Brokerage Views: Citi On HCLTech, Coal India; Nuvama On DMart And More

Brokerages, including Jefferies India Pvt. and Citi Research, offered insights on HCL Technologies Ltd., while Nuvama Institutional Equities shared its outlook on Avenue Supermarts Ltd. after the companies announced its earnings for the first quarter of the current financial year. Investec has initiated coverage on Indian luggage due to "⁠increased focus on functionality and travelling in style".

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 Monday.

Jefferies On HCLTech

Maintains a 'hold' rating on the stock and a target price of Rs 1,630 apiece, implying a potential upside of 4% from the previous close.
Revenue declined across key markets due to productivity benefits being passed.
Management highlighted that spending continues on cost-efficiency programmes.
Seen some weakness in the auto segment in Europe.
Expects HCLTech to deliver at midpoint of guided range in FY25.
Expect HCLTech to deliver 18% margins in FY25.
Sees limited scope for re-rating as the stock is trading at 26x price to earnings multiple for its services business.

Nomura On HCLTech

Nomura maintains a 'buy' rating on the stock and raised target price to Rs 1,720 apiece from Rs 1,560 earlier, implying a potential upside of 10.3% from the previous close.
Reiteration of FY25 guidance does not factor in improvement in discretionary demand.
Seeing signs that discretionary demand may have bottomed out, but it is too early to call with certainty.
Downside risks include unexpected ramp-downs hurting revenue.
Expects growth in Q2 across verticals and geographies to be better than Q1, except financial services

Bernstein on HCLTech

Maintains 'market-perform' rating, while raising the target price to Rs 1,520 from Rs 1,460, implying a downside of 2.6%.
In-line quarter, revenue growth muted across segments.
FY25 revenue and margin guidance maintained.
Products and Platforms business was flat, services revenue was lower QoQ.
Updates FY26 earnings by 0.7%.
Maintains PE multiple at 21x.

Citi On HCLTech

Maintains a ‘neutral’ rating on the stock and a target price of Rs 1,545 apiece, implying a potential downside of 1% from the previous close.
Unchanged guidance for FY25 is positive.
Total contract value was weaker than expected.
The two largest verticals—financials and manufacturing—reported revenue declines.
Business is gradually bottoming out but recovery is still slow.
Management highlighted competitive intensity driving irrational behaviour in deal renegotiations.

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Investec On Indian IT Services

ISG-One Index call highlighted the continued weakness in discretionary spending and managed services.
It flagged potential for a strong banking, financial services and insurance recovery in 2025.
⁠ISG-One observed 30% in cost savings from GenAI-based projects in application data management and infrastructure.
⁠For now, the sector is celebrating the lower revenue leakage on the book.
However a bigger recovery is more likely in 2025.
⁠ISG-One has cut it growth forecast for managed services to 2% versus 3% earlier.
Data suggests that managed services reduction in pricing is slowing.

Nuvama On Avenue Supermarts

Maintains a 'hold' rating on the stock and raised target price to Rs 5,091 apiece from Rs 4,821 earlier, implying a potential upside of 3% from the previous close.
Building 45 stores for FY25.
First-quarter estimates for FY27 earnings are unchanged at 75 times its price to earnings ratio.
Store productivity remains below pre-Covid average.
DMart sustained an improving trajectory of general merchandise and apparel.
Expects slight improvement in store productivity.
DMart ready growth was stable at 27% YoY.

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Citi On Avenue Supermarts

Maintains a 'sell' rating on the stock and raised target price to Rs 3,550 apiece from Rs 3,400 earlier, implying a potential downside of 28% from the previous close.
Gross margin recovery to the pre-Covid will take 18–24 months.
Revenue per square feet continue to face headwinds from quick commerce
Key concerns include:
- Store growth, given the ownership model.
- Revenue per square foot impacted by quick commerce.
- Gross margin — slowdown in discretionary consumption.
Avenue Supermarts Ltd. remains one of the best run retailers in India.

Morgan Stanley On Cement Sector

Limited upside triggers in cement.
Medium-term outlook remains robust.
Demand-led margin-expansion story intact.
Stocks with capacity and cost improvement capability will do well.
UltraTech Cement Ltd. and Ambuja Cements Ltd. to see strong additions.
Margin expansion to continue for UltraTech Cement and Ambuja Cements Ltd.
Raises bull case weight on both stocks.
UltraTech Cement remains top pick.
Maintains an 'overweight' rating on UltraTech Cement Ltd. and a target price of Rs 13,620 apiece, implying a potential upside of 18% from the previous close.
Upgrades Ambuja Cements to an 'overweight' rating on the stock and a target price of Rs 775 apiece, implying a potential upside of 14% from the previous close.
Maintains an 'equal-weight' rating on ACC Ltd. and a target price of Rs 2,930 apiece, implying a potential upside of 10% from the previous close.
Maintains an 'equal weight' rating on Grasim Industries Ltd. and a target price of Rs 2,990 apiece, implying a potential upside of 7% from the previous close.
Downgrades rating on Dalmia Bharat Ltd. to 'equal weight' and a target price of Rs 1,990 apiece, implying a potential upside of 6% from the previous close.
Downgrades rating on Shree Cement Ltd. to 'underweight' and a target price of Rs 27,000 apiece, implying a potential downside of 2% from the previous close.

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Investec On India Luggage

Initiates coverage on VIP Industries Ltd. with a 'buy' rating on the stock and a target price of Rs 560 apiece, implying a potential upside of 20% from the previous close.
Initiates coverage on Safari Industries (India) Ltd. with a 'buy' rating on the stock and a target price of Rs 2,800 apiece, implying a potential upside of 31% from the previous close.
Following factors underpin growth runway for India’s luggage industry — ⁠favourable demographics, evolving lifestyles and ⁠increased focus on functionality and travelling in style.
India's luggage market size is estimated at Rs 10,000 crore.
Investec estimates the luggage market to be 50% higher or Rs 15,000 crore.
E-commerce continues to be a key growth driver.
VIP Industries Ltd. and Safari Industries (India) Ltd. are present across just 45% and 35% of retail counters in general trade respectively.
Expects direct-to-consumer plays to gradually make inroads into traditional retailing.

Citi On Budget Preview

Additional RBI dividend and better tax collections opens additional fiscal space.
Expects the government might want to accelerate the pace of fiscal consolidation.
Might allocate additional fiscal space to reduce FY25 deficit.
Might allocate fiscal space to lowering taxes, increasing capital expenditure and other expenditures.
Could be positive for the consumer staples, autos, industrials and real-estate sectors.

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Citi On Coal India

Maintains a 'neutral' rating on Coal India Ltd. and a target price of Rs 460 apiece, implying a potential upside of 7% from the previous close.
Impact of changes in e-auction process.
Firm asks subsidiaries to increase the share of e-auction sold coal to 40% of production.
Enhanced coal availability in the spot market to result in lower premium of e-auction coal.
Impact on Coal India Ltd.'s profitability to depend on the quantum of additional sales.
The 1% change in e-auction pricing impacts earnings before interest, taxes, depreciation and amortisation and profit after tax by 0.4%.
The 1% change in e-auction volumes impacts Ebitda/profit by 0.15%.

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