Brokerage Reports: 13th December 2023

Brokerage Reports: 13th December 2023
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CLSA has given ITC an Outperform rating, setting a target price of Rs 494. Insights from the analyst meeting highlight a focus on strengthening the FMCG sector, pursuing adjacencies, and aiming for an annual Ebitda margin increase of 80-100 basis points. ITC plans to consolidate cigarette growth in the near term while exploring higher-margin opportunities in the Agri business, including nicotine. The ITC Next strategy emphasizes innovation, digital initiatives, and supply chain improvements.

Motilal Oswal’s brokerage report on ITC suggests a target of 535, with a buy recommendation. The analysis anticipates increased volumes due to a stable tax environment in cigarettes, positioning ITC as a robust defensive option amid volatile interest rates. The report also projects a 13% earnings compound annual growth rate (CAGR) for ITC from FY23-25.

Meanwhile, Morgan Stanley (MS) maintains an Overweight rating for ITC, with a target price of Rs 493. Near-term demand trends resemble those of the second quarter, with urban growth outpacing rural growth. MS anticipates moderate cigarette tax increases due to a high prevalence of illicit trade. There is a reiterated emphasis on FMCG, with a goal to drive growth and improve margins by 80-100 basis points annually.

Bank of America Securities recommends buying Gland Pharma with a target price of Rs 2050, citing positive momentum in the US market. Earnings upgrade in the ex-Cenexi business in the last quarter has eased concerns about risks to US revenue, and margin improvement in Cenexi is anticipated.

Jefferies’ healthcare analysis indicates hospitals are optimistic about bed expansion, foreseeing no significant regulatory challenges in the near term. There’s an upside risk to FY25 estimates for Medanta, JB Pharma, Zydus, and Lupin, while Cipla and Laurus face downside risks.

Jefferies maintains a Buy rating for Infosys with a target price of Rs 1650. Following a non-deal roadshow, management suggested near-term growth might be subdued, but robust deal bookings in 1HFY24 are expected to support growth in FY25. Despite recent senior management changes, the company remains confident in its execution.

Regarding M&M Financial, Jefferies suggests holding with a target price of Rs 270. Insights from a management meeting indicate expectations of sustained healthy loan growth. Net Interest Margins (NIMs) are projected to increase by 20 basis points to 6.8% by 4QFY24 compared to 2QFY24 levels. Operating expenses to assets are expected to remain elevated, with a target to reduce GS3 below 4%.

Motilal Oswal Securities recommends buying PI Industries with a target price of Rs 4480. The management has dismissed any negative impact from Chinese competition, affirming no stress on its full-year guidance and growth outlook. Additionally, the management highlighted that pyroxasulfone, a key product, is patented until 2025 in developed markets.

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