Brokerage Reports on HDFC Bank, Kotak Bank, IndiaMART, Tata Cons, MCX, Zee, City Gas, RBL Bank, L&T Fin, Oberoi, TechM, Cement Stocks

HDFC Bank (JPM – Neutral, TP Rs 1750): HDFC Bank’s 2nd quarter profit was Rs 168 billion, up 5% year-on-year (ROE: 14.6%), which was 3% higher than JP Morgan’s estimate due to a reversal in some earlier provisions. Adjusted net income was in line with expectations. Net interest income (NII) grew by 10%, and core profit before provisioning was up 13%.

HDFC Bank (GS – Buy, TP Rs 2156): HDFC Bank’s core operating profits were in line with expectations, and profit was slightly higher than expected in Q2. The bank’s management discussed their strategy for future credit growth as they work on improving their loan-deposit ratio.

Kotak Bank (Jefferies – Hold, TP Rs 2080): Kotak Bank’s profit was mostly in line with expectations. Its net interest margins (NIMs) lagged behind competitors. Slippage, or unpaid loans, came from credit cards and microfinance loans. On the positive side, deposit growth was 15%, and the loan-deposit ratio was 87%. Regulatory clarity is still needed on some issues.

Kotak Bank (JPM – Overweight, TP Rs 2030): Kotak’s Q2 net income was Rs 33.4 billion, up 5% year-on-year (ROE: 12.4%), but missed JP Morgan’s estimates by 2% due to higher provisions and a small miss in core profits. Asset quality worsened, with slippages increasing, especially from credit cards and microfinance.

IndiaMART (Nomura – Neutral, TP Rs 3150): IndiaMART’s collections and subscriber growth were weak, which hurt its near-term outlook. The company expects things to return to normal by the first quarter of FY26. Collections were down 5% year-on-year, but customer additions and collection growth helped slightly.

IndiaMART (Jefferies – Downgrade to Underperform, TP cut to Rs 2540): IndiaMART’s results were as expected, but softness in subscriber additions has slowed down collection growth to 5% year-on-year. Jefferies cut their estimates by 4-12%.

Tata Consumer (MS – Overweight, TP cut to Rs 1273): Tata Consumer Products saw weak organic revenue growth of 5%, with tea volumes declining. Growth businesses grew 15%, but the international and non-branded segments performed well.

Tata Consumer (Jefferies – Hold, TP Rs 1170): Tata Consumer Products had another weak quarter, especially in India. Revenue and margins were down, with EBITDA falling 23% due to inflation in tea costs. Tea volume also declined.

MCX (MS – Underweight, TP Rs 3245): MCX’s adjusted EBITDA was slightly better than expected, but its profit missed due to voluntary contributions and regulatory provisions. Revenue was 2% above estimates. The upcoming focus will be on regulatory risks and the timeline for a new CEO.

Zee Entertainment (CLSA – Upgrade to Outperform, TP Raised to Rs 170): Zee’s Q2 revenue dropped by 6% quarter-on-quarter, with a 44% drop in movie revenue and a 1% decline in advertising. However, margins improved significantly, and EBITDA rose 18%, about 20% above estimates.

City Gas Companies (CLSA – Negative Outlook): Reduced supply of legacy gas will challenge the pricing power of city gas companies, leading to a potential 15-25% cut in the fair value of IGL and MGL. However, after the recent stock price fall, there may still be up to 12% upside.

City Gas Companies (JPM – Buy): IGL and MGL dropped around 10% recently due to a cut in APM gas allocations. This could hurt EBITDA by 20-30%, but with price increases and better gas sourcing, the impact could be smaller. MGL remains a buy.

City Gas Companies (CITI – Stable Outlook): The unexpected cut in APM gas allocation is a short-term issue for IGL and MGL. While some uncertainty remains for the next quarter, CITI doesn’t see this as a reason for a long-term decline in the sector.

RBL Bank (CITI – Buy, TP cut to Rs 255): RBL Bank faced high stress in its credit cards and microfinance business, leading to higher slippages and lower profit margins. Despite a treasury gain of Rs 1.1 billion, return on assets and equity were below targets.

RBL Bank (JPM – Neutral, TP cut to Rs 225): RBL Bank’s Q2 profit fell 24% year-on-year to Rs 2.2 billion, largely due to higher provisions from unsecured loans. Stress in credit cards and microfinance is rising, and growth for FY25 is expected to be below the bank’s earlier guidance.

L&T Finance (GS – Buy, TP Rs 222): L&T Finance had a stable quarter, with its microfinance business in control, though there was a slight drop in collection efficiency from 99.6% in June to 99.4% in September.

L&T Finance (MS – Underweight, TP Rs 140): L&T Finance’s profit and revenue were largely in line with expectations, with lower operating costs balancing out higher credit costs.

Oberoi Realty (MS – Equal-weight, TP Rs 1900): Oberoi Realty’s Q2 pre-sales were 26% higher than expected, with strong sales growth of 85% year-on-year. Cash flow was also strong, leading to a decline in debt-to-equity ratios.

Tech Mahindra (Jefferies – Underperform, TP Rs 1440): Tech Mahindra’s Q2 revenue beat expectations due to growth in its communication business and favorable foreign exchange rates. However, profits missed estimates, and management noted a challenging demand environment.

Tata Consumer (GS – Neutral, TP Rs 1050): Tata Consumer’s India business saw a sharp slowdown, with margins under pressure due to competition in ready-to-drink beverages. GS cut earnings estimates by 10-14%.

Cement Sector (JPM – Multiple Initiations): JPM started coverage on several cement companies, including Ultratech (Overweight, TP Rs 13,750), ACC (Neutral, TP Rs 590 and Rs 3020 for ACC), Shree Cements (Neutral, TP Rs 25,175), and Dalmia Bharat (Underweight, TP Rs 1,550). The sector is set for consolidation, and urbanization and infrastructure projects should boost medium-term demand. Utilization rates are expected to remain stable despite new capacity, and government spending is projected to grow by 40% year-on-year.