MS on NBFCs
Our key Overweight (OW)-rated stocks where we see value and meaningful upside potential with margin of safety are PNB Housing Finance and Shriram Finance.
In order of preference moved Bajaj Finance (OW) higher, and SBI Life (OW), HDFC Life (OW) and Can Fin Homes (OW) lower.
Among Equal Weight-rated stocks, Aditya Birla Capital and Chola Finance are the top.
IPRU Life and SBI Cards advance a few notches in terms of weights
Muthoot Finance and PB Fintech move to the bottom.
Underweighted-rated stocks are LIC Housing Finance, L&T Finance and MCX
Nomura on Consumer Durables
Structural drivers to sustain healthy momentum
Macro tailwinds in EMS to drive strong growth
Slower growth in most durable segments
Structural drivers to support growth in ACs and cables, while slow growth in other segments; EMS scale-up on track
Prefer Dixon Tech and Voltas
Dixon Tech Maintain Buy TP 22256
Voltas Maintain Buy TP 2142
Jefferies on EMS
Stay positive on India indigenization theme in 2025
Bullish on backward integration and components theme vs prescriptive OEM
Top SMID pick is Amber Enterprises
Key risks for EMS players include demand slowdown, loss of market share for key customers and supply chain issues
Amber Maintain Buy, TP 8840
Dixon Tech Maintain Underweight, TP 12,600
Kaynes Tech Maintain Hold, TP 6950
SYRMA SGS Maintain Buy, TP 730
Emkay initiates coverage on PFC& REC
PFC – BUY – TP Rs600; REC – BUY – TP Rs650
Our optimistic stance is underpinned by three factors.
1) With planned capex of over Rs33trn during FY23-32 in Generation, Transmission, and Distribution, the growth runway is long and visibility high.
2) Lessons learnt from the previous cycle (i.e. project gestation risk, PPA/FSA risks, and so on), a host of Central Government-driven reforms addressing the sustainability issue in the sector by attempting to resolve the burning issue of who pays the bill, continued benign competition from banks in the power space, and gradual diversification approach adopted by PFC/REC provide reasonable comfort around asset quality issues and, hence, added confidence around profitability.
3) Valuations, despite being higher (1YF Dec-25E P/BV of ~1.5x for REC, and 1.14x for standalone PFC) than the long-term median of 0.7x, remain palatable for the growth and profitability profile, along with near clean-up of past baggage.
4) We project ~13%/~18% AUM CAGR for PFC/REC over FY24-27E, along with ~19%/~20% ROE during FY25-27E
Jefferies Greed/Fear Report
Asia ex-Japan long-only portfolio
Remains 49% invested in India
Portfolio primarily geared to long-term domestic demand story in India
India long-only portfolio outperformed since inception rising by 87% compared with a 42.6% increase in the MSCI India Index and a 36.7% gain in the Nifty
Global long only portfolio has 21% exposure to India
CLSA on Financials
IndusInd Bank-Maintain overweight, TP reduced to Rs 1300 from Rs 1600
Bandhan Bank-Maintain overweight, TP reduced to 220 from Rs 240
Cut FY25-27CL PAT for IndusInd and Bandhan by ~10%/20% on average on higher credit costs in the near term
Both to be impacted by lower growth in the medium term
Even after revising estimates, these stocks are cheap at 7-9x PE (FY26)
Jefferies – Transport & Logistics – 2025 Outlook
2H2024 was a relatively weak year for logistics stocks
Rail and domestic truck volumes were weaker than expected.
Expect volume recovery should be visible on a low base from 1QFY26E
Especially for rail container volumes as the impact of Indian Railways busy season surcharge is fully captured.
Dedicated Freight Corridor (DFC) to JNPT by Dec 2025 will boost volumes further.
Our top picks are JSW Infra, Concor, and TCI Express.
CLSA India Strategy – 2025
Bargain hunting for 2025
Add TATA MOTORS, NTPC, Nestle and Britannia to India-Focus portfolio
Remove HDFC Bank
An uncertain and risky global macro environment
Near-term economic growth slowdown in India in the face of elevated absolute and relative valuations
Forecast muted returns for the Nifty in 2025.
Underperformance of actual capex spending versus expectations
Rising tailwinds for affordable consumption make us favour this sector and raise staples to a big overweight. S
Cut overweight in banks
Remain overweight commodities and insurance.
IT, discretionary, industrials and healthcare are big underweights.
Jefferies on Utilities
Aug-Nov 2024 power demand has been weak at 1% YoY decline, and 8MFY24 is just 4.4% YoY rise
Believe this is a temporary blip as electrification drivers of residential demand, data centres and manufacturing are intact
2023 saw concerns emerging on power shortage in India
Peak deficit returning in summer months, accelerating capacity addition and higher merchant prices should be seen in 2025
Top picks: JSW Energy and NTPC
Retain Buy on Power Grid
[10:10 am, 3/1/2025] KS BadriNarayanan: MS on Maruti
Maintain Overweight, TP 14124
Share price will rise relative to the country index over the next 30 day
Expect the stock to outperform incrementally as: 1. valuation at 22x FY26e P/E looks supportive vs 10- year median of 26x
Will showcase its first EV launch on Jan 17
Exports are performing better than expected, which should also support margins
Expect 13% EBITDA growth in Q3 with 11.5% EBITDA margin.
