Morgan Stanley on Titan
EW, Target Price: Rs 3532
Titan’s 2Q showed strong top-line growth but a significant negative surprise in margins.
The 12% YoY growth in buyer numbers was robust, driven by the duty cut. Management expects strong demand in the second half of the financial year.
The F2025 consolidated jewellery EBIT margin guidance has been revised down to 11-11.5%.
CLSA on Titan
Outperform, Target Price raised to Rs 4221 (on Roll Forward)
Titan’s 2Q standalone sales grew 13% YoY, exceeding estimates.
Jewellery sales also rose 13%, outperforming the forecast of 12%, with domestic sales surging 25% YoY (excluding bullion).
Watches & wearables grew by 19% YoY, and Eye Care & emerging businesses grew by 7% and 14%, respectively.
Jefferies on Titan
Hold, Target Price reduced to Rs 3400
The customs duty cut benefited jewellery growth but negatively impacted margins. Even after adjusting for this, margins remained weak due to a less favorable product mix (lower studded sales).
Management’s commentary on demand remains positive, but EPS has been cut by 3-7%.
Goldman Sachs on Titan
Buy, Target Price reduced to Rs 3650
2Q EBIT declined by 15.9% YoY.
Adjusted for a one-off loss of Rs 2.9bn due to inventory losses in the jewellery business from the customs duty cut, EBIT grew 6.9% YoY, below estimates.
Despite strong jewellery growth in 2Q, the festive season in 3Q is expected to remain strong.
A split government post-US elections is the base case, limiting drastic policy shifts. A Republican sweep could bring significant policy changes, while a Trump victory might accelerate the China+1 strategy, benefiting sectors like EMS, chemicals, and cables. Fossil energy sectors (coal, thermal power) would also benefit, but select autos could be negatively impacted. A stronger USD under Trump would hurt FPI flows.
CLSA on Auto
Festive season retail growth led to inventory corrections. Dealers expect double-digit growth for 2Ws and mid-single-digit growth for PVs in FY25. Retail sales for both 2Ws and PVs were boosted in late October, with discounts remaining at September levels. The marriage season in November-December will likely further increase sales. Inventory levels have normalized.
Nomura on India Consumption
Demand remains strong in rural areas and tier-2/3 cities, but urban metros and industrial demand are weak. Overall results are mixed, indicating stability rather than growth. A cyclical slowdown is in progress, with leading indicators suggesting further moderation in GDP growth.
Nomura on Berger Paints
Reduce, Target Price Rs 500
The quarter was weaker than expected, though the company is embarking on new initiatives to boost market share.
2Q results showed volume/sales growth of 3.6%/0.3% YoY, underperforming forecasts of 10%/3%.
Operating profit margin (OPM) stood at 15.6%, below the 17% forecast. The OPM guidance is maintained at 15-17%.
Morgan Stanley on Berger Paints
Underweight, Target Price Rs 466
2Q results missed estimates on both the top line and margins.
EBITDA margin was at the lower end of management guidance.
Management expects top-line growth to pick up in the second half, with no significant impact from competition so far.
Macquarie on Berger Paints
Underperform, Target Price Rs 455
Weaker-than-expected volume growth in 2Q, along with higher investments in urban sales teams, led to a 7% EBITDA miss.
Berger Paints is confident of achieving 7-8% volume growth in 3Q and 10%+ growth in 4Q.
The company has reiterated its FY25 EBITDA margin target of 15-17%.
UBS on GAIL
Buy, Target Price Rs 240
H1 FY25 performance suggests the company is on track to meet or exceed its FY25 guidance.
Gas transmission volume averaged 131 mmscmd in H1, with gas trading earnings at Rs 33.6bn for the period.
The earnings growth prospects are not fully reflected in the stock price.
Jefferies on GAIL
Upgrade to Buy, Target Price Rs 240
EBITDA rose 7% YoY, slightly below estimates.
New pipelines are driving market share gains, and this trend is expected to continue.
Trading profitability should remain strong due to muted Henry Hub prices and elevated US gas inventories.
The risk-reward outlook is favorable.
Morgan Stanley on GAIL
Overweight, Target Price Rs 258
The company reported a 19% integrated ROE for its gas pipelines, with volume growth benefiting from its expanding pipeline network.
At 1.2x F26e P/B, with rising domestic gas penetration, there are multiple triggers for stock re-rating.
Jefferies on DR Reddy’s
Underperform, Target Price Rs 1130
2Q missed estimates slightly due to a weaker product mix and higher R&D expenses.
US growth slowed sequentially, but the base business in India recovered with a 9% growth.
The acquisition of Nicotineel OTC brands has been completed, but there are no near-term catalysts.
GS on DR Reddy’s
Neutral, Target Price Rs 1325
Q2 revenue and adjusted EBITDA grew 17%/6% YoY, broadly in line with expectations.
Adjusted EBITDA margins declined to 28.7% (above estimates) due to lower gross margins and higher SG&A expenses.
EPS estimates for FY25-27 have been tweaked by 3-8% to factor in the Q2 results.
UBS on DR Reddy’s
Sell, Target Price Rs 1140
The upside case for DRL depends on the size of the GLP-1 opportunity.
DRL aims for a day 1 launch of GLP-1 in all key emerging markets.
Consensus is still overestimating core EBITDA by US$150-200mn.
CLSA on Manappuram Finance
Outperform, Target Price Rs 200
2QFY25 NII, PPOP, and PAT exceeded estimates by 5%-8%, driven by better spreads and operational efficiency.
The gold loan business grew 3% QoQ, better than usual but lower than recent growth rates.
The MFI business remains subdued, similar to industry peers.
Morgan Stanley on Manappuram Finance
Equal Weight, Target Price Rs 170
F2026-27e EPS has been trimmed by 1-2%, primarily due to lower loan growth.
F2025e EPS has been revised upwards by 7% following the 2Q25 beat.
Although valuation remains attractive, the RBI ban on the MFI subsidiary may take some time to restore investor interest.
HSBC on ABB
Hold, Target Price reduced to Rs 8000 from Rs 9000
Q3 revenue and PAT grew by 5% and 22%, respectively, though PAT missed Bloomberg consensus by 5%.
The increase in order backlog is driven by large orders, while base order growth remains slow, leading to a cut in revenue and earnings expectations.
Nomura on ABB
Neutral, Target Price reduced to Rs 7570
Short-term outlook remains cautious, but the long-term outlook is bullish.
EPS estimates for CY24F/CY25F/CY26F have been reduced by 4%, 7%, and 7%, respectively, due to slower-than-expected execution rates.
There has been an uptick in large-cycle contracts.
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