CS initiates coverage on AU Bank; CLSA bearish on Maruti Suzuki

New Delhi: With volatility in the domestic equity markets increasing, global brokerage firms have turned negative on select underperformers of Dalal street.

Credit Suisse has initiated its coverage on AU Small Finance Bank with a target price of Rs 510, which is 18 per cent lower than the last close of Rs 621.90. The stock is trading at 3.2x FY24E P/BV, it said.

The foreign broker expects the growth to moderate from historical levels. "Elevated operational expenditure will keep RoA at 1.7 per cent and RoE around 17 per cent, which is quite similar to larger banks as the stock trades are premium," Credit Suisse said.

Another overseas brokerage firm CSLA maintained 'sell' rating on Maruti Suzuki. It has given a target of Rs 7,053 on the counter, hinting at a 17 per cent slide in the largest carmaker in the country.

The brokerage noted that Maruti needs massive market share gains to achieve 50 per cent market share and it is lagging in the SUV segment.

"Incremental volumes could aid in EBITDA margin and improvement in EPS but margin tailwind could be offset by airbag regulations."

Further, CLSA has maintained a buy rating on HDFC Asset Management Company (AMC), thanks to its inexpensive valuations. It has set a target price of Rs 2,230, signalling an upside potential of 27 per cent in the counter.

It sees earnings having a strong correlation with equity markets, which is stabilizing lately. However, CLSA has cut its estimates by 10-11 per cent for FY23-25CL.



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