Citi Research, Nuvama Institutional Equities and Emkay Global have shared their outlook on HDFC Life Insurance Co. after it published its quarterly results. Citi also has Vodafone Idea Ltd. on its radar, while Nuvama shared a note on HDFC Asset Management Co. Morgan Stanley shared its outlook on Apollo Tyres Ltd. following a price hike by peer.
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 HDFC Life
Maintains a 'buy' rating on the stock and a target price of Rs 735 apiece.
Value of new business' margins 70 basis points lower than Citi's estimates.
Higher-than-expected unit-linked insurance plans mix contributed to margin pressure.
Capacity additions, revival in non-par and focus on volume augur well.
Comfort on underlying surrender assumptions, distribution payout tweaks to alleviate margin pressure.
Rollover estimates to June 26 to arrive at target price.
Have a pair trade open: HDFC Life as 'overweight' and ICICI Prudential Life Insurance Co. as 'underweight'.
Emkay On HDFC Life
Reiterates a 'buy' rating on the stock and a target price of Rs 750 apiece, implying a potential upside of 18% from the previous close.
Annualised premium equivalent came in 4% above estimates.
APE growth offset margin miss leading to 2% beat in VNB.
Management is confident of doubling the VNB over the next four years.
Expects VNB and APE growth through HDFC Bank and the agency channel firing up.
Increases APE estimates, reduces margins and unchanged VNB.
Valuations based on 2.5 times the FY26 price to embedded value.
Nuvama On HDFC Life
Raises target price to Rs 780 apiece against earlier Rs 760, implying a potential upside of 22% from the previous close.
Strong ULIP sales drove growth; 1% below estimates.
VNB came in 0.7% below estimates.
Shift in product mix towards linked products drove down margins.
Continues to be focused on growth and willing to forego margins.
Higher surrender values rules to have limited impact on margins.
Revising FY25E/26E VNB by 0.5%/2.5%.
Valuations for FY25E price to embedded value of 3x.
Nuvama On HDFC AMC
Maintains a ‘buy’ rating on the stock and a target price of Rs 4,910 apiece.
Reported a stellar operational performance.
Quarterly growth in average assets under management at 9.6% QoQ.
Equity AUM market share rose 80 basis points YoY to 12.9%.
Hikes profit estimates by 2.4% and 0.7% for FY25 and FY26.
Values the company at enterprise value to profit of 51 times FY25 and 43 times FY26.
Citi On Vodafone Idea
Maintains a 'buy' rating on the stock and a target price of Rs 23 apiece, implying a potential upside of 38% from the previous close.
Senior counsel of the company has once again sought urgent listing of curative petition it had filed last October. This is for correcting arithmetic errors that it claims were made in the computation of the adjusted-gross-revenue dues.
The company had previously sought an early hearing in February as well.
AGR liability of Rs 70,300 crore has potential for reduction in the event of a favourable outcome.
The curative petition could be Rs 30,000–35,000 crore according to the management.
Target price could rise from Rs 23 to Rs 28 in the event of a favourable outcome.
Could be positive for Indus Towers Ltd. as well as Bharti Airtel Ltd.
JP Morgan Initiates Coverage On Bharti Hexacom
The brokerage initiated coverage with 'overweight' and a target price of Rs 1,280 apiece, a potential upside of 20% from the previous close.
The company can enjoy stronger tailwinds from subscriber growth and organic ARPU expansion.
Tariff repair to drive 20% CAGR.
Spectrum cost per population is lower than Bharti Airtel's national average.
98% of revenues is largely wireless.
Capex should come off after 5G investments of last year.
Tariff hikes should drive a reduction in net debt to Ebitda, improve free cash flow and higher dividends.
Motilal Oswal's June Update On Metals
Steel prices corrected 2% MoM in June.
Correction due to onset of monsoons, elevated imports, decline in global steel prices.
Lower global steel prices impacted exports, down 32% YoY in June.
Channel checks suggest subdued steel prices over the next few months, with improvement from the second half of FY25.
Alumina prices up 20% MoM on supply constraints.
Morgan Stanley On Apollo Tyres
Maintains an ‘equal weight’ rating on the stock and a target price of Rs 472 apiece, implying a potential downside of 13% from the previous close.
MRF Ltd. reportedly hiked its prices 2% on blended basis, 2% for its truck tyres and 3-7% across products within passenger car & radial tyres.
Price hikes show a focus on margins.
See limited earnings upside in view of sharp rises in commodity and regulatory costs.
Apollo Tyres Ltd. hiked prices by 2-3% in May and 1.5% in July 2024.
Ceat Ltd. and JK Tyre Industries Ltd. have also implemented price hikes.
Low-margin original equipment manufacturing segment is slowing down for tyre companies.
Demand in higher-margin replacement segment is holding up.
Industry needs more price hikes to offset all cost pressures.
Expect Apollo's standalone Ebitda margin to decline around 210 basis points YoY to 15.5% in FY25.
Company's focus on sustainable and profitable growth helped improve free cash flow and return on capital employed profile.
FY26 price to earnings ratio of 17x against 5-year median forward P/E of 15x keeps us on the sidelines.
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