India’s Stock Valuation Not Cheap Despite Sharp Plunge: Jefferies

India’s Stock Valuation: India’s NSE Nifty 50 Index is trading at 18 times its price-to-equity ratio and 2.8 times its price-to-book, valuation levels that are still a premium to its long-term average, according to Jefferies analyst Mahesh Nandurkar.

  • Despite recent turbulence, the yield gap between India’s 10-year bond and Nifty’s earnings has remained 35 basis points above its long-term average, Nandurkar writes in a note
  • The sharp jump in crude oil prices comes on top of already accelerating imports for India and will drive a jump in current account deficit, the note says
  • Jefferies estimates India’s fiscal 2023 current account deficit to reach 10-year high of 2.8% based on oil prices averaging at $90 per barrel, which could lead to a negative balance of payment
  • “On the fiscal front too, rising crude prices are likely to drive some cuts in fuel excise duties wherein an ~15% price hike is needed to pass on the full costs,” Nandurkar writes.

Source: Bloomberg

Motilal Oswal Says Alkem’s India Focus Play Bodes Well For The Company

Motilal Oswal

  • Reiterates ‘buy’ on the stock with the target price reduced from Rs 4,500 to Rs 3,870; an implied return of 18.96%.
  • Alkem garners maximum sales from the domestic formulation segment, which augurs well as it is well protected from the turmoil on the global front.
  • Company has multiple levers to outperform the Indian pharma market in the near to medium term.
  • Compliance and series of approvals have aided the company in offsetting price erosion impact in the U.S. Generics segment.
  • Cuts our FY23/24 estimate by 6%/7% to factor in raw material and logistics-related headwinds.
  • Remains positive on the company on the back of its superior execution in the domestic formulations segment, positive benefit of inflation-linked price hike on certain products.
  • Key growth levers include revival in non-covid therapies, outperformance in chronic therapies and impact of WPI-linked price hike under NLEM.
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Neal Bhai has been involved in the Bullion and Metals markets since 1998 – he has experience in many areas of the market from researching to trading and has worked in Delhi, India. Mobile No. - 9899900589 and 9582247600

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