Brokerage Reports: CLSA on Adani Ports, BofA on India, Nomura on Bharti Airtel, Jefferies on Marico, HSBC on Maruti Suzuki, Goldman Sachs on SBI Cards, Investec on Cipla and More

CLSA on Adani Ports

CLSA has a rating of Outperform with a target price of Rs 1764 for Adani Ports. In the first half of FY25, traffic at Mundra Port increased by 18%, while all ports saw a 9% rise year-on-year. In the second quarter of FY25, a diverse business mix and a rebound at Mundra contributed to an 11% increase in net profit compared to the previous year. The company has made several strategic moves and successfully reduced its debt. The EBITDA for Adani Ports is expected to be at the higher end of the FY25 guidance.

UBS on Adani Ports

UBS maintains a Neutral rating with a target price of Rs 1700. The results were flat compared to the previous quarter. They believe that the ports in Colombo and Vizhinjam could provide unexpected growth. Container volumes are driving growth, but the Gangavaram Port’s performance remains below expectations in the second quarter of FY25. Coal volumes have also been stable, with some growth in logistics.

Morgan Stanley on Adani Ports

Morgan Stanley rates Adani Ports as Overweight and has raised the target price to Rs 1648. Port revenue and EBITDA grew by 10% and 13%, respectively, in line with their estimates. Logistics revenue and EBITDA exceeded expectations, increasing by 22% and 7%. The company’s net debt to EBITDA ratio improved to 2x, down from 2.3x in FY24, indicating strong balance sheet and cash flow performance.

BofA India Strategy

BofA expects risks to continue affecting the market as anticipated. They observe weak markets in certain sectors, particularly state-owned enterprises (SoEs), which have low liquidity and are momentum-driven. They advise caution against buying into these dips, noting a mixed sector reaction and potential for market rotation. The reacceleration of inflation in the U.S. poses an emerging risk, and domestic institutional investor (DII) flows are critical to monitor.

Nomura on Bharti Airtel

Nomura has a Buy rating and raised the target price to Rs 1850 for Bharti Airtel. The company has shown strong performance in its India business, while its core operations in Africa remain robust. Net debt increased modestly to INR 1.4 trillion, and capital expenditure has moderated to INR 77 billion. Bharti is well-positioned for future growth.

Jefferies on Marico

Jefferies maintains a Buy rating and has increased the target price from Rs 780 to Rs 800 for Marico. The company’s Q2 results were in line with India’s volume growth of 5%, driven mainly by rural demand. With inflation returning, Marico is expected to see revenue growth accelerate to double digits. Management’s outlook for the coming quarters is positive, making Marico one of their top picks.

Nomura on Marico

Nomura rates Marico as Buy with a target price of Rs 760. The second-quarter results were consistent with their pre-quarter update, showing improved demand. There was no impact from weakness in urban areas, as Marico caters to both premium and mass markets. Sharp price increases have enhanced their growth outlook.

HSBC on Maruti Suzuki

HSBC maintains a Hold rating with a target price of Rs 14,000 for Maruti. They report weak margins in Q2 due to low demand and high discounting, with expectations for a worse third quarter. However, they foresee a normalization of business in 2025/FY26 as demand improves and new products are launched, suggesting that current valuations look reasonable.

Investec on Maruti Suzuki

Investec maintains a Hold rating but has cut the target price from Rs 14,030 to Rs 12,385. They note operational misses and a subdued outlook, driven primarily by margin concerns. They project mid-single-digit volume growth for FY25, citing weak demand for entry-level cars due to changing consumer preferences towards premium vehicles.

Nomura on Maruti Suzuki

Nomura holds a Neutral rating with a target price of Rs 12,455 for Maruti. They express concerns about weaker demand and a margin miss in Q2. High discounting may persist in the near term, though an improving CNG mix and rising average selling prices are positive indicators. Management anticipates festive season sales exceeding 300,000 units, a 14% year-on-year increase.

CLSA on Maruti Suzuki

CLSA has an Outperform rating but has lowered the target price to Rs 12,631. They report a decline in Q2 EBITDA margin to 11.9%, below estimates, due to increased discounting and higher commodity costs. The EBITDA margin fell by 104 basis points year-on-year and 80 basis points quarter-on-quarter, primarily due to a decrease in gross margin.

Goldman Sachs on SBI Cards

Goldman Sachs maintains a Buy rating with a target price of Rs 960 for SBI Cards, believing that the downcycle is nearing its bottom. Management reports improving earnings visibility, which could lead to a re-rating. The reported credit costs were 9.1%, better than their estimate of 9.4%.

Jefferies on SBI Cards

Jefferies has a Hold rating and has cut the target price to Rs 760. The second quarter profit after tax was Rs 4 billion, down 32% year-on-year, which was below their estimate of Rs 6 billion due to higher operating expenses. Receivables growth remained strong at 23% year-on-year, but net interest margin disappointed, though it is expected to improve in the second half.

HSBC on SBI Cards

HSBC has a Reduce rating and has cut the target price to Rs 580. They report muted new card issuance, a low share of earnings assets, net interest margin contraction, and high credit costs affecting earnings. Without a clear outlook on asset quality recovery, predicting an earnings rebound is challenging.

Investec on Cipla

Investec maintains a Buy rating but has reduced the target price to Rs 1800 from Rs 1900. They believe that near-term challenges are already factored into the stock price. Confidence in resuming supply of Lanreotide is intact, and Q2 is expected to show better seasonal performance in India. They have postponed the launch of gAbraxane to FY27 due to clearance issues at the Goa facility.

UBS on Cipla

UBS maintains a Buy rating and has cut the target price from Rs 2060 to Rs 1960. Q2 results were in line, but growth in India was weak. A shortage of Lanreotide could impact near-term performance. The timelines for the launch of gAdvair are intact, but the launch of Abraxane depends on clearance from the Goa facility. They have lowered EPS estimates for FY26 and FY27 by 4% and 7%, respectively.

BofA on Cipla

BofA maintains an Underperform rating with a target price of Rs 1400. Although EBITDA exceeded expectations, they note mixed trends in Q3, with margins expected to decline in the second half of the fiscal year. Any further delays in critical near-term launches could pose risks to their estimates, and they see limited catalysts for improvement.

JPMorgan on Container Corp

JPMorgan maintains a Neutral rating with a target price of Rs 1000. They report sluggish growth in Q2, although cost management showed positive surprises. A reduction in railway charges, staff costs, and land license fees helped improve margins despite modest revenue growth. Overall volume growth of 6% year-on-year was below their full-year guidance.