Brokerage Views: Bernstein Initiates Coverage On Financials, Citi On Titan, Emkay On Paytm And More

Bernstein Research has initiated coverage on three financial stocks, with target prices implying upside of 28% to downside of 7%. Indian consumer and retail, IT and insurance sectors are also in brokerages' focus on Wednesday. Jewellery is taking the spotlight with Motilal Oswal Financial Services Ltd. initiating coverage on Kalyan Jewellers India Ltd. and Senco Gold Ltd., while Citi Research tracking Titan Co. Nuvama Research has ICICI Lombard General Insurance Co. and other insurance companies on its radar.

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 Wednesday.

Citi On Titan

Rates 'neutral' with a target price of Rs 3,650 apiece.
Subdued demand environment likely to continue in the near term as it does not expect any demand recovery in the first half of FY25.
Jewellery should continue to outpace other categories on growth.
Expects earnings growth for Titan in the first half of FY25 to be subdued, due to relatively weak demand owing to high gold price, lower number of wedding days and increasing competitive intensity.
Margin contraction and competitive intensity in the category is also on the rise led by aggressive store expansion, higher gold price and regulatory changes driving accelerated formalisation.
Sees further downside risk to consensus earnings-per-share estimates, given the recently revised margin guidance of 12% for jewellery.
Margins/earnings downgrade risk for Titan.

Bernstein on Bajaj Finance

Initiates 'market-perform' rating with a target price of Rs 6,800 apiece.
Has been a true superstar in the Indian lending landscape with flawless execution.
Much of the story is priced into valuations currently.
Still healthy growth ahead, sees room for consensus earnings cuts, given several headwinds.
Challenges include sector-wide trend of slowdown in consumption credit, an already high scale that limits outperformance versus the sector, risks of scale-up in new segments having limited overlap with current core segments and increased competitive intensity.

Bernstein On IndusInd Bank

Initiates 'outperform' rating with a target price of Rs 1,800 apiece, implying a potential upside of 28%.
Quasi-NBFC, given its NBFC-like loan book composition and a weak deposit franchise.
Well-positioned for a potential rate-easing cycle and has high exposure to attractive segments.
Expects the return on equity to be 15–16% in FY24–26.
Expects loan growth of 18%.

Bernstein On Muthoot Finance

Initiates 'outperform' rating with a target price of Rs 2,000 apiece, implying a potential upside of 14%.
Sees a long and shiny road ahead for gold loans.
Unique segment, given Indians love for gold and use it as collateral to borrow.
Muthoot is the best play in the segment.

Citi On India IT Services

Overweight on Infosys, underweight on Tata Consultancy Services.
Maintains 'neutral' on Infosys with a target price of Rs 1,550 apiece, implying a potential upside 3.4%.
Maintains 'sell' on TCS with a target price of Rs 3,570 apiece, implying a potential downside 6.5%.
Expects recovery in Infosys to play out in coming quarters by large deal ramp-ups.
Any recovery in discretionary spend may help Infosys.
Initial headwinds in margins due to deal ramp-ups, but Infosys has levers to set it off.
Infosys trades at a 13% discount to TCS.
Gap will likely narrow as growth improves.
Risks to TCS estimates are higher, given the slow pace of improvement across the industry.
TCS has limited incremental margin levers.

Citi On Apparel, Footwear

Aditya Birla Fashion and Retail Ltd.'s underlying business continues to remain weak with profitability not in sight yet.
Expects debt levels to increase further in FY25.
Expects subdued performance to continue for Page Industries Ltd.
Bata India Ltd.'s Q1 will have a one-time gain on sale of land parcel.

Emkay On Paytm

Retains 'reduce' on One97 Communications Ltd. with a target price of Rs 300 apiece, implying a potential downside of 28% from the previous close.
Suggests strategy of focusing on the dwindling core business — distribution of products.
Transfer of high-margin movies and event ticketing business to Zomato expected to hurt customer traffic for Paytm.
Paytm has shelved plans to manufacture general insurance products.
Zomato is reportedly offering a higher deal of Rs 2,000 crore, including receivables.
Deal will shore up the cash reserves of Paytm.
Cash could be used to scale-up rewards/cash-back programmes to revive its payment business.
Retains reduce, given possibility of prolonged slowdown in business.

Nuvama On Insurance Companies

Maintains 'hold' on ICICI Lombard with a target price of Rs 1,790 apiece, implying a potential upside of 2.5%.
Maintains 'buy' on Star Health and Allied Insurance Co. with a target price of Rs 660 apiece, implying a potential upside of 25%.
Maintains 'buy' on Medi Assist Healthcare Services Ltd. with a target price of Rs 600 apiece, implying a potential upside of 4%.
Industry gross direct premium income grew 14.9% in May, driven by health.
Motor growth decelerated to 12.6% after a strong showing in April.
Retail health GDPI growth held steady at 19.1% YoY.
Remains positive about industry growth.

Motilal Oswal On Jewellery Stocks

Initiates 'buy' rating on Kalyan Jewellers with a target price of Rs 525 apiece, implying a potential upside of 23%.
Initiates 'buy' rating on Senco Gold with a target price of Rs 1,300 apiece, implying a potential upside of 27%.
Reiterates 'buy' rating on Titan with a target price of Rs 4,150 apiece, implying a potential upside of 16%.
Titan, Kalyan, and Senco combined recorded a 20% revenue compound annual growth rate during FY19–24.
Says the jewellery sector has been experiencing a trend towards formalisation.
Organised market accounts for 36–38% of the total jewellery market, compared to 22% in FY19.
The total jewellery market reported 8% revenue CAGR during FY19–24, reaching a market of Rs 6.4 lakh crore.
The organised market clocked 18–19% revenue CAGR.
Anticipates ongoing rapid shifts in consumer purchasing behaviour transitioning from unorganised to organised channels.
Factors fuelling this trend are increasing ticket prices, enhanced shopping experiences and greater product variety.
Franchise-based model consistently achieved success as it is not only asset-light but also enables faster reach.
Jewellery store penetration is at its peak, driven by small jewellers, offering significant growth opportunities for organised players.