Brokerage Reports: 2nd January 2024

CLSA has a buy rating on Zomato with a target price of Rs 168. The recent platform fee increase from Rs 3 to Rs 4 in key markets is expected to partially offset the impact of GST on delivery charges. Zomato’s dynamic approach, exemplified by the temporary hike to Rs 9 on December 31st, indicates strategic flexibility.

Jefferies provides a cautiously optimistic 2024 outlook on metals. They anticipate a healthy 6-15% volume compound annual growth rate (CAGR) for COAL, TATA, and JSTL due to rising power demand and capacity expansions. Jefferies favors COAL amid global uncertainties, citing its attractive 7.3x FY25E PE and 7% dividend yield.

In their 2024 metals outlook, Jefferies upgrades JSW Steel to hold with a target price of Rs 800, while Coal India is rated a buy with a revised target price of Rs 450. Hindalco is also recommended as a buy, with the target price raised to Rs 725, and Tata Steel is a buy with a target price of Rs 160.

Nomura recommends buying Lupin, raising the target price to Rs 1593. They anticipate improved EBITDA margin over the next 3-4 years, driven by US launches, growth in India, emerging markets, and Europe. Nomura revises EPS estimates for FY24F/25F/26F upward by 8%, 2%, and 14%, respectively.

Kotak Institutional Equities downgrades GAIL to sell with a target price of Rs 125. Despite robust recent performance, they hold a pessimistic view on India’s medium-term and long-term gas demand. The outlook for GAIL’s petrochemical and LPG sectors also appears bleak.

Citi predicts a 6% growth in IT services revenue for FY25, though valuations remain a concern, with a 12-month forward PE at 26x compared to the pre-pandemic 5-year average of 18x. Despite a strong global growth of 2.5% in CY23, IT services faced challenges due to reduced discretionary spends and slower decision-making, leading to a moderation in the sector. While IT stocks performed well, Citi economists anticipate a 1.9% global growth for CY24E.