Brokerage Views On Budget Day: Citi, Nomura On Economic Survey And More

The stock market is in focus as Finance Minister Nirmala Sitharaman gets set to present the Union Budget 2024-25 in the Lok Sabha. What are the brokerages saying about select stocks?

Nomura and Citi Research shared their notes on the key facets of the Economic Survey, which was released a day ahead of the budget.

Citi has Exide Industries Ltd., GAIL (India) Ltd., JK Cement Ltd. and Indus Towers Ltd. on its radar. Motilal Oswal Financial Services Ltd. and Nuvama Institutional Equities reiterated their ratings on Oberoi Realty Ltd. following its results for the first quarter of the current financial year.

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.

Nomura On Economic Survey

Fiscal consolidation is still the key.
Nominal growth likely unchanged, survey forecasted FY25 real GDP growth at 6.5–7.0%.
Nominal GDP growth assumption of 10.5% YoY made in the interim budget to be retained.
⁠Expired tax cuts for manufacturing firms may not be extended.
Commentary suggests that govt support to the farm sector is already adequate.

Citi On Economic Survey

Survey highlighted recovery in private capital expenditure has sustained in FY24, up 19.8% YoY.
Supply-side reforms of last decade to pave way for "next-gen reforms".
⁠Investment in the production-linked incentives schemes at Rs 1.28 lakh crore as of May.
⁠Asset monetisation to be a key source of financing the infra push.
FY25 state fiscal deficits could be lower than 3.1% of the GDP.

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Citi On Exide Industries

Maintains a 'buy' rating on the stock and raises the target price to Rs 630 apiece from earlier Rs 560, implying a potential upside of 15% from the previous close.
Estimates tweaked to reflect stronger demand-growth expectations.
FY25–27 earnings estimates are thus increased by 2–10%.
Raises target price to earnings ratio for core business to 22x from 20x; reflecting better demand trends.
Values core lead acid batteries at Rs 490 per share from Rs 420 earlier.
Continues to value lithium-ion batteries business at Rs 140 per share
Based on Exide Industries' investment for the first phase at 2.5x.

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Citi On GAIL

Maintains a 'buy' rating on the stock and raises the target price to Rs 250 apiece, implying a potential upside of 12% from the previous close.
Makes minor 0–1% changes to FY25–27 estimates for earnings before interest, taxes, depreciation and amortisation .
Changes made on slight increase in average gas-transmission volume forecasts.
Increases target enterprise value/Ebitda multiple for gas transmission segment from 10x to 11x.

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Citi On Indus Towers

Maintains a 'buy' rating on the stock and raises target price to Rs 500 apiece from earlier Rs 450, implying a potential upside of 18.8% from the previous close.
Market is not yet appreciating and fairly pricing the return of growth and resumption of payouts.
Expects 6% dividend yield on FY26–27 versus nil payouts for the last two years.
Ascribes a higher target multiple for Indus Towers from 9x to 10x.
Introduces a 90-day positive catalyst watch.
Positive developments in the adjusted-gross-revenue case
Potential purchase of 3% stake by Bharti Airtel Ltd.

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Citi On JK Cement

Maintains a 'sell' rating on the stock and raises target price to Rs 4,400 apiece, implying a potential downside of 10% from the previous close.
June-quarter Ebitda rose 19% YoY on higher sales volumes, lower costs.
Outperformance versus estimates largely on lower costs.
Company on track to expand capacity to 30 million tonnes per annum by FY26.
Marginally tweaks FY25–27E Ebitda estimates by 0–3% on lower costs.

Nuvama On Oberoi Realty

Retains a 'hold' rating on the stock and a target price of Rs 1,847 apiece, implying a potential upside of 5.9% from the previous close.
Net sales stood at Rs 1,070 crore, up 124% YoY.
Expects to launch the new Borivali Mall in Mumbai by FY25.
Believes pace of launches and inventory liquidation to determine stocks trajectory.
Revises net-asset-value premium to 50% from 40%.

Motilal Oswal On Oberoi Realty

Reiterates 'neutral' rating on the stock and a target price of Rs 1,560 apiece, implying a potential downside of 10% from the previous close.
Pre-sales doubled to Rs 1,070 crore, driven by bookings in Three Sixty West, a skyscraper complex in Mumbai.
Started to witness an uptick in its rental portfolio.
Expects a 41% CAGR in pre-sales over FY24–26.
Re-rating dependent on reinvestment of strong cash-flow generation.

Motilal Oswal On Cyient DLM

Retains 'buy' rating on the stock and a target price of Rs 880 apiece, implying a potential upside of 15% from the previous close.
Strong growth in aerospace and defence drives revenue.
Margins narrowed 140 basis points YoY, mainly due to higher selling, general and administrative expenses.
Company expects higher order inflows in the second quarter of FY25.
Momentum sustenance led by healthy order inflows and high customer stickiness.
Estimates company to report a CAGR of 33%, 50% and 69% in revenue, Ebitda and profit respectively over FY24–26.
Maintains earnings-per-share estimates and retains 40x FY26 P/E ratio.

Also Read: Cyient Reports Surge In Q4 Revenue and Net Profit | NDTV Profit

Motilal Oswal On Mangalore Refinery

Maintains a '‘sell' rating on Mangalore Refinery & Petrochemicals Ltd. and a target price of Rs 170 apiece, implying a potential downside of 21% from the previous close.
First-quarter earnings missed brokerage estimates on weak refining performance.
⁠Gross refining margin and throughput stood 32% and 7% below brokerage estimates.
Builds GRM of $6.9/$8.4 per barrel in FY25/FY26.
Believes strong free-cash-flow generation, debt reduction will lead to lower net debt-to-equity by FY26.
Bullish on refining from a medium to long-term perspective.
Believes valuations for MRPL remain elevated.

Nomura On Federal Bank

Reiterated ‘buy’ rating on the stock and a target price of Rs 195 apiece, implying a potential upside of 1% from the previous close.
New Chief Executive Officer appointment to drive continued re-rating.
KVS Manian was head of the corporate banking, commercial banking, private banking and asset reconstruction businesses.
We view this development as positive.
Brings an end to the uncertainty around management succession.
Can potentially aid Federal Bank Ltd.'s growth and profitability outlook over the medium term.
Federal Bank Ltd. continues to be the brokerage's top mid-cap banking idea.

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