Brokerage Views: Citi, Nuvama On Tech Mahindra, Nomura On Axis Bank And More

Brokerages from Citi Research to Nuvama Institutional Equities and Nomura, among others, have shared their notes on key companies after the first-quarter earnings announcement on Thursday.

Citi and Nuvama have issued a 'sell' and a 'reduce' call on Tech Mahindra Ltd., respectively. Both Axis Bank Ltd. and AU Small Finance Bank Ltd. received a 'buy' call from other brokerages. Cyient Ltd. is kept on 'hold' by Nuvama.

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 Friday.

Citi On Tech Mahindra

Maintains a ‘sell’ rating on the stock but raises the target price to Rs 1,260 apiece from earlier Rs 1,150 apiece, implying a potential downside of 18% from the previous close.
Margin improvement is not possible without a growth uptick.
Subcontracting costs 200 basis points.
Good growth in the United States.
The telecom vertical is still weak.
Comviva Technologies Ltd.'s seasonality impact is 50 basis points.
Commentary suggests market conditions are largely unchanged.
Discretionary spends still challenged.

Nuvama On Tech Mahindra

Maintains a ‘reduce’ rating on the stock but raises the target price to Rs 1,200 apiece from earlier Rs 1,000 earlier, implying a potential downside of 22% from the previous close.
First quarter after announcement of three-year strategy was decent. June quarter results are a step in the right direction.
Revenue is slightly ahead of ours and the street’s expectations of 0.5% constant currency sequentially.
Except for telecom and deal wins, broad-based growth is stable.
Growth shall be difficult with telecom still forming 33% of revenue.
Margins are taking small steps towards the fiscal 2027 target.
Small steps in the right direction, but miles to go.
Margins are likely to face headwinds.
Continue to anticipate near-term pain before any long-term gain.
Introducing fiscal 2027 estimates and rolling forward valuation to 18-times estimated September 2026 Price to Earnings from earlier 16 times.
Margin headwinds include building bench strength and investing in growth.
Margin tailwinds are employee pyramid and subcontracting costs.

Jefferies On Tech Mahindra

Maintained ‘underperform’ rating on the stock and raised target price to Rs 1,300 apiece from Rs 1,065 earlier, implying a potential downside of 15% from the previous close.
Demand environment remains unchanged.
Valuations at 24 times FY26 PE are rich.
Encouraging start to TechM's turnaround journey.
However, 15% margins by FY27 are still optimistic.

Nomura On Tech Mahindra

Maintained a ‘buy’ rating on the stock and kept target price unchanged at Rs 1,600 apiece, implying a potential upside of 4% from the previous close.
Margin improvement might happen in FY25.
Expects Ebit margin of 9% in FY25.
Other cases of turnaround (such as Infosys Ltd. in 2018-20) also took three years.
Key risk is TechM faltering on its execution.

Also Read: Stocks To Watch: Cipla, IndiGo, Sanstar, Mankind Pharma, Tech Mahindra, SJVN, Texmaco Rail

Bernstein On Draft RBI Liquidity Rules

The major change is the additional 5% run-off factor for retail deposits.
The framework appears to have excessive measures.
Assuming 80% retail deposits are enabled with internet banking, LCR to decline by 10-15% for large banks
The same level of LCR could impact the return of assets by 0.05%.
Retail banks to have a larger impact.
Higher runoff for retail deposits could reduce LCR by 10-15 pp for the large banks.
Banks with a greater share of retail deposits will see a greater impact.

Also Read: RBI Proposes Deposit Framework To Avoid SVB-Like Troubles In India

Motilal Oswal On Draft RBI Liquidity Rules

Stable deposit: Run of factor has been increased to 10% from the existing 5%.
Less stable deposit: Run-off factor has been increased to 15% from the existing 10%.
The run-off factor is unanticipated deposit withdrawal.
Steps to strengthen liquidity framework of banks.
Aim to enhance the overall liquidity resilience of banks, better prepared to manage risk.
Impact on banks LCR ratio is broadly 7-13%.
Federal Bank, IDFC First Bank and AU Small Finance Bank have relatively lower LCRs versus other private banks.

