Brokerage Reports: Infosys, Wipro, Axis Bank, Manappuram Finance, United Spirits, Tata Chemicals and more!!

Brokerage reports on Infosys:

CITI: They have a neutral view with a target price of Rs 1960. Infosys had a decent Q2 with 3.1% growth in constant currency terms and stable margins. The company raised the upper end of its revenue guidance, better than its competitors. However, large deal wins are down 7.4% over the last year, headcount has dropped 3%, and the guidance suggests no growth in Q3 and Q4 at the midpoint.

Bernstein: They maintain an outperform rating and increased the target price to Rs 2270 from Rs 2100. Infosys is performing well and is their top pick. Deal activity remains healthy, and Infosys continues to outgrow its peers.

Investec: They maintain a sell rating and reduced the target price to Rs 1700 from Rs 1720. Infosys had the best H1 performance among its peers but lacks catalysts for growth in the second half of FY25. Margins and deal wins don’t look promising in the second half, and discretionary spending remains low.

Morgan Stanley: They rate Infosys as overweight with a target price of Rs 2150. While Q2 revenue missed expectations and deal wins were weak, they see the stock correcting in the short term. However, they believe investors should build positions if the stock corrects to around Rs 1780.

Brokerage reports on Wipro:

Nomura: They maintain a buy rating with a target price of Rs 680. Wipro had strong deal wins in Q2, but weak seasonal guidance for Q3. They outperformed across all parameters in Q2, and discretionary demand is showing early signs of recovery.

Jefferies: They are underperform on Wipro with a target price of Rs 465. Q2 exceeded estimates, but margins were supported by one-offs. Despite positive signs in some sectors, overall growth remains weak and the guidance for Q3 is disappointing.

CITI: They have a sell rating with a target price of Rs 500. Wipro had a decent Q2, but forward indicators look weak with revenue guidance pointing to a 1% decline in Q3 and headcount down 4.4% year-over-year. Deal wins are also down by 11% on a trailing twelve-month basis.

Brokerage reports on LTIMindtree:

CITI: They maintain a sell rating with a target price of Rs 5710. LTIMindtree’s Q2 was in line with expectations. Deal activity remains steady, headcount is up 1% year-over-year, and management is cautiously optimistic about the future.

Investec: They maintain a sell rating but increased the target price to Rs 5600. They expect weaker growth in the second half of the year despite a broad-based growth in Q2. The stock has been re-rated, but without a matching outperformance.

Morgan Stanley: They maintain an overweight rating with a target price of Rs 7050. Although there were no surprises in Q2, the broader recovery trends remain intact. BFSI continues to perform well, and they expect a strong deal pipeline and headcount additions.

Brokerage reports on Axis Bank:

IIFL: They maintain a buy rating but cut the target price to Rs 1360 from Rs 1380. They also reduced their earnings estimates due to slower net interest income growth. They expect muted earnings growth until the first half of FY26, with credit costs remaining high.

Investec: They maintain a buy rating but cut the target price to Rs 1298 from Rs 1340. Growth will be gradual in the near term, but management maintains long-term guidance. Asset quality performance has been better than expected.

Bernstein: They maintain an outperform rating with a target price of Rs 1250. There wasn’t much positive in Q2, with improvement in credit costs but continued concerns over asset quality and loan growth.

Morgan Stanley: They maintain an overweight rating with a target price of Rs 1445. Q2 showed improvements in asset quality, with much lower credit costs compared to Q1, but core revenue growth remains muted.

Brokerage reports on Manappuram Finance:

Jefferies: They downgraded Manappuram to hold and cut the target price to Rs 167. The RBI’s ban on loan disbursements by its subsidiary Asirvad will pressure earnings. However, at 0.9x FY26 book value, the downside seems limited.

Morgan Stanley: They downgraded to equal-weight and cut the target price to Rs 170. The RBI’s restrictions will impact profits, and Manappuram might have to support Asirvad financially. Earnings forecasts have been reduced, and they expect investor interest to remain low for some time.

Emkay on M&M Finance:

Emkay: They upgraded to buy and raised the target price to Rs 360 from Rs 280, citing an upcoming inflection point in growth, asset quality, and profitability.

CLSA on Tata Communications:

CLSA: They maintain an outperform rating with a target price of Rs 2220. Q2 revenues were up 18% year-over-year, driven by strong digital services growth. EBITDA was in line with expectations.

CITI on Havells:

Citi: They are neutral with a target price of Rs 1950. Revenue growth was strong, but EBITDA and PAT growth missed expectations due to higher ad spending, volatile raw material prices, and increased manpower investment.

Morgan Stanley on Tata Chemicals:

Morgan Stanley: They are underweight with a target price of Rs 880. Q2 was in line, but India margins were impacted by weather, and global market conditions may limit margin improvements in the near term.

Jefferies on City Gas Companies:

Jefferies: They expect city gas distributors to face margin pressures due to a rising reliance on market-linked gas prices, potentially triggering a sector-wide re-rating.

Macquarie on United Spirits

Macquarie: They maintain an underperform rating with a target price of Rs 1100. Pernod India’s sales growth was 2% for the quarter, but they expect stronger growth in the next quarter and fiscal year ending June 2025.

Nuvama on Indusind Bank

IndusInd Bank’s shareholding for the second quarter shows a significant drop in the stakes held by Foreign Institutional Investors (FIIs). Their holding has decreased to 55.53%.

Currently, the bank’s foreign headroom (space for additional FII investments) is just below a crucial 25% mark, at 24.96%. If FII holdings decrease by 0.03 basis points, the headroom will go above 25%, which could lead to a doubling of IndusInd Bank’s weight in the MSCI index. This change could attract inflows of around $290 million.