Brokerage Reports on Tata Motors, Nykaa, Zomato, Polycab, and More: Key Stock Ratings and Forecasts

Nomura on Tata Motors: Nomura maintains a “Buy” rating with a target price of Rs 1303. Jaguar Land Rover (JLR) reported a 3% and 10% year-on-year drop in retail and wholesale volumes for the second quarter of FY25. They estimate JLR’s annual sales for FY25 to be 403,000, which is flat compared to last year. They also expect JLR’s EBIT margin to be 8.3% for FY25, slightly below the company’s guidance of at least 8.5%.

Nomura on Nykaa: Nomura gives a “Neutral” rating with a target price of Rs 203. For the second quarter of FY25, growth seems to be improving, led by Beauty & Personal Care (BPC). They expect consolidated revenue growth of 26% year-on-year and an EBITDA margin of 6%, up 50 basis points from the previous quarter. However, this is still lower than the full-year forecast for FY25, which expects 29% revenue growth and a 7.5% EBITDA margin.

HSBC on Cable & Wire OEMs: HSBC retains its “Buy” rating on Polycab, raising the target price to Rs 7800. It also retains “Hold” on KEI Industries and R R Kabel, raising their target prices to Rs 4350 and Rs 1900, respectively. Demand for cables and wires remains strong, but the high base and copper price fluctuations could affect EBITDA margins for Polycab and R R Kabel.

HSBC on Zomato: HSBC maintains a “Buy” rating on Zomato, raising the target price to Rs 330. The competition in the food delivery space appears to be stabilizing, although Zomato can still improve its take rates. In the quick commerce sector, Swiggy is struggling to keep up with Blinkit but still has potential to increase take rates and margins.

CITI on Info Edge: CITI gives a “Buy” rating with a target price of Rs 8320. Info Edge reported 14% year-on-year growth in recruitment billings in the second quarter of FY25, continuing the upward trend seen since the fourth quarter of FY24. They expect overall EBITDA to be Rs 2.7 billion, up 11% year-on-year, with margins increasing by 10 basis points annually and 180 basis points from the previous quarter.

Nomura on Power Utilities: Nomura initiates a “Buy” rating on Tata Power with a target price of Rs 560. They expect the company to achieve a strong 16% EBITDA CAGR from FY24 to FY27, driven by a doubling of renewable energy capacity, strong performance in solar EPC projects, and increased profitability in Odisha operations.

Nomura on Power Utilities: Nomura sees great opportunities across India’s entire energy sector, from solar module manufacturing to renewable energy generation and transmission. They expect India’s energy demand to grow at a 7% CAGR from FY24 to FY30.

Nomura on JSW Energy: Nomura initiates a “Buy” rating on JSW Energy with a target price of Rs 885. They expect JSW to achieve a 38% EBITDA CAGR from FY24 to FY27, supported by a more than doubling of operational capacity and strong margins from renewable energy projects.

CLSA on M&M: CLSA upgrades Mahindra & Mahindra (M&M) to “Outperform” with a target price of Rs 3400. The company’s growth in SUVs, led by models like XUV 300, Thar Roxx, and upcoming electric vehicles, is expected to boost sales and maintain segment EBIT margins at 9% for FY26-27. After flat tractor volumes in FY23-25, they expect the domestic tractor industry to recover from FY26, with good reservoir levels as a key factor. M&M’s return on equity (ROE) has been over 20% since FY24, and despite high capital expenditures of over Rs 70 billion per year, the company is trading at a 3% free cash flow yield for FY26.

UBS maintains a “Sell” rating on Aurobindo Pharma with a target price of ₹1,333. The company’s API Unit 2 underwent a week-long US FDA inspection, resulting in 10 observations, including issues with shared equipment, incomplete manufacturing instructions, inadequate training for microbial assessment, and poor quality control oversight. Additional concerns included improper water tank design, an inadequate change control process, and insufficient equipment cleaning validation. If no integrity issues are found, the plant may avoid an Official Action Indicated (OAI) flag.

Morgan Stanley maintains an “Overweight” rating on Trent with a target price of ₹8,032, as the company expands into the mass-priced beauty segment through Zudio Beauty. The beauty and personal care (BPC) category has significantly contributed to sales in Westside and Zudio stores, growing as customers increasingly indulge in these products. The importance of emerging categories has also increased, now representing 20% of Trent’s standalone revenue, up from 10% previously.

Nuvama has initiated a “Buy” rating on Skipper with a target price of ₹650, citing the company’s strong growth potential as a niche player. The proposed National Electricity Policy, with a ₹9.2 trillion transmission capex, and the global shift towards renewable energy will drive significant capital expenditure in high-voltage transmission and distribution. Skipper is expected to benefit from increased domestic and export orders, projecting a CAGR of 22% in order inflow, 26% in sales, and 50% in EPS from FY24 to FY27, with an EBITDA margin of 10.5% by FY27. The company also plans to double its tower capacity and is the only backward-integrated player in India.

Morgan Stanley Emerging Market Strategy: Key Updates

Geopolitical risks, the upcoming US election, and policy uncertainty for 2025 are major concerns for the coming months (October-November).

India remains the largest “Overweight” position in their portfolio.

Australia has been upgraded to “Overweight” as a defensive choice.

They are slightly reducing their “Underweight” position in China to -50 basis points for pan Asia and emerging market investors.

The “Overweight” position in Japan is also reduced to +50 basis points, with policy continuity expected under Ishiba-san, but Japan remains vulnerable to global growth and oil price fluctuations.

They’ve increased their “Underweight” positions on Korea and Taiwan to -150 basis points each, while adding to “Overweight” positions in Brazil and South Africa.

Nomura’s India Strategy suggests that with renewed interest in Hong Kong and China stocks, India may experience some near-term underperformance. However, they believe this phase of underperformance will not be long-lasting.

The structural outlook for India remains attractive. If valuations return to more favorable levels, both foreign and domestic investors are likely to consider re-entering the market. Currently, MSCI India is trading at a forward price-to-earnings (P/E) ratio of 24.1x.

Valuation levels decreasing to around 21x would be an appealing point for investors to begin rebuilding their positions in the market. The India Equity Strategy team has set an end-2024 fair value index target of 24,860 for the NIFTY Index.