Brokerage Views: Morgan Stanley On Zomato; Jefferies On IT

Brokerages have shared their insights on key sectors. Citi Research has recommendations for global metals, gas, and auto sectors, while UBS has a positive outlook on India's infrastructure. Morgan Stanley highlights the implication of gig-worker regulations on online platforms Zomato Ltd.

NDTV Profit tracks what the brokerages are putting out on stocks and sectors. Here are all the top calls from analysts that you need to know about on Tuesday.

Citi On June Auto Sales

Overall steady volume growth.
Trends weak in trucks.
Utility vehicles, tractors and buses witnessed healthy volume growth.
Maruti Suzuki India Ltd. and Mahindra & Mahindra Ltd. saw decent uptick in UV volumes.
Hero MotoCorp reported strong volume growth, Bajaj Auto Ltd. and TVS Motor Co. saw steady momentum.
Disappointed by the continued weakness in truck volumes for Tata Motors Ltd. and Ashok Leyland Ltd.
Preference order: Maruti Suzuki, M&M, Hero MotoCorp.

Also Read: Stocks To Watch: Tata Motors, TVS Motor, NMDC, Patanjali Foods

Jefferies On IT Q1 Preview

Expects aggregate revenue growth to pick up to 0.8% quarter-on-quarter on cost and currency basis.
⁠Likely be led by LTIMindtree Ltd. and Infosys Ltd. and dragged by HCL Technologies Ltd.
Aggregate margins likely to contract 35 basis points QoQ.
Tata Consultancy Services Ltd. is likely to witness higher margin contraction, while Infosys is witnessing higher margin expansion.
Deal wins are likely to be healthy.
Remain selective due to rich valuations and limited demand recovery.

JP Morgan On Indian IT Services

⁠Prefers defensive stocks with dividend support such as TCS and Infosys.
Also prefers high-growth stocks like Persistent Systems Ltd., Coforge Ltd. and LT Technology Services.
Surveyed 166 chief information officers responsible for $123 billion in annual IT spending.
IT budgets are expected to accelerate to 4.1% in 2024 from 2.7% in 2023.
33% of the CIOs expect to delay or defer their IT purchases in the second half of 2024.
This can be due to uncertain macro, geopolitics, US elections.
25% of the CIOs expect to accelerate on tech investments.
33% are re-prioritising IT spends away from legacy and systems upgrades to fund generative artificial intelligence.
⁠8%,11% and 10% of the CIOs using TCS, Cognizant and Capgemini respectively as vendors to increase IT spends respectively.

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Morgan Stanley On Zomato

Maintains an 'overweight' rating on Zomato Ltd. and a target price of Rs 235 apiece, implying a potential upside of 15% from the previous close.
Karnataka is drafting a bill for platform-based gig workers, requiring aggregators to enter fare contracts and proposing a fee. The state will establish a welfare board, fund workers, prevent unjust dismissal, and provide dispute resolution mechanisms.
The Rajasthan Assembly passed a welfare fee bill in August 2023, while there was news of Telangana launching a platform based on the Gig Workers Policy in June.
If this gets implemented, it will impact e-commerce, logistics, food delivery, quick commerce, and ride-hailing platforms nationwide.
The incremental cost burden could be shared by all the stakeholders.
The bigger medium-term implication would be increased regulatory scrutiny.
This will create a more complicated operating environment for the platform-based companies.

Citi On Indraprastha Gas

Maintains a 'buy' rating on Indraprastha Gas Ltd. and a target price of Rs 610 apiece, implying a potential upside of 16% from the previous close.
Target raised on reduction in cost of capital assumptions.
Key underlying operating, financial assumptions remain unchanged.

Also Read: Trade Setup For July 2: Nifty May Witness Profit-Booking At Higher Levels

Citi On Gujarat Gas

Maintains a 'sell' rating on Gujarat Gas Ltd. and a target price of Rs 500 apiece, implying a potential downside of 22% from the previous close.
Target raised on reduction in cost of capital assumptions.
⁠Key underlying operating, financial assumptions remain unchanged.

Jefferies On ICICI Lombard

Maintains a 'buy' rating on ICICI Lombard General Insurance Co. and a target price of Rs 2,090 apiece, implying a potential upside of 16% from the previous close.
Partnerships with PB Fintech Ltd. to help the health insurance segment grow at a 25% compound annual growth rate over fiscal 2024–27.
Expects premiums to grow at 17% CAGR over fiscal 2024–27.
New health insurance product Elevate to help ramp up retail presence.
New products can get positive response from customers and agents.
The company should handle underwriting analytics well to help maintain profits.
Raises earnings assumptions to factor strong growth in health insurance.

UBS On Industrials And Infrastructure

Expects FY25 to record sustained 86%, 20% and 22% growth in new orders, sales and earnings before interest, taxes, depreciation, and amortisation respectively.
Electrification, defence manufacturing, mobility and energy to lead growth.
Top-line growth visibility remains strong on the back of strong orders in two years.
Remains confident on healthy margins uptrend for short-cycle business.
Maintains positive view despite expensive headline valuations.
Top sector picks in order: CG Power & Industrial Solutions Ltd., Bharat Electronics Ltd. and Larsen & Toubro Ltd.
Maintains 'neutral' rating on Siemens Ltd. and 'sell' rating on Cummins India Ltd.