Brokerage Research Stock Insights: Unveiling Trends in Polycab, HDFC Life, Wipro, HCLTech, Indusind Bank, Zomato, PayTm, Delhivery, Info Edge, and Avenue Supermarts

• Goldman Sachs on Polycab:
– Recommends a Buy with a target price of ₹5,750.
– Suggests awaiting further clarity from both the company and government authorities.
– Takes no stance on the substance or outcome of allegations/investigations.
– Notes Polycab’s current trading position at 29X FY25E, representing a 38% discount to domestic peers post recent correction.

• Macquarie on HDFC Life:
– Maintains a Neutral stance with a target price of ₹635.
– Reports Q3 VNB growth lower than estimates due to low APE growth.
– Highlights constant margins despite a higher share of ULIP.
– Revises growth guidance to 11-12% in FY24F, down from ~15% earlier.

• BOFA on Wipro:
– Maintains an Underperform rating with a target price of ₹395.
– Acknowledges a tepid quarter but notes better commentary; suggests sustainability could be beneficial.
– Points out revenue decline continuing in Q3 with a lower dip expected in Q4.
– Highlights more optimistic demand commentary compared to earlier quarters and peers.
– Notes AI becoming integral in large deals.

• Jefferies on Wipro:
– Maintains Underperform; raises target price to ₹470 from ₹385.
– Q3 results beat estimates, primarily driven by higher margins.
– Expresses concern about weak Q4 growth guidance and ongoing headcount declines.
– Raises EPS estimates by 4-10% on margin beat.
– Cautions against overly optimistic pricing indicated by a sharp 18% ADR upmove.

• Ambit on HCLTech:
– Maintains a Sell recommendation; increases target price to ₹1,360 from ₹1,000.
– Recognizes qualitative improvement but remains cautious due to valuations.
– Expects growth based on better product/services and product-led margin beat.
– Anticipates HCL to outperform peers in cloud demand and ER&D recovery, but notes absolute growth remains at pre-Covid levels.

• Jefferies on HCLTech:
– Maintains a Hold with a target price of ₹1,500.
– Reports Q3 results beating estimates, particularly in higher-than-expected margins in the Software segment.
– Highlights revenue beat in Software offsetting a miss in services.
– Notes soft deal bookings and a slight cut to growth guidance.
– Lowers growth guidance to 5-5.5%, largely aligning with expectations.

Citi Research on India’s Internet (Q3 Preview):
– Anticipates 28% year-on-year GOV growth for Zomato.
– Expects slow loan disbursal growth at 48% YoY for PayTm, compared to 122% in 2Q.
– Forecasts 15%/-2% year-on-year growth in express shipments/yields for Delhivery.
– Suggests that lateral hiring for Info Edge may start to recover in 1HC24.
– Reports an 18% year-on-year increase in the E-commerce traffic index in December 2023.
– Highlights strong momentum in Nykaa Fashion and Meesho, decent performance in Flipkart, and muted activity for Myntra.
– Notes flattish quarter-on-quarter Zomato Android traffic in December ’23.
– Indicates strong property web visits, though moderating sequentially, and points to robust domestic air traffic and hotel ADRs for a strong travel season.

• Citi Research on India’s Economy:
– Describes a benign December CPI print at 5.69% year-on-year, reflecting softness despite an unfavorable base.
– States that Q4FY24 headline inflation is tracking at ~4.6% year-on-year, 60 bps below the RBI forecast.
– Observes that supply fears on food prices are not materializing, and core inflation remains subdued.
– Retains the FY25 average headline inflation forecast at 4.5% year-on-year.
– Notes a balance of risk tilted towards the downside rather than the upside.
– Expects a change in MPC stance to neutral in April.
– Considers February as a ‘live’ policy for its consideration.
– Forecasts a 50 bps cumulative repo rate cut in 2024 starting from August.

• Citi Research on Avenue Supermarts:
– Target: ₹3,200, increased from an earlier target of ₹3,100.
– Recommendation: Sell.
– Reports Q3 PAT 4% below Citi’s estimate, with revenue in-line post the trading update.
– Notes a 10% fall in average revenue/sq. ft. (Citi est; flat year-on-year).
– Observes an 80 bps decline in GM to 14.2% vs. Q3FY20 (pre-COVID period).
– Sees a risk to earnings estimates due to a continued slowdown in the consumer discretionary segment (ex-jewelry) and slower store expansion.