MS on Petronet
Maintain Equal-Weight TP-400
PLNG remains a high ROCE stock through cycles
See upside to utilisation rates for its terminals
LNG prices normalise and support demand by March 2025.
See competitive risks as less of an issue now
PLNG brings its own low-cost brownfield 5mntpa capacity to market in 1H25.
JPM on Petronet
Maintain Overweight, TP 377
Tariff Regulation seems low probability.
Upside from capacity and seasonal demand near term
PNGRB currently does not have authority to regulate these tariffs
Regas terminals are not necessarily monopoly assets with captive consumers.
PLNG can benefit from 5 MTPA capacity expansion by March, a seasonal uptick in power demand and the annual 5% tariff increase in Jan
CITI on Eicher Motors
Buy, TP Rs 5350
Reported robust vol in December at 79,466 units (+25%YoY; -3%MoM).
A strong December volume print indicates favorable inventory levels post festive season, something that mgmt. had alluded to in 2Q conference call.
Jefferies on Jubilant Foodworks
High Conviction Idea-Maintain Buy, TP 1000
Outlook is improving with likely pick-up in SSSG ahead
On the back of a low base and self-help measures.
SSSG should expand to mid-to-high-single-digit in coming qtrs
Ebitda margin already bottomed-out in early part of CY24 and should further improve
Mgmt. is prioritising growth over margins.
Jefferies on ONGC
Buy, TP cut to Rs 385 from Rs 410
Recent regulatory actions bode well for improved profitability.
Likely ramp-up in KG basin production in 4QFY25/1QFY26 a key trigger for stock
Stock trading at 6x fwd PE
UBS on Bandhan BK
Neutral, TP cut to Rs 185 from Rs 230
Earnings to remain under pressure
MFI stress to drive higher credit costs & lower NIMs
BK’s MFI PAR 1-90 was at 3.3% in Q2; Industry at 5.4% in Nov
Cut EPS by c11% as raise credit costs & reduce NIMs
Citi on TVS Motors
Maintain Sell, target price at Rs 1700
Domestic 2Ws stay flat while exports see an uptick
Export 2W volumes saw strong 29%YoY growth (+11%MoM)
Scooter volumes rose a healthy 96097 30% YoY (-19%MoM)
E2W (iQube) volumes rose 79% YoY (weak base)
Citi on Eicher Motors
Maintain Buy, TP 5350
Royal Enfield reported robust volumes in December at 79,466 units (+25%YoY; -3%MoM).
A strong December volume print indicates favorable inventory levels post festive season,
Something that mgmt had alluded to in 2QFY25 post-results conference call
Bus volume growth higher than goods CV volume growth.
MS on DMART
Maintain Underweight, target price at Rs 3702
Weak growth trends continue
Standalone 3Q revenue of Rs 155.7bn was up 17.5% YoY, ~1% above expectations
Top-line growth was led by an average 12% increase in store count count
SSSG (implied) of ~5.5% vs. estimate of +4%
Five-year CAGR at 18.2% was lower than F2Q’s 18.8% (SSSG)
Growth trend remains well below the historical 20% top-line growth algorithm for the business
Macquarie on DMART
Maintain Underperform TP 3700
General merchandise/apparel sales recovery aided the 3Q sales print
Worry that competitive headwinds from quick commerce is weighing on growth momentum
Sales growth recovers closer to 1QFY25 levels
At 10-store additions are in line with our estimate
Company guided for 3Q standalone sales of Rs15570cr, with a total store count of 387
Typically, 3Q sees a sequential pickup in gross margin given better product mix
CLSA on DMART
Maintain Outperform, TP 5360
Revenue growth in line with consensus
The implied sales per average store for DMart was at Rs407m for the quarter versus Rs376m in 2QFY25 and Rs391m in 3QFY24.
HSBC on PI Industries
Hold Call, Target Cut To Rs3,800/Sh From Rs4,000/Sh
Difficult Times For Pyroxasulfone Which Increases Risk For Export Growth Prospects
Exports Already Reflecting Weakness
Co Has Entered Uncertainty Zone As Core Biz Remain Muted While New Biz Is Taking Time To Scale
MS on PNB
Underweight Call, Target At Rs95/Sh
Q3F25 Initial Update Is A Positive Surprise
Volume Growth Was Much Stronger Than Expected
Domestic CD Ratio At 72% Stayed Lower Than The System
Brokerages take on ITC Hotels/ITC Price
Nomura: ITC Hotels to list at Rs200-300, market cap of Rs42,500-60,000 cr
Centrum Broking: TP of Rs583 on ITC, would adjust Rs17/share post demerger
Nuvama: Initial market price for ITC Hotels to range between Rs150-175; ITC’s price to be adjusted by Rs22-25 post demerger
SBI Securities: Implied fair value of ITC Hotels between Rs113-170; Adjusted price of ITC post demerger: Rs470-473
