Brokerage Views: Goldman Sachs On Zomato, Citi On Telecom And More

Zomato Ltd. is in analysts' focus with several brokerages retaining their stock rating. Bernstein Research is bullish on HDFC Bank Ltd., while Motilal Oswal Financial Services Ltd. shares top picks in the India oil and gas sector.

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.

Citi On Tech Mahindra

Maintains a 'sell' rating on the stock and a target price of Rs 1,150 apiece, implying a potential upside of 17% from the previous close.
The company is confident of achieving FY27 topline target, with a focus on organic growth.
Tech Mahindra will return more than 85% of free cash flow to shareholders in the form of dividends, rather than buybacks.
The stock is trading at 21 times FY26 consolidated earnings per share.
Management is focused on "scale at speed".
Turnaround in IT has not been easy, execution will be the key.
The company has realigned incentives with a focus on performance-driven culture.
Most of the company's leadership hiring is already in place.
Management has set up large deal teams to improve win rate on large deals.
The company's average resource cost is significantly higher as compared to peers.
Orderbook has been soft for Tech Mahindra as the demand environment remains uncertain.

Bernstein On HDFC Bank

Maintains an ‘outperform’ rating on the stock and a target price of Rs 2,100 apiece, implying a potential upside of 26% from the previous close.
Expects the return on average assets to improve from 1.8–2.1% in the next four years.
Loan mix improvement: Expects yield to improve by 40–50 bps over the next four years.
Cost of funds normalisation: Borrowing has increased from less than 10% pre-merger to 22%, which is expected to fall to 13% in the next four years.
Operating leverage kicks in: Slower branch expansion to cause lower operating expenses to assets and drive up return on average by 11 bps.
Merger with parent HDFC has left it trailing on profitability and growth.

CLSA On Zomato

Maintains a ‘buy’ rating on the stock and a target price of Rs 248 apiece, implying a potential upside of 28% from the previous close.
Zomato reported positive earnings before interest, taxes, depreciation, and amortisation of $5 million, while Swiggy’s trading losses reduced to $158 million.
Zomato's overall GOV growth is 36% as compared to Swiggy, which is at 26%.
Zomato's revenue grew at 56% versus Swiggy, which is at 24%.
Zomato is growing faster than Swiggy.
Zomato's Blinkit has 526 dark stores as compared to Swiggy Instamart's 487 dark stores.

Emkay On Zomato

Maintains a ‘buy’ rating on the stock and a target price of Rs 230 apiece, implying a potential upside of 16% from the previous close.
Zomato’s higher growth has been aided by the superior performance of its quick commerce section Blinkit.
Swiggy’s overall losses narrowed to $261 million from $531 million in 2022.
Swiggy’s IPO is now a key milestone, with valuation being the main monitorable.
Steady improvement in operational performance and the planned IPO of Swiggy are likely to keep investor interest high in the space.

Goldman Sachs On Zomato

Maintains a 'buy' rating on the stock and a target price of Rs 240 apiece, implying a potential upside of 21% from the previous close.
Prosus' Swiggy disclosure suggests further share gains for Zomato.
The GOC scale of Zomato is more than 30% larger than that of Swiggy.
Zomato's market share is now at 56–57% with 200 bps expansion as compared to the previous period.
Quick commerce Zomato scale is likely 50% larger than its nearest competitor.
Zomato being ahead of its peers on profitability will continue to provide opportunities to further gain market share and improve profitability.
Online grocery delivery expects competition to be consistent.

Kotak Institutional On Zomato

Maintains a 'buy' rating on Zomato and a target price of Rs 225 apiece, implying a potential upside of 13.6% from the previous close.
Zomato's overall gross merchandise value growth came in at 32% year-on-year, compared with Swiggy's 26% year-on-year growth.
Prosus, whiih holds a 32.7% stake in Swiggy, disclosed Swiggy’s overall GMV growth in its annual results.
Swiggy’s revenue closely trails gross merchandise value growth; losses came further in calendar year 2023.
Higher growth from Instamart could have diluted overall take rate.
Swiggy’s adjusted Ebitda loss came in at $261 million in 2023, substantially lower than $531 million reported in 2022. By comparison, Zomato reported adjusted Ebitda profit of $20 million in 2023.
Swiggy’s food delivery profitability improvement was aided by added revenue streams such as restaurant advertising and platform fees.
Swiggy’s quick commerce gross merchandise value growth was much ahead of peers.
Zomoto's Blinkit had 487 dark stores as of March 2024, whereas Zepto currently has about 350 stores, making Swiggy the number two amongst quick commerce players from a dark store count perspective.