Citi Research on HDFC Life Insurance:
– Target: ₹675, reduced from an earlier target of ₹710.
– Recommendation: Neutral.
– Raises medium-term EV estimates by 1% due to favorable investment variance in the base.
– Trims medium-term VNB estimates by 3-5% citing slower growth.
– Expects the valuation premium to private peers to decrease without visible stimulus driving growth.

• Motilal Oswal on Wipro:
– Target: ₹520.
– Recommendation: Neutral.
– Anticipates a 3.9% CAGR in IT Services revenue over FY23-26.
– Foresees a return to growth in FY25 after a decline in FY24.
– Envisions reaching a 17% EBIT margin in FY25, implying an 8% PAT CAGR in FY23-26.

Motilal Oswal on Wipro (Q3 Results):
– Target: ₹520, same as earlier.
– Recommendation: Neutral.
– Brokerage Radar:
– Views Q3 results positively, considering the continued miss against estimates in recent quarters.
– Identifies higher deal wins commentary in Consulting, indicating a potential bottoming out of the segment’s drag.
– Expects FY24 revenue growth rate to be among the lowest among Tier-1 IT Services peers.

• Motilal Oswal on HCLTech:
– Target: ₹1,880.
– Recommendation: Buy.
– Brokerage Radar (Q3FY24 Results):
– Reports a 6% quarter-on-quarter revenue growth beat against MOSL estimates.
– Indicates Q4 guidance for the Services vertical points to growth in the next quarter.
– Views positive HCL software growth over the next 2 years as beneficial for the stock price.
– Expects a revenue CAGR of 9.8% over FY23-26.

• Motilal Oswal on Indusind Bank:
– Target: ₹1,900.
– Recommendation: Buy.
– Expects 19% loan growth CAGR over FY24-26.
– Notes an asset mix favorable to retail to support margins.
– Aims to improve CASA mix to >45% and increase the retail deposit mix to 45-50% of overall deposits.
– Estimates a 22% earnings CAGR over FY24-26.

Just Dial:
– UBS recommends buying with a raised target price of Rs 1125, citing better-than-expected results and a 400bp QoQ margin expansion.
– They anticipate guidance on growth outlook, operating expenses (employee cost & advt. spends), and overall margin trajectory for FY25.

HCL Tech (MS):
– Rated as EW with a target price of Rs 1600 by Morgan Stanley.
– Highlighted superior performance in 3Q with a notable beat from Services business and improved EBIT margins.

HCL Tech (Bernstein):
– Bernstein rates it as Market Perform with a target price of Rs 1640.
– Acknowledges a strong quarter with a sharp beat on revenue and margins (100 bps).
– HCL Software led a significant beat, up 32% QoQ CC, while Services grew 3.1% QoQ CC.

• Wipro (Nomura):
– Nomura recommends reducing with a target price of Rs 410.
– While acknowledging a 3Q beat on revenues and margin, cautious due to weak 4Q guidance and soft deal wins.
– Indicates early signs of discretionary demand recovery but sees margin improvement as unlikely in FY24.

Wipro (Bernstein):
– Bernstein rates it as Under-Perform with a target price of Rs 400.
– Notes a decline in growth across all verticals (except Healthcare) & Geos.
– Margins decreased 10bps QoQ to 16.0%, and large deal TCV was at $0.9 Bn (down 8.3% YoY CC).

Interglobe Aviation:
– UBS suggests buying with a target price of Rs 3700.
– Raises TP due to continued new aircraft additions despite supply crisis and faster than industry growth.
– Points out upside risks to yields on resilient demand and lower crude prices supporting near-term margins.
– Mentions media reports of IndiGo wet-leasing 11 aircraft in Q3, planning 10 more in Q4, and successfully deferring aircraft returns.

Goldman Sachs downgrades Dixon Technologies to “sell” from “neutral” but raises the price target to ₹5,400 from ₹4,190. Concerns include limited growth in Dixon’s non-Apple phone manufacturing, uncertainty in winning IT hardware contracts, and a high stock valuation at 52 times FY2025, a 30% premium to Indian peers and over five times global counterparts.

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