Bernstein on India Strategy
Bernstein acknowledges a slowdown in India, noting that most sectors, except banks and IT, have missed earnings expectations in Q2. Autos and consumer staples face subdued demand, while utilities and industrials struggle with weak capex. Despite an urban slowdown, rural growth won’t offset it. A moderate decline in Nifty to 23,500 is expected, signaling a cautious outlook.
CLSA Price Action by Laurence Balanco
Earlier this year, after the general election, Nifty experienced a bear trap when it quickly reversed after breaking down from the March-June trading range. Following a mid-October breakdown, the target is now 22,990, just below the 200-day moving average of 23,493. Key support levels are 23,493, 23,000, and 22,990, while resistance levels are 24,694-24,753, 25,112, and 26,277.
Nuvama Alternative and Quantitative Research
Indian equities saw their steepest October decline since March 2020, with expectations of continued losses in November as investors adopt a “sell on rally” approach. Nuvama reports a drop in market-wide open interest to 4.068 trillion rupees. The Nifty 50 index fell 8% amid record foreign equity sales of $11.2 billion.
Morgan Stanley on Apollo Hospital
Morgan Stanley maintains an “Overweight” rating for Apollo Hospital with a target price of Rs 7,110.
Apollo is constructing a 500-bed hospital in Worli, Mumbai, a promising local market.
The hospital chain’s share of metro-based hospitals is expected to rise from 57% in FY24 to 60% by FY29.
Metro locations have a higher Return on Capital Employed (ROCE) of 28% compared to 23% for non-metro areas, which should help improve overall returns.
The company plans to add 2,877 beds over the next 3-4 years, indicating a growth rate of 8% from FY25 to FY29.
CITI on HDFC Bank
Citi maintains a “Buy” rating for HDFC Bank, with a target price of Rs 1,990.
HDB Financial Services, a subsidiary of HDFC Bank, has filed for an IPO to meet regulatory listing requirements and fund future growth.
HDB Financial is a leading, well-diversified, and highly-rated NBFC with a AAA rating.
The IPO could value HDB Financial at 2.8-4.3% of HDFC Bank’s total market cap.
Nuvama on Amara Raja Batteries
Nuvama maintains a “Buy” on Amara Raja but lowers its target price to Rs 1,580 from Rs 1,980.
The company’s Q2 FY25 revenue and EBITDA met expectations, with steady growth expected in its lead-acid battery business.
Amara Raja is also increasing its focus on electric vehicle (EV) batteries.
A lower valuation is applied to the lithium battery segment due to rising competition and missed production-linked incentive (PLI) benefits.
CITI on Oil Marketing Companies (OMCs)
Citi suggests that recent declines in OMC stock prices, driven by weak Q2 results mostly due to non-recurring factors, offer a favorable risk/reward balance.
Citi sees this as an attractive opportunity to re-enter OMC stocks and is optimistic about positive catalysts for HPCL.
Nomura on KEC International
Nomura gives KEC International a “Buy” rating with a target price of Rs 1,030.
Q2 profit missed estimates due to higher interest costs and a slight EBITDA miss.
Year-to-date, order inflows have risen 50% year-on-year to Rs 135 billion, with a backlog of Rs 341 billion, equal to 1.6 times trailing 12-month sales.
KEC is trading at a P/E ratio of 24x for FY26 and 18x for FY27.
Nomura and Morgan Stanley on Exide
Nomura has a “Buy” rating for Exide with a target price of Rs 589. Q2 revenue grew 4% year-on-year but was 4% below expectations. EBITDA margin declined to 11.3%.
Morgan Stanley holds an “Overweight” rating with a target price of Rs 538, expecting revenue growth to improve in the second half of FY25, backed by Exide’s scale and new energy initiatives.
Citi also rates Exide as a “Buy” but has reduced its target price to Rs 540 from Rs 610 due to slightly weaker Q2 results and higher-than-expected expenses.
Jefferies and Goldman Sachs on Gland Pharma
Jefferies rates Gland Pharma as “Hold” with a reduced target price of Rs 1,840 due to muted 2Q growth of 5% year-on-year (excluding Cenexi) and rising losses from the Cenexi unit.
Goldman Sachs rates Gland Pharma as “Sell” with a target price of Rs 1,450, highlighting weak Q2 sales and EBITDA performance and a reduced FY25 growth outlook.
UBS and Nomura on ABB
UBS has a “Neutral” rating with a target price of Rs 9,100. ABB’s orders, revenue, and EBITDA saw growth of 11%, 5%, and 23%, respectively. Strong performance in automation and electrification offset weaker process automation results.
Nomura also rates ABB as “Neutral” with a target price of Rs 8,260, noting revenue growth of 5% year-on-year and a strong EBITDA margin of 18.6%. However, execution issues offset gains from higher margins.
CITI and Goldman Sachs on Bata India
Citi rates Bata India as “Sell” with a target price of Rs 1,050, citing weak revenue growth of 2.2% year-on-year and declining profitability.
Goldman Sachs also rates Bata India as “Sell” with a target price of Rs 1,300, noting weak sales growth and underperformance in profit margins.
CITI on Indraprastha Gas Limited (IGL)
Citi maintains a “Buy” rating on IGL with a target price of Rs 525, encouraged by strong 9% year-on-year volume growth in Q2, which marks a recovery from recent lower growth rates.
Citi anticipates a volume growth CAGR of 7-8% over the next three years with further growth catalysts expected.
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