Bajaj Auto Ltd. received divergent ratings from brokerages. While Nuvama and Jefferies retained their 'buy' call, Emkay downgraded to 'sell', following the announcement of the second quarter results. Sales growth, competition and industry outlook are among the factors influencing views.
Besides, SRF Ltd. received a downgrade from UBS, while two brokerages remain bullish on KEI Industries Ltd. on positive sales outlook.
NDTV Profit tracks what brokerages are putting out on stocks and sectors. Here are all the top calls from analysts you need to know about on Monday.
Brokerages On Bajaj Auto
Nuvama
Maintained 'buy' with target price Rs 13,200 per share from 12,000 apiece earlier, a potential upside of 13% over the previous close.
Strong second quarter results and outlook remains positive.
The company's presence is improving in electric and CNG space.
The brokerage has built in 43% CAGR in electric vehicles over the next three years.
Estimates CNG volumes at 80,000 units this year and 2,40,000 units in fiscal 2027.
Share of CNG and EV vehicles should rise to 20%-plus in domestic two-wheelers in fiscal 2027.
Estimates 8% volume CAGR over the next three years, led by 7% growth in domestic and 10% growth in export segments.
Builds in revenue and Ebitda CAGR of 12% and 15%, respectively, over the next three years.
Jefferies
Retained 'buy' rating with target price of Rs 13,400 per share, compared to Rs 11,630 apiece earlier, an upside potential of 15%.
Strong growth but slight miss in second quarter earnings.
Gross margin contracted 130 basis points sequentially on higher share of lower-margin electric two wheeler.
The company expects 3-5% growth in motorcycles in festive season.
Remains more optimistic as registration data suggest 12% YoY growth in two wheelers.
Optimistic on continued quarterly improvement in exports.
Electric two wheeler market share rose from 11% in fiscal 2024 to 21% in September.
Expects two-wheeler industry volumes to grow at 14% this year, 15% next year and 11% in fiscal 2027.
It trimmed EPS estimate till fiscal 2027 by 1-2%, but still expects strong 16% CAGR over the period.
Also Read: Stock Market Today: Nifty, Sensex End Near Two-Month Low; Bajaj Auto, Shriram Finance Top Losers
Emkay
Downgraded to 'sell' from 'reduce' with target price of Rs 9,500 apiece, compared to Rs 8,300 earlier, a potential downside of 18%.
Financial results were marginally weak on lower ASPs.
Two-wheeler retail growth has been muted so far this fiscal at 6.7% and September-October at 5.7%.
Market share loss in the fast-growing 125-cc category.
Management expects this fiscal's industry growth to be closer to 5% than 8% due to ongoing below-par festive performance persisting.
Exports recovering, albeit with key Nigeria market still 50% below its earlier peak.
Elevated base effect for three-wheelers may kick-in.
Estimates are unchanged at 13% EPS CAGR for the next three years.
Prefers Hero Moto Corp on better risk reward and TVS Motors on improved growth prospects.
UBS On SRF
Double downgrades to 'sell' rating from 'buy'. Target price cut to Rs 2,100 per share from Rs 2,700 apiece earlier, implying 8.8% downside.
Expectation of demand recovery in chemical segment to meet with disappointment.
It expects agro-chem demand environment to remain difficult.
It expects market share shift toward Chinese manufacturers.
The brokerage cut earnings per share estimate for the current and the next fiscal by 20% and 22%, respectively.
Brokerages On KEI Industries
Nuvama
Maintained 'buy' call with a target price of Rs 5,250, a likely upside of 20.6%.
Mixed September results with healthy cables performance but margins contract.
The QIP of Rs 2,000 crore will aid working capital requirements and help remain debt-free.
Management reiterated 16–17% revenue growth, 10.5-11% margins for current fiscal.
Expects to maintain guidance with exports contributing 11–12%.
Projects revenue to grow at 19% on a compounded annual basis, Ebitda by 23% and net profit by 24% in the next three years.
Jefferies
Maintained 'buy' rating with a target price of Rs 5,365 per share, a potential upside of 22%.
Second quarter Ebitda growth muted at 8% YoY, and 15% below estimates.
Extra High Voltage cable sales declined 51% YoY, but expects deliveries to pick up.
It expects positive surprise in 12-18 months on power T&D orders.
Rs 2,000-crore QIP will ensure that the balance sheet remains net debt free.
Exports have positive surprise scope on China+1 opportunity, the brokerage said.
Brokerages On L&T Tech
Nomura
Maintain 'reduce' rating with a target price of Rs 4,840, down from Rs 4,960 earlier, a potential downside of 9%.
In the third quarter, mobility business could be affected by furloughs.
Management indicated it could see sequential margin improvement hereon this year.
It believes achieving a 16% EBIT margin would be a tall task.
There were significant investments in the first half of this year.
Salary hikes and growth from margin-dilutive SWC businesses could impact margins.
It expects an EBIT margin of 15.6% this year and 16.4% in the next fiscal.
Citi
Maintain a 'sell' with a target of Rs 4,860, slightly down from Rs 4,890 previously, implying a likely downside of 9% from the previous close.
Management said mobility business is likely to be soft in the next quarter and rebound expected in the fourth one.
Wage hikes effective November, full quarter impact likely to be 100-120 bps.
Management sounded confident on the revenue guidance, asking a rate of 4.5% CQGR. The brokerage believes even at the lower end, this looks difficult.
This is despite better SWC seasonality in the second half, deal wins, and expected deal wins due to stronger pipeline.
This could also be difficult due to macro uncertainty and furloughs in the December quarter.
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