Brokerage Views: Goldman Sachs, Nomura On IT, Morgan Stanley On Power Sector And More

The information technology sector is in focus as Goldman Sachs, Nomura and Emkay have all put out notes following Accenture's quarterly earnings report.

Morgan Stanley has the Indian power sector on its radar and double upgraded the ratings of Tata Power Ltd. and and Torrent Power Ltd.

NDTV Profit tracks what the brokerages are putting out on stocks and sectors. Here are all the top calls from analysts you need to know about on Friday.

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Goldman Sachs On IT

Results and guidance show improving trend at moderate pace.
Commentary suggests limited expectations of any meaningful improvement in discretionary demand.
Channel checks suggest demand environment improving.
'Buy' rated Tata Consultancy Services Ltd. trades at lower premium to the sector versus history.
TCS remains a defensive play.
'Buy' rated Infosys Ltd. is a beneficiary of discretionary demand revival over next 12 months.
Have 'sell' on Tech Mahindra Ltd. and Wipro Ltd. and 'neutral' on HCL Technologies Ltd.

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Nomura On IT

Accenture's fourth quarter fiscal 2024 revenue growth came in at mid point of guidance, up 5% year-on-year in Constant Currency terms.
Managed services up 7% YoY in CC terms.
Financial Services was the weakest with a 2% YoY decline.
Fiscal 2025E revenue guidance includes 3%+ inorganic growth, expected broad based.
Fiscal 2025 margin guidance implies 10-30 basis points YoY expansion.
Clients continue to prioritise large-scale transformation projects.
GenAI means more opportunity in cloud adoption and data standardisation.
A strong recovery in discretionary demand may take a few quarters.
Is unlikely to worsen further.
Expect largecaps to outperform smallcaps.
Interest rate cut cycle, potential thaw in decision-making by US corporates post US elections in Nov. could provide a fillip to demand.
Buy rating on Infosys Ltd., Wipro Ltd. and Cognizant Technology Solutions Corp. in largecaps; and ECLX Ltd. in midcaps.
Have a 'reduce' rating on LTIMindtree Ltd., MPHL and L&T Technology Services.

Emkay On IT

Demand environment has not seen much change and remains cautious.
Clients continuing to limit discretionary spending.
Consulting and managed services are expected to grow in a low-to-mid single-digit in fiscal year 2025
Bookings and revenue from GenAI are expected to register healthy growth.
Guidance points to a stable demand environment and conservative approach.
Believe uptick in technology spending in commercial year 2025 hinges on confidence on macro stability, resilience of US economy after the start of the interest rate-cut cycle.
Pecking order is Infosys, HCL Technologies, Tech Mahindra, TCS, Wipro, and LTIMindtree in largecaps
Among midcaps, prefer ECLX, CYL, BSOFT, and FSOL.

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Morgan Stanley On India Utilities

Double upgrades Tata Power Ltd., Torrent Power Ltd. and upgrades Bharat Heavy Electricals Ltd. to 'overweight'.
Tata Power, Torrent Power, BHEL targets at Rs 577/2268/352, with 23%/20%/25% potential upside.
Maintains 'overweight' on NTPC Ltd. at Rs 496 target, implying 14% upside.
Downgrades Suzlon Energy Ltd., Power Grid Corp., ReNew Energy Ltd. to 'equal-weight'
Suzlon, Power Grid targets at Rs 88/362 implies 6% upside/-1% downside.
Tata Power: Offers good mix of regulated businesses earning and assured returns.
Torrent Power: Large merchant capacity, steady core business growth and renewable growth picking up.
NTPC: Strong play on India's energy security and a transition theme.
⁠BHEL: Strong coal order visibility and low competition.
Suzlon Energy: Balanced risk reward and await stronger order execution.
Power Grid: Slow earnings compound annual growth rate and higher competition.

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Citi On Oil

Oil prices falling on higher likelihood of Libya production returning to market.
Chinese announcements on new economic stimulus to have limited upside impact on demand.
Expect Brent prices to average at $74 in fourth quarter of 2024.
Downtrend in oil prices is a deflationary tailwind.
Falling oil prices to further lower annual spend on oil.
Global spending for oil products likely below $2.9 trillion in Sept.
Consumers paying $600 billion less in Sept. on oil production versus second quarter of 2024.

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Emkay On Marico

Upgrade to 'add' from 'reduce' with target price of Rs 775, raised from 700 earlier, implying an upside of 12%.
Improving demand setting and thrust on enhancing distribution is positive.
Healthy growth in premium personal care, digital brands and foods is positive.
Continue to see steady expansion in fiscal year 2025 and quarterly volume growth trajectory.
Inflation in copra is likely to help drive double-digit growth in Parachute oil in second half of fiscal 2025.
Expect price hikes with custom edible oil duty pass-through in second half of the year to induce double-digit growth.
Lift valuation multiple to 50x from 47x.
Multiples are 15% premium to the average five year forward price to earnings ratio.

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