Also Read: India's 10-Year Bond Yield Lowest In Two Years On Draft RBI Liquidity Rules

IIFL Securities On Draft RBI Liquidity Rules

Draft changes to LCR norms to further fortify banks’ liquidity profile.
Estimate LCR hit of 11-18 percentage points for banks.
LCR may fall below the threshold for Federal Bank.
Expect these norms to drive the CD ratio lower.
To intensify retail deposit competition.
To drive margins lower for the banks.

Also Read: RBI Mulls Liquidity Norms With More Buffers For Electronic Fund Transfers

Nomura On Axis Bank

Maintains a ‘buy’ rating on the stock and raises the target price to Rs 1,435 apiece from Rs 1,485 apiece, implying a potential upside of 22% from the previous close.
The company is entering a challenging phase.
A sharp pick-up in credit costs is led by unsecured retail and lower non-performing loan recoveries.
Soft loan and deposit growth trends; operating expenses surprise positively.
Cut fiscal 2025–26 earnings per share by 3-5%.
Factor in a moderation in our loan growth outlook to 13%.
Valuations are still attractive.

Also Read: Nifty, Sensex Little Changed After Volatile Session; Axis Bank, ICICI Bank Drag: Market Wrap

Nuvama On Cyient

Retains a ‘hold’ rating on the stock but lowers the target price to Rs 1,840 apiece from earlier Rs 2,120 apiece, implying a potential downside of 3% from the previous close.
Reported a disappointing June quarter in fiscal 2025.
Broad-based decline and weak order inflow.
Digital, engineering, and technology revenue declined 5% sequentially and 3.6% year-on-year in constant currency terms.
It now requires 3% plus the comounded quarterly growth rate to achieve fiscal 2025's flat year-on-year revenue guidance.
Cheap valuations limit the potential downside.
Cutting consolidated fiscal 2025 and 2026 estimated earnings-per-share by -15% and -12%, respectively.
Rolling forward to a 20-times September 2026 price-to-earnings ratio from 22 times earlier.

Nirmal Bang On AU Small Finance Bank

The stock has been upgraded to a 'buy' rating from 'accumulate', with a target price of Rs 784 apiece, implying a potential upside of 24% from the previous close.
The results were much better than our expectations.
Marked improvement in net interest margins from 5.1% in the fourth quarter of fiscal 2024 to 6% in the first quarter of fiscal 2025.
Improvement in disbursement yields by 250 basis points sequentially to 15.8%.
Seven-basis-point sequential improvement in the cost of funds and merger synergies from the Fincare Small Finance Bank merger.
Received the board’s approval for applying for the universal bank license.
Universal Banking License to enhance brand image, led to improved acceptability by customers.

Also Read: Trade Setup For July 26: Nifty, Sensex Consolidation To Continue With Earnings In Focus, Say Analysts

Nomura On Ashok Leyland

Maintained a ‘buy’ rating on the stock and a target price of Rs 247 apiece, implying a potential upside of 6% from the previous close.
Ebitda margin largely in line with estimates.
Management continues to see strong demand in all its business.
Power solutions, aftermarket, defence, and international operations contributed strongly to the top line.
Clear roadmap to participate in growing electric vehicle market with Switch Mobility.
Strengthen position in light commercial vehicle market with second e-LCV launch by Switch Mobility.
Strongly focussed on achieving mid-teens Ebitda in medium term.
Estimates margins will gradually continue to move higher through the up cycle.
Factors in 6%/7% YoY increase in volumes for FY25F/26F.
Key catalysts will be improved commercial vehicle growth, double-digit Ebitda growth over FY25-26F and an upside from the EV business.