CLSA has maintained a 'hold' rating on HDFC Bank Ltd. stock and said more frequent sell-downs are unlikely to repair the balance sheet faster and change the neutral view on the stock. The brokerage also maintained 'outperform' on Bharti Airtel Ltd.
While, Nuvama maintained a 'buy' on Phoenix Mills Ltd. as it sees retail consumption growth remaining on track in second quarter.
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 Wednesday.
CLSA On HDFC Bank
The brokerage maintained 'hold' rating on HDFC Bank Ltd. with a target price of Rs 1,725 per share, a potential upside of 4.5% to the previous close.
HDFC Bank has swapped one type of debt with another type of more expensive debt.
The lender sold down Rs 1.92 lakh crore in the second quarter and Rs 2.46 lakh crore of loans via securitisation and assignment.
More frequent sell-downs are unlikely to 'repair' the balance sheet faster and change the neutral view on the stock.
Securitisation market in India is not very large, and the LDR reduction is at the cost of profits.
Alternatively, HDFC Bank could retire some high-cost borrowings, using the cash from the sell-downs.
If HDFC Bank wants to reduce LDR by 10 percentage points, it would need to sell down $30 billion of loans.
Such a large quantum of money, at a relatively cheap cost, is difficult to find in domestic debt markets.
If HDFC Bank were to raise money at a landed cost of 7% or lower, that would be a value-accretive deal.
Also Read: Stocks To Watch Today: HDFC Bank, Bajaj Finserv, Tata Motors, IRCON International And More
CLSA On Bharti Airtel
Maintained 'outperform' on the stock with a target price of Rs 1,820 apiece, a potential upside of 9.5%.
Media reports state that Bharti Airtel is looking to acquire Tata Play at $1 billion valuation.
Tata Play deal, should it happen, would be a significant positive. It has 20 million subscribers and 33% industry share.
The DTH industry has seen revival in growth post new tariff order in 2023.
Tata Play is 70% owned by Tata Group and balance by Walt Disney.
Bharti’s DTH business has 16.3 million subscribers with annualised revenue of Rs 3,100 crore and 50% margin.
Both these businesses combined would be 7% of Bharti India’s revenue. The deal would multiply access to high end homes and boost coverage.
Reliance and Disney Star are in the middle of a merger to establish India’s largest media business covering TV, OTT and IPL rights.
Also Read: Bharti Airtel, Fortinet Partner To Launch Next-Gen Connectivity Solution, Airtel Secure Internet
Nuvama On Phoenix Mills
The brokerage maintained 'buy' rating on the stock with a target price of Rs 1,857 per share, a potential upside of 12%.
Retail consumption growth of 25% YoY in the second quarter remains on track.
Weighted average trading occupancy stood at 92% across major malls in September.
The brokerage continues to maintain bullish stance on company.
The key stock triggers over next few years is entry in new cities and operationalisation of under-construction assets.
Citi On Divi's Laboratories
The brokerage initiated coverage on the stock with a 'buy' call and a target price of Rs 6,400, a potential upside of 15%.
The drugmaker is likely to be key beneficiary of the supply chain diversification trend as innovators look to de-risk their supply chains.
The company secured Eli Lilly's GLP-1 and execution can drive multi-year growth.
US Biosecure Act likely to drive diversification.
Potential to become a prominent player in chemistry-based CDMO projects.
Currently trading at 20% higher than its historical premium over NSE Pharma.
Valuations likely to continue to remain elevated, assign 40 times the enterprise value-to-Ebitda multiple.
Morgan Stanley On Reliance Industries
The investment bank maintained its 'Overweight' rating on the stock at Rs 3,325 target, implying 21% upside.
RIL rises to number five from six in brokerage's preference order.
Continued cyclical challenges in refining and retail priced in.
It expects second quarter Ebitda to grow 3% sequentially, but fall on an annual basis.
It lowered gross refining margin estimate by $2.7 per barrel for the current fiscal.
It also lowered the earnings-per-share estimate for FY25 by 12% and 7% for the next year.
Re-rating to regain traction after retail profitability improves, new energy cashflows kick in.
Jefferies On India Equity Strategy
BJP’s win in Haryana should be an investor sentiment booster in the interim.
Manifesto shows that cash transfers and populism remains on the rise.
BJP’s victory provides comfort at a national level on the political front.
Politically important Maharashtra stare likely to have elections in November.
In general national elections, BJP could secure only 18 off 48 seats in Maharashtra, making upcoming states elections tough.
Haryana victory is good for capex stocks.
Both BJP and Congress have initiated income transfer schemes, targeting women.
Estimate 0.8-1% of GDP being spent on annualised basis on such schemes.
CLSA On Ashok Leyland
The brokerage downgraded the stock from 'outperform' to 'underperform' with target price reduced to Rs 188 from Rs 258 earlier, a downside of 15%.
Subdued demand and subsequent de-rating is driving downgrade.
The brokerage said 10% decline in domestic truck sales in the first half of this fiscal signals start of commercial vehicle down cycle.
Fleet owners are showing preference for used truck purchases versus buying new trucks.
Falling scale and rising risk of discounts are key margin headwinds.
Forecast of Ebitda margin of 10.4% next year compared to 12.4% in fiscal 2024.
It lowered EV/Ebitda multiple from 11 times to 10 times.
It also lowered contribution from stake in NBFC arm from Rs 23 per share to Rs 11.
Citi On Metals
The brokerage upgraded near term metal price forecasts.
It expects China to see further policy easing that will be announced by October end.
The December quarter average prices broadly in line with current spot pricing. The prices reflect near-term bullish view on metal prices.
It expects buying opportunity for iron ore and copper.
Conviction across base metals remains low on Middle Eastern tensions.
Citi On Indraprastha Gas
The brokerage maintained 'buy' rating on the stock with a target price of Rs 620 target, a potential upside of 15.6% upside.
The company's CNG volumes grew at 4% on an annual basis over last five quarters.
The slowdown in CNG volumes is due to bus electrification nearing an end.
Volume growth to reflect CNG vehicle additions momentum soon.
The brokerage expects IGL’s vehicle base to grow 9% this year.
The company will benefit from vehicle scrapping policy incentivising CNG vehicles.
The launch of CNG two-wheelers to be positive for overall CNG ecosystem.
Nuvama On Transformers & Rectifiers India
The brokerage maintained 'buy' rating on the stock with a target price of Rs 980 target, a potential upside of 45% upside.
The company beat second quarter estimates by miles powered by strong execution.
Better operational efficiencies led margins to expand 15% compared to 7.7%.
Order inflows shot up 48% sequentially and 228% annually to Rs 1,000 crore.
The firm sees strong domestic transmission inflows with rising exports TAM.
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