Nomura on Asset Management Companies (AMCs):
Nomura initiates coverage of several AMCs. They rate HDFC AMC a “Buy” with a target price of ₹5,000, Nippon Life a “Buy” with a target price of ₹785, and UTI AMC as “Neutral” with a target price of ₹1,300. The asset management industry has a long growth runway, and AMCs are well-positioned to benefit from the increasing financialization of savings. The industry’s assets under management (AUM) are expected to grow at an 18% compound annual growth rate from FY24 to FY30. The growth of exchange-traded funds (ETFs) will continue, driven by institutional investments, but core operating profitability may slow down over time.
CLSA on HDFC Bank:
CLSA maintains a “Hold” rating on HDFC Bank with a target price of ₹1,725. The bank faced a choice: either reduce loans to lower its high loan-to-deposit ratio or continue without making changes. The bank opted for the first option, selling down loans equivalent to 100 basis points of its total. However, this may not fix the balance sheet quickly, and frequent loan sell-downs are unlikely to speed up the process.
Morgan Stanley on Reliance Industries (RIL):
They have an “Overweight” (OW) rating with a target price (TP) of ₹3,325. Although challenges in refining and retail are expected to persist due to market cycles, these are already reflected in the current price. By 2025, as new refining capacity is utilized, retail profits improve, and cash flows from new energy projects begin, the stock should see a positive re-rating.
Morgan Stanley on Torrent Power:
They rate the company “Overweight” with a target price of ₹2,268. Torrent Power received a Letter of Award (LoA) from Maharashtra’s electricity distribution company for a 2GW pumped storage project, which includes 1.5GW announced earlier in September 2024. The company expects annual revenue of ₹16.8 billion from this project. They estimate the project could generate a 15% equity return, assuming ₹50 million per MW of capital expenditure and a debt-to-equity ratio of 80:20.
Nomura on State Bank of India (SBI):
They have a “Buy” rating with a target price of ₹980, recommending it as their top pick in the banking sector. SBI is expected to maintain strong asset quality. The bank is in a good position to handle challenging deposit conditions and potential interest rate cuts. It is also attractively valued at 1x FY26 forecast price-to-book value (P/BV) and 6.7x price-to-earnings (P/E).
Antique on Gravita:
They recommend a “Buy” and have raised the target price to ₹2,920 from ₹1,710. The company’s board has approved a ₹10 billion fund raise, which is likely intended for acquisitions and new business lines. They have also increased their earnings estimates for FY25, FY26, and FY27 by 3%, 8%, and 18%, respectively.
Emkay on Escorts:
Emkay upgraded Escorts to “Buy” with a target price of ₹4,700 per share. The stock is valued at 30x its September 2026 earnings plus ₹320 in cash per share. The recently concluded monsoons improve the outlook for upcoming crop cycles, and the industry’s base is becoming more favorable. Kubota’s plan to increase sourcing from India is a key driver for growth in the medium to long term.
Citi on Indraprastha Gas Ltd (IGL):
Citi maintains a “Buy” rating with a target price of ₹620. Sales of CNG-powered two-wheelers are gaining momentum. New rules propose banning inter-state buses not running on clean fuels from entering Delhi when air pollution levels rise. Concerns about large price cuts for petrol and diesel have diminished.
Citi on Divi’s Labs:
Citi initiates coverage with a “Buy” rating and a target price of ₹6,400. Their FY26/27 EBITDA estimates are 3% and 12% higher than consensus, driven largely by GLP-1 products ($95 million expected in FY27) and new custom synthesis products. The main risk to their outlook is the failure to scale up in custom synthesis, which could lower the target price to ₹5,100 in a bear case scenario with no sales from GLP-1.
Bernstein India Strategy:
Bernstein believes that India is nearing the peak of its return on equity (ROE) cycle, but this peak will be much lower than pre-2008 financial crisis levels. Once the peak is reached, concerns about valuations will start growing rapidly. Across the top 100 companies, only a few sectors show strong potential for further growth. This could limit gains in the broader stock market indices. The focus will shift to stocks that can grow their revenues in non-linear ways or have specific catalysts, limiting the number of good investment opportunities.
Morgan Stanley: India Politics
Since the end of 2013, the stock market has been good at predicting the performance of the BJP-led NDA in elections. Markets tend to lose value before expected election defeats. However, this time, market performance has stayed strong even though there is a chance the BJP-led NDA may not do well in upcoming state elections. Historically, the market reacts positively to BJP victories, driving up stock prices.
Morgan Stanley is concerned about the upcoming state elections. State governments tend to increase populist spending before elections, which is already causing a peak in state-level capital expenditure. This kind of spending counteracts the central government and RBI’s efforts to manage inflation, especially its volatility. Reducing inflation volatility has been a key reason for the current bull market.
Jefferies: India Politics
The BJP had a positive surprise with the Haryana election results, which gave the party some much-needed political comfort. As expected, Congress won the election in Jammu and Kashmir. The Haryana result should boost investor confidence in the short term, but the more important Maharashtra state election is coming soon. Political manifestos show that populist measures, like cash transfers, are on the rise.
Bernstein: India Strategy
Bernstein believes that India is nearing the peak of its return on equity (ROE) cycle, but this peak will be much lower than the values seen before the 2008 financial crisis. Once the ROE peaks, concerns about high valuations will grow quickly. Across the top 100 companies, there are very few areas where significant growth potential remains. This will limit further gains in the broader stock indices.
As profit margins stop expanding, investors will focus on companies that can grow their revenues in non-traditional ways or those with specific catalysts. This will greatly reduce the number of attractive bottom-up investment opportunities.
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