Goldman Sachs on Asia-Pacific Conviction List
Honda and Mahindra & Mahindra (M&M): Added to APAC Conviction List. The strong demand for new SUVs and upcoming electric vehicles (BEVs) is expected to boost their growth compared to competitors.
Agriculture Equipment: The company’s farm equipment division is expected to benefit from improving market conditions.
Growth Forecast: EBIT and Free Cash Flow are expected to grow by 20% and 100% annually from FY25 to FY27.
Rating: Buy, with a target price of Rs 3,600.
Kotak Institutional Equities on Mahindra & Mahindra (M&M)
Upgrade: Upgraded to Buy with a target price of Rs 3,150.
Growth Expectation: Anticipated to outperform industry growth across auto and tractor segments, including passenger and commercial vehicles.
Tractor Segment: Expected to see growth in the second half of FY25 due to a good monsoon and high water reservoir levels.
Goldman Sachs on Oil Marketing Companies (OMCs)
Second-Quarter Performance: Core EBITDA weaker than expected, with IOC’s earnings impacted by refining, marketing, and petrochemical segments.
IOC: Seen as having the largest downside risk; rating retained at Sell, target price Rs 105.
HPCL & BPCL: Ratings remain Neutral.
Morgan Stanley on Tata Motors
Rating and Target Price: Equal-Weight (EW) rating, target price Rs 1,178.
JLR October U.S. Retail Sales: Land Rover sales up 25% year-on-year; Jaguar sales up 4%.
Model Mix: Range Rover models accounted for 71% of sales in Q2FY25, up slightly from 70%.
Incentives: JLR’s incentives per unit increased 127% year-on-year.
Nomura on Cipla
Upgrade: Upgraded to Buy with a target price of Rs 1,800.
Reasoning: After lagging behind the sector, risk-reward now appears favorable.
Growth Drivers: Positive outcome from Goa inspection, expected growth in inhalers and injectables for FY25-FY27, and potential contribution from antiretrovirals (ARVs) after FY30.
UBS on Sun Pharma
Rating and Target Price: Buy, target price Rs 2,450.
Leqselvi Opportunity: Settlement is still possible; the launch could be delayed past FY25, but valuation impact would be minimal.
Royalty: Incyte has a tiered royalty arrangement on Olumiant from Lilly.
JPMorgan on Sun Pharma
Legal Action: Sun Pharma plans to appeal a recent judgment and may also consider settling with Incyte to speed up product launch.
Leqselvi Value: Estimated net present value (NPV) of $546 million (Rs 19 per share) if launched in 2026.
Specialty Growth: Projected specialty business growth of 20% annually from FY24-FY27, driven by products like Ilumya, Winlevi, and Cequa.
DAM Capital on Bharti Airtel
Initiation: Initiated Buy rating with a target price of Rs 1,907.
Industry Maturity: Telecom sector now stable.
Growth Areas: Home broadband is expected to see multi-year growth, and the B2B segment is steadily expanding.
Financial Forecast: Revenue and EBITDA for Indian operations expected to grow by 12% and 15% annually from FY25 to FY27.
Jefferies on Nykaa
Rating and Target Price: Maintain Buy with a target price of Rs 220.
Nykaaland 2.0 Event: A beauty festival in Mumbai featured over 80 brands and 1,000+ content creators, attracting 25,000 visitors and distributing 400,000 samples.
Market Potential: India’s evolving beauty and grooming trends make it a key market, with brands seeing Nykaa as an essential partner.
Morgan Stanley on October Auto Sales
Brokerage Insights
Passenger Vehicles (PV) and Two-Wheelers (2W) Growth: Retail data from early Navratri shows a 9% year-on-year growth in PV sales and a 14% increase in 2W sales.
Sales Drivers: High discounts and a recovery in rural demand supported these gains.
Inventory Levels: Inventory has returned to normal levels.
Notable Performers: Royal Enfield and Mahindra & Mahindra (M&M) performed particularly well.
Industry Outlook: Projected growth estimates for FY25 are 3% for PV and 10% for 2W.
Investment Preference: Morgan Stanley favors overweight positions on M&M, Maruti Suzuki, and Bajaj Auto.
Emkay on Potential U.S. Election Outcome Impact on Indian Equities
Brokerage Insights
Republican Sweep:
Could lead to a short-term rally in Indian equities.
IT and BFSI sectors may see potential benefits.
Democrat Sweep:
Might cause nervousness in global markets, which could impact India.
IT sector could face short-term pressure due to high valuations and concerns over a potential corporate tax hike.
Goldman Sachs on OMCs
Indian Oil Corporation, Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) significantly fell short of expectations in their Q2 results. Global brokerage Goldman Sachs attributes these misses primarily to challenges in marketing and refining operations.
In a note dated November 4, Goldman Sachs reported that the earnings before interest, taxes, depreciation, and amortization (EBITDA) for these oil marketing companies (OMCs) during the July to September 2024 quarter were generally below forecasts.
According to the report, Indian Oil’s Q2 EBITDA was 21% lower than Goldman Sachs’ projections, while HPCL’s results were 6% below estimates, and BPCL reported earnings that were 4% less than the brokerage anticipated.
Goldman Sachs indicated that Indian Oil’s earnings shortfall was mainly due to disappointing performance in the refining, marketing, and petrochemical segments. For HPCL and BPCL, the weaker results were linked to issues in marketing and refining, respectively.
Goldman Sachs has identified the most significant downside risk for Indian Oil and has maintained a sell rating on the stock with a target price of ₹105, suggesting a potential decline of 27.5% from the closing price on November 1, during Muhurat Trading.
The brokerage has kept a neutral stance on HPCL and BPCL stocks, adjusting HPCL’s target price down to ₹370 from ₹375. In contrast, it has increased BPCL’s target to ₹370 from ₹365.
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