Brokerage Views: BofA, Citi On Infosys, Jefferies On Dr Reddys And More

Brokerages have Infosys Ltd. on their radar following the tech giant's management meeting. The Indian pharmaceutical sector is also in focus, with Dr. Reddy's Laboratories being in the purview of Jefferies and Citi.

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.

Bank Of America On Infosys

Maintains 'buy' with a target price of Rs 1,785 apiece, implying a potential upside of 19.9% from the previous close.
Several mega deal wins make the outlook for Q1 FY25 better.
The demand environment remains cautious.
Guidance bakes in easy assumptions. Hence, macro uncertainties would not put pressure.
⁠Certifications in AI-managed services enable Infosys to gain a greater market share.
Margin improvement plan Project Maximus on its track to gain profitability.

Jefferies On Dr Reddy's Laboratories

The brokerage reiterated that the company is underperforming with a target price of Rs 5,010 apiece, implying a downside of 18% from the previous close.
Market watcher IQVIA suggests the company is losing market share in its top US products.
Expects the impact of loss in market share to reflect in H1 FY25.
Top products contribute $417 million.
R&D costs could remain elevated.
New launches to offset price erosion but do not drive meaningful growth.
The strategic acquisition may fill the Revlimid void.

Citi On Dr Reddy's Laboratories

The brokerage has a 'sell' rating on the pharma with a target price of Rs 5,200 apiece, a downside of 14.5% from the previous close.
Witnessed competition in its top products in the US.
Impact of the pricing may be higher than the other companies.
Impact of pricing higher due to with commoditised portfolios.

Nuvama Raises Target Price On Vedanta

The brokerage maintains a 'buy' rating on Vedanta.
Raises target price to Rs 644 from Rs 542 apiece earlier, implying a potential upside of 46.4% from the previous close.
Cost-reduction initiatives and value-addition at Vedanta are reassuring.
Cost of production of zinc in FY25 likely to be around the Q4 FY24 level of $1,050 per tonne.
Expects aluminium to surpass zinc profits by FY26, and both segments to contribute 84% to FY26 Ebitda.
⁠Raises FY25/26 Ebitda by 5% to 6% on operational efficiency, lower aluminium CoP and higher premiums for aluminium and zinc.
Approval by lenders shall allow for demerger of companies by FY25.
Hindustan Zinc shall soon take steps for its future growth.
Hindustan Zinc may raise silver capacity to 1,500 tonnes per annum from 800 tonnes in the next five years.

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Motilal Oswal On Vedanta

Motilal Oswal maintains ‘neutral’ on Vedanta.
The brokerage has set a target price of Rs 500 on the stock with 13.7% potential upside from the previous close.
Well-positioned; focus on structural cost rationalisation to drive earnings.
Capex plans are progressing well to drive the next level of growth.
Demerger is on track and is anticipated to be completed by the end of 2024.

Citi On Nykaa

The brokerage rates FSN E-Commerce Ventures at 'sell' with a target price of Rs 170 apiece.
Expects 25–30% compound annual growth rate in beauty and personal care, and 35–40% CAGR in fashion over FY24–28.
In the beauty segment, management aims for over 25% growth over FY24–28 and also doubling store count to more than 400 within four years.
In fashion, management aims for 2.5–3 times growth in net sales value over the next three years.
Expansion of 150–200 basis points in gross margins and 1,300–1,600 bps Ebitda-margin expansion.

Nomura on Nykaa

Nomura maintains 'neutral' on FSN E-Commerce Ventures with a target price of Rs 203 apiece, implying a potential upside of 20% from the previous close.
Beauty and personal care for fiscal 2024–2028 targets a mid-high 20% gross merchandise value, or GMV, for online businesses.
Beauty and personal care, or BPC, at 40% GMV CAGR for retail store GMV.
BPC's focus is to expand the market by adding global brands and developing in-house brands.
Fashion is to grow 3.5 times by fiscal 2030, with a focus on premium.
Fashion Ebitda is expected to turn positive by fiscal 2026, to the mid-single digit by fiscal 2027, and over 10% in a steady state.
The brokerage likes the approach of identifying growth avenues and remaining ahead of the industry.
Believe their estimates of ~26%/19% GMV CAGRs can have upside.
The company may need to prioritise growth over margins in fashion.
Factoring in an annualised revenue growth of 17% through fiscal 2025–2040 and long-term Ebitda margins of 15%.
Stocks in the fair value zone are trading at 5-times their fiscal 2026 enterprise value-to-sales.

Citi On Aurobindo Pharma

Maintains non-consensus 'sell' with a target price of Rs 1,040 apiece and a downside of 17.3% from the previous close.
Aurobindo has the highest exposure of US generics among the Indian pharma companies.
If generic pricing trends start reflecting, possibility of margins softening in Q1/Q2 FY25.

Citi on RBL Bank

Citi maintains a ‘sell’ on RBL Bank with a target price of Rs 257 apiece.
Management interaction to revisit key priorities, initiatives and journey to fiscal 2026.
Branch-driven asset growth; key performance indicators for each business segment.
Cross-sell return-on-assets guidance of 1.4% to 1.5%.
Build return-on-assets of 1.1% and 1.2% and return-on-equity of over 10% and 12% for fiscal 2025 and 2026, respectively.
Await better visibility on structural improvement.

JP Morgan on Vodafone Idea

Maintain 'underweight' rating and a target price of Rs 7 apiece, implying a potential downside of 58% from the previous close.
Capex priority will be on 4G coverage followed by capacity enhancement.
Company believes capex can drive substantial gains over next 12 months.
⁠In talks with lenders to raise Rs 25,000 crore in debt for capex.
Needs government support in fiscal 2026 and 2027 after expiry of spectrum moratorium for spectrum repayments.
Intends to generate internal cash generation up to repay annual government dues from fiscal 2028.
Given its cash crunch, company prefers converting deferred amounts of debt into equity from fiscal 2026.
Even after this, company would still have $21 billion in debt with no clarity on repayment.
Remain underweight as equity story is complicated.