG Consumer; financials and IT sector to disappoint

Global brokerage firms have a mixed take on domestic equities ahead of the June 2022 quarter. Foreign brokers are positive on the consumption theme but have a negative outlook on the IT sector and financial stocks.

CLSA remains positive on Crompton Greaves Consumer Electricals after a decent performance in the June quarter and has maintained a 'Buy' call with a target price of Rs 465, hinting at a 20 per cent upside.

"Q1 was a good start but a long way to go," said the brokerage, which believes that demand would be key ahead. "Results are encouraging, but the run rate is not enough for EPS neutrality, and the path to EPS neutral in FY 23 looks steep."

However, JP Morgan remains underweight on The New India Assurance Company with a target of Rs 72, a 10 per cent decline from its previous close near Rs 80.

The estimates and target cut are due to weak underwriting. It also expects the industry to witness strong competition and high claim inflation hit the market.

Another foreign broker, Morgan Stanley, remained underweight on Canara Bank, with a target price of Rs 240 on the counter, signalling a 15 per cent upside.

The brokerage expects the stock to underperform amid the liquidity and capital buffer. "Credit cost is expected to remain elevated as slippage remains above the normalized levels," it added.

Commenting on the IT sector, Morgan Stanley said that near-term headwinds and a lack of catalysts could keep the performance under pressure. "Sector will continue to see headwinds near term and the downgrades cycle to continue."

The global brokerage remains overweight on Mphasis, Infosys, Tech Mahindra and Cyient but has slashed target price on all others.

On the other hand, the brokerage maintained equal-weight on MindTree and TCS but trimmed the targets for both the IT counters. However, it has upgraded L&T Infotech to equal-weight, but the target price has been slashed for it as well.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)