Brokerage Reports: Goldman Sachs Downgrades India, UBS on Paytm, Macquarie on Zomato, JPMorgan on Bajaj Finance, Jefferies on SRF, Nomura on Persistent, HSBC on ICICI Pru Life

Goldman Sachs on India: Goldman Sachs has downgraded Indian equities from Overweight to Neutral, pointing to slowing economic growth and corporate profits. While the long-term outlook remains attractive, high valuations and a less favorable market could limit near-term gains. The firm expects a ‘time correction’ in the next 3-6 months and revised its 12-month NIFTY target to 27,000, implying a 9% upside.

Nomura on Zomato: Nomura maintains a Buy rating with a target price of Rs 320, highlighting that Zomato’s Q-commerce division is growing rapidly. A recent capital raise of $1 billion will strengthen the company’s balance sheet. The food delivery business is also seeing steady growth, and Zomato aims to ensure neutral EBITDA in its quick commerce segment.

HSBC on Zomato: HSBC has a Buy rating on Zomato with a target price of Rs 330. While the food delivery business met expectations, quick commerce performed better. Margins remain stable despite ongoing investment in expanding Q-commerce and brand-building. The recent fundraise will help Zomato stay competitive in the market.

Macquarie on Zomato: Macquarie maintains an Underperform rating with a target price of Rs 100, noting that Blinkit’s momentum is strong, but food delivery margin expansion lags behind market expectations. They are concerned about the economics of the quick commerce industry due to rising competition.

UBS on Zomato: UBS maintains a Buy rating with a target price of Rs 320. Zomato’s strong quick commerce growth in Q2FY25 offset a slight slowdown in food delivery. Lower take rates were attributed to seasonality, and the recent approval to add new UPI users will help the company expand its customer base.

Jefferies on SRF: Jefferies has an Underperform rating on SRF with a target price of Rs 2070, citing weak performance in its Chemical segment due to inventory destocking. The management expects a stronger second half of the year, but it’s typically a seasonally better period for the company.

Jefferies on ICICI Pru Life: Jefferies rates ICICI Pru Life a Buy with a target price of Rs 860. The company reported 2% YoY growth in VNB, slightly below expectations. Premium growth was strong at 21%, driven by Ulips and annuity products across most distribution channels.

Bernstein on Paytm: Bernstein has an Outperform rating with a target price of Rs 600, highlighting positive factors such as 5% QoQ growth in GMV and 32% growth in merchant loan disbursals. However, a decline in active users and personal loan disbursals were concerns, though cost control efforts were visible.

UBS on Paytm: UBS maintains a Neutral rating with a target price of Rs 490. Paytm has received approval to add new UPI users, which should help grow its customer base. However, Paytm’s monthly transaction users (MTUs) have declined from 100 million in December 2023 to 71 million in September 2024 due to the restriction on new customer additions.

Jefferies on Bajaj Finance: Jefferies has a Buy rating on Bajaj Finance with a target price of Rs 8400. While AUM growth was 29%, profit growth lagged at 13% YoY due to higher credit costs. If credit costs stabilize, Bajaj Finance is expected to return to 20% earnings growth by FY26.

JPMorgan on Bajaj Finance: JPMorgan maintains an Overweight rating but cuts the target price to Rs 7300 from Rs 8000, citing credit overshoot and asset quality strains in Q2. Loan growth remains strong at 29% YoY, and margins should stabilize as funding costs peak.

Morgan Stanley on Can Fin Homes: Morgan Stanley has an Overweight rating with a target price of Rs 1095. PAT was in line with estimates, and calculated NIM exceeded expectations at 3.8%. Higher operating costs were balanced by lower credit costs, and disbursements grew 18% YoY.

Morgan Stanley on M&M Finance: Morgan Stanley rates M&M Finance Equal-weight, cutting its target price to Rs 285. PAT missed estimates due to lower-than-expected ROA guidance, which was cut to 1.8-2%. While the second half of FY25 is expected to be stronger, risk-adjusted returns remain an issue.

HSBC on ICICI Pru Life: HSBC maintains a Buy rating with a target price of Rs 850. VNB growth was 4% higher than estimates for Q2FY25. HSBC expects VNB growth to improve by 25% YoY in 2HFY25 and sees strong potential for sustainable VNB growth in the medium term.

Nomura on Persistent: Nomura rates Persistent Neutral with a target price of Rs 5200. The company showed resilient growth driven by strong execution and deal wins. Revenue growth in Q2FY25 exceeded expectations, and margins are expected to improve in 2H FY25.

Macquarie on Capital Goods: Macquarie reports that L&T has emerged as the lead contender for NTPC thermal power plant tenders, but concerns remain about BHEL losing its market dominance. The installation of flue-gas desulfurization (FGD) systems could be halted, affecting BHEL’s margins.

Macquarie on Cement Sector: Macquarie notes that Ambuja is expanding its footprint in South India and has potential for growth in the North. A recent deal with Orient positions Ambuja well for future expansion, and the company is expected to benefit from improved pricing and margins through inorganic growth.