Brokerage Reports on Reliance Industries, HCL Tech, HDFC Bank, JSW Infra, RK Forging, Maruti, Neuland Labs, Kotak Bank, and Time Technoplast

Reliance Industries Review

CLSA: Maintain Outperform with a target price of Rs 3300. Q2 EBITDA was 2% below expectations, mainly due to weak performance in O2C (oil-to-chemicals) and Reliance Retail. However, Reliance Jio and the upstream business did better. Lower depreciation and higher other income resulted in a 7% PAT beat. A 15% drop in the stock brings it closer to their valuation. Key triggers include more Airfiber subscribers, new energy projects, and a potential Jio IPO in the next 12-15 months.

UBS: Rated Buy with a target price of Rs 3250. Digital business performed well, but Retail disappointed, and O2C remained weak. Telecom saw some subscriber loss due to tariff hikes. UBS lowered FY25-27 EBITDA estimates by 5-10%, but future growth drivers and lower capex could help reduce debt.

Jefferies: Buy with a target price of Rs 3400. O2C missed big, and there were minor misses for Jio and Retail. Jefferies reduced FY25/26 EBITDA estimates by 8%/6% but believes the recent 14% correction in the stock makes the valuation attractive.

Morgan Stanley (MS): Overweight with a target price of Rs 3325. Q2 EBITDA missed estimates, but profits beat expectations.

Nomura: Buy with a target price of Rs 3450. Q2 results were below expectations in a tough environment. Net debt reduced slightly to Rs 1.12 trillion, but capex increased to Rs 288 billion. They cut FY25-27 EBITDA estimates by 5-6%. The start of new energy operations by March 2025 will be a key catalyst.

Bernstein: Maintain Outperform with a target price of Rs 3440. Q2 earnings missed expectations, although Jio’s ARPU beat and Retail was soft. O2C margins were weak, but the company’s valuation remains supportive despite the earnings miss.

Citi: Neutral with a target price of Rs 2990. Weakness continued in O2C and Retail, while Jio performed as expected.

J.P. Morgan (JPM): Overweight with a target price of Rs 3125. Q2 PAT was in line with estimates. Jio did better on higher ARPU, but O2C performance dropped, and Retail saw its slowest revenue growth since COVID.

HCL Tech Review

Bernstein: Market Perform with a target price of Rs 1940. Q2 was strong, with services growth and a margin beat. Guidance for FY25 EBIT margins remains at 18-19%. Stock is up 18% over the last three months, making risk-reward balanced.

Morgan Stanley (MS): Overweight, raised target price to Rs 1970. Better-than-expected Q2 and positive comments on improving demand led to EPS upgrades. Strong revenue growth supports premium valuations.

HSBC: Hold, target price raised to Rs 1700. It was a good quarter with beats on both revenue and margins, but valuations limit near-term upside.

Nomura: Buy, target price of Rs 2000. Strong execution in Q2 led to a beat. EPS estimates for FY25-26 were raised by 1-1.5%.

Jefferies: Hold with a target price of Rs 1770. Q2 performance beat expectations with strong results from both services and products. HCL raised its lower-end growth guidance for FY25, but the stock trades at a high valuation, limiting the scope for further re-rating.

Jefferies on HDFC Bank: Buy with a target price of Rs 1890. The bank aims to reduce its loan-to-deposit ratio to 85-90% in the next three years by growing deposits at 15% and slowing loans to 11%. While branch expansion will help increase deposit share, loan growth will likely remain at or below the industry level. Lower funding costs could boost NIM, and compliance with PSL won’t significantly affect profits. They trimmed estimates by 4-6% to account for slower loan growth.

Nuvama on JSW Infra: Initiate Buy with a target price of Rs 390. The company is set for strong long-term growth, supported by a 4x capacity increase over the next 25 years, driven by organic growth from JSW Steel and other areas. They expect revenue, EBITDA, and PAT to grow by 19%, 16%, and 15% annually over FY24-27.

UBS on RK Forging: Initiate Buy with a target price of Rs 1500. UBS sees strong growth potential driven by higher EV penetration, contributions from recent acquisitions, and new clients in various sectors. They expect revenue to grow at 22% annually over FY25-27, beating consensus expectations.

HSBC on Maruti Suzuki: Buy with a target price of Rs 14,500. Passenger vehicle demand was muted during Navratri, growing just 3% year-on-year, while two-wheelers grew by 12%. With high inventory and low demand, Maruti’s Q3 dispatches may be weak.

Kotak on Neuland Labs: Buy with a target price raised to Rs 20,000. The company received USFDA approval for COBENFY, and its pipeline is strong. A shift to more profitable CMS supplies is improving margins. It trades at a discount to peers like Divis and Suven.

Bernstein on Kotak Mahindra Bank: Market Perform with a target price of Rs 1750. The bank’s growth intent is positive, but aggressive ambitions to become a top 3 bank could bring M&A risks and integration challenges.

Systematix on Time Technoplast: Initiate Buy with a target price of Rs 615. They are optimistic about the company’s composite products like LPG and CNG cylinders, and industrial packaging. They expect it to become debt-free in 2-3 years.