Brokerage Reports on HDFC AMC, HDFC Life, Zomato, Airtel, RIL, Vodafone, Avenue Supermart, BSE & Others

Jefferies on HDFC AMC

Jefferies has given a “Buy” rating with a target price of Rs 5,450. HDFC AMC showed strong profit growth of 46% year-on-year (YoY) for the second quarter, driven by a 38% rise in revenue. The growth was supported by a 65% YoY increase in average assets under management (AAUM) for equity and a small improvement in yields due to reduced distribution commission costs across major equity funds.

CITI on HDFC AMC

Citi has given a “Sell” rating with a target price of Rs 3,600. Core profit before tax (PBT) grew 45% YoY, which was 2% higher than Citi’s estimates. The key factors for this growth were a strong increase in AAUM (45% YoY for mutual funds) and sustained positive fund inflows, boosted by good performance.

Morgan Stanley on HDFC Life

Morgan Stanley (MS) has an “Overweight” rating with a target price of Rs 840. HDFC Life’s management expects 18-20% growth in annual premium equivalent (APE) and 15-17% growth in value of new business (VNB) for the year. This should lead to an improvement in VNB margins in the second half of FY25. In the second quarter, the VNB margin was weaker due to delayed price adjustments for non-participating saving products, but margins should recover from the third quarter onwards.

UBS on Zomato

UBS gives a “Buy” rating with a target price of Rs 320. In September 2024, the food delivery industry saw a 2.9% decline in volume, which is typical for the season. Zomato is expected to show 7% quarter-on-quarter growth in gross merchandise value (GMV) for Q2 FY25 as it continues to compete with Swiggy.

HSBC on Bharti Airtel

HSBC has upgraded Bharti Airtel from ‘hold’ to ‘buy’ and increased its target price from ₹1,325 to ₹1,950, indicating a potential upside of 13.5% based on the October 15 closing price.

HSBC expects Bharti Airtel’s EBITDA and earnings per share (EPS) to grow by 16% and 78% respectively, from FY24 to FY27. This growth will be driven by higher mobile average revenue per user (ARPU), strong broadband subscriber growth, and improved profit margins. Capex is expected to decrease, leading to better free cash flow and a reduction in the company’s debt.

HSBC on RIL (Jio)

HSBC believes Jio (a subsidiary of RIL) is well-positioned to capture the home broadband market due to its investments in a 5G network and strong content offerings. Jio is expected to achieve a 45% market share in home broadband by FY30, up from 28% in FY24.

HSBC on Vodafone Idea

HSBC maintains a “Reduce” rating on Vodafone Idea due to its high debt (12 times its FY26 estimated EBITDA) and rich valuation. There is also a risk of equity dilution if the company cannot pay its regulatory dues through its operating cash flows.

HSBC on Avenue Supermart

HSBC has downgraded Avenue Supermart to “Hold” and lowered the target price to Rs 4,500. Sales growth slowed to around 14% YoY in the second quarter as quick commerce gained traction in metro cities. While gross margins improved slightly, higher operating expenses limited EBITDA growth to 10% and net profit growth to 8%.

Nomura on Aditya Birla Real Estate (Century Textile)

Nomura has initiated coverage with a “Buy” rating and a target price of Rs 3,700. They expect strong growth in pre-sales (87% YoY in FY25) and positive operating cash flow starting from FY25, with free cash flow turning positive between FY27 and FY28. The company’s debt-to-equity ratio is expected to peak at 1.1x in FY26.

Jefferies on BSE

Jefferies has downgraded BSE to “Underperform” but raised the target price to Rs 3,500. After SEBI’s new framework for futures and options trading, BSE stock has more than doubled. However, if market volumes drop by 25%, BSE’s valuation, assuming a P/E of 40x FY26E, implies its market share would need to rise from 13% in Q2 to 30-35%, which Jefferies considers unlikely in the short term.