Citi On India Telecom

Preferred picks include Bharti Airtel with a target price of Rs 1,520 and Indus Towers with a target price of Rs 450.
Neutral on Vodafone Idea Ltd. stock.
Expects the government to remain amenable to a tariff hike, assuming an approximately 15% 4G tariff hike in the September quarter.
Jio's plan is to monetise 5G through differential pricing.
VIL's equity raise and borrowings to enable it to kickstart its three-year capex plan and tower additions plan.
VIL's liquidity woes are now clearly behind them and there is an improved visibility on recovery of VI’s past dues.
Expect Indus to resume dividends payouts.
VIL's capex revival should drive tenancy growth for Indus.

Motilal Oswal On India Oil & Gas

HPCL remains a preferred pick among Indian oil marketing companies.
Maintains a 'buy' rating on HPCL stock and a target price of Rs 400 apiece, implying a potential upside of 18% from the previous close.
Expects marketing margin of Rs 3.3 per litre.
Key catalysts include demerger and potential listing of lubricant business.
Maintains a ‘buy’ rating on ONGC stock and a target price of Rs 340 apiece, implying a potential upside of 26% from the previous close.
Execution key for ONGC's production guidance.
Maintains a 'buy' rating on Gujarat Gas stock and a target price of Rs 385 apiece, implying a potential upside of 28% from the previous close.
Gujarat Gas to be a potential beneficiary of possible inclusion of natural gas under GST.

Nuvama On Krystal Integrated Services

Maintains a 'buy' rating on the stock and a target price of Rs 1,369 apiece, implying a potential upside of 69% from the previous close.
Co-sources 77.6% of revenue from the government.
Expects integrated facilities management services, staffing, and security services to grow 1.2–5 times faster than industry average from fiscals 2023-26.
Achieved 19% revenue CAGR over the past decade.
Revenue is expected to grow at a 27% CAGR over FY24–26E.
Expect Ebitda margin expansion by 97 bps to 7.7%.
Target price values stock at 20 times fiscal 2026 earnings.

Nuvama On Real Estate: Hot Property

As of May:

Housing sales are up 17% on a year-on-year and 9% month-on-month basis.
Year-to-date demand up by 15% on a year-on-year basis, with Kolkata, Mumbai Metropolitan Region seeing a surge of 35–44% year-on-year.
New launches up 10% year-on-year in May, but down 3% month-on-month.
Unsold inventory dipped 6% on a year-on-year basis.
Mumbai Metropolitan Region and Pune clock maximum rate of correction in inventory.
Average prices up in all cities annually, except Chennai.
Launches shall remain contained on liquidity constraints.
Valuations remain comfortable on a relative basis.
Argues it is a good opportunity to enter realty stocks.

Kotak Institutional Equities On Amara Raja

Maintains a 'sell' rating on the stock and a target price of Rs 1,100 apiece, implying a potential downside of 20% from the previous close.
Signs transformational licence agreement with Gotion High-Tech for lithium iron phosphate battery technology.
Agreement will help the company develop lithium ion batteries and scale up its business.
Valuations remain expensive at 23 times FY25 earnings per share amid terminal risk to lead acid business.
High capital expenditure requirements as well as the commoditized & B2B nature of the business give inferior return ratios.

Jefferies On Budget Expectations

Positive for several domestic sectors.
IT and Pharma could lack triggers.
Recent announcements of ministerial appointments and modest minimum support price hikes create impression of policy continuity.
Believe drastic change in spending patterns are unlikely.
Income tax collections buoyancy gives some fiscal space for tax cut.
Positive for consumer discretionary and durables, telecom and retailers.
Government likely to bring interest subsidy for urban housing.
Expects reduction in borrowing target.

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