Brokerage Views: CLSA On Indian IT, Goldman Initiates Coverage On Metro Brands And More

We at NDTV Profit are tracking what the brokerages are putting out on specific stocks on the go.

<div class="paragraphs"><p>(Source: Envato)</p></div>
(Source: Envato)

Top brokerages, from Jefferies to Citi, have come out with interesting stock calls on a variety of sectors. Revenue downgrade by Accenture Plc and its impact on Indian IT companies is among the key developments to follow today.

Benchmark equity indices gained for the second day on Thursday, with financial services stocks contributing the most to advances, following U.S. Federal Reserve's decision to keep interest rates unchanged.

The NSE Nifty 50 ended 172.85 points, or 0.79%, higher at 22,011.95, while the S&P BSE Sensex was up 590.60 points, or 0.82%, at 72,692.29.

We at NDTV Profit are tracking what the brokerages are putting out on specific stocks on the go. Here are all the top calls you need to know this Thursday morning.

Stock Market Live: GIFT Nifty Trades Above 22,000; LIC, Wipro, Reliance Power In Focus

Goldman Sachs Intiaties Coverage On Metro Brands, Bata

  • Goldman Sachs initiates coverage on Metro Brands with a 'buy' and target price of Rs 1,450

  • Coverage initiated on Bata India with 'neutral+' rating at Rs 1,470 target price.

  • Multibrand footwear retailers best positioned.

  • Sports and athleisure category at inflection to be multi-decadal growth opportunity.

  • Expects Metro Brands to successfully leverage on sports and athleisure opportunity.

  • The company will start scaling up Fila in FY25.

  • Goldman Sachs believes MetroBrands is better positioned.

CLSA On Information Technology

  • Maintain cautious stance on Indian information-technology sector.

  • Limited growth visibility over the macro environment.

  • Believe Indian IT companies will start with conservative guidance in April.

  • Valuations remain stretched on multiple fronts.

Jefferies On Accenture

  • Growth was at midpoint of guided range, managed services slowed to decade low.

  • Tightening of client budgets, cut FY24 guidance by 100-200 basis points.

  • Sector valuations rich, no recovery in sight.

  • Nifty IT valuations at 26x PE, 13% premium to 5 year avg, 29% premium to Nifty.

  • Remain selective: Infosys and Coforge top picks

Nirmal Bang On Accenture

  • Cut its revenue growth guidance for FY24(fiscal ending August 2024) from 2-5% growth to 1-3%.

  • Inorganic growth component to 3% from 2%; organic revenue decline of 1%.

  • Customers continue to be concerned about macro.

  • Global peers are guiding for a modestly weaker growth in 2024 vs 2023

  • Revenue growth guidance range of 4-7% assumed for Infosys and HCL Technologies for FY25 may be at risk

  • Weak exit from FY24 and a possible weak start to FY25 for Indian IT companies is expected.

  • Brokerage maintains ‘underweight’ stance on the Indian IT services sector.

  • ‘Slower for longer’ phenomenon could lead to further downward earning revisions.

  • Tier-2 pack has held out better than anticipated.

  • Nirmal Bang maintain TCS as its industry valuation benchmark.

Indian ADRs Slide After Accenture Lowers Revenue Guidance

Citi Research On India Equity Strategy

  • Remove Mahanagar Gas Ltd. from midcap picks after rating downgrade

  • Sectoral preference and large-cap picks remain unchanged

  • Large-cap valuations at >20x 1 year forward PE are >1 standard deviation above long term average.

  • Japan and India have been the stronger major Asian markets over the past year.

BofA On India Equity Strategy

  • Power deficit issue real, but the brokerage remains underweight on sector.

  • It sees 100 basis points risk to grid power demand growth CAGR.

  • Execution risk not priced in—historically power projects have missed planned execution by 30-48 months.

  • Rally mostly valuation driven; consensus has cut/maintained FY24/26 estimates.

  • Bullish on broader capex cycle - still in third year of typically ten years' upcycle.

  • Prefer Industrials, Financials over Power Utilities.

  • Downgrade Tata Power to 'underperform' from 'buy'.

  • Maintain 'underperform' on NTPC, Power Grid Corp, NHPC, BHEL.

  • Prefer direct capex plays such as LT, Havells, ABB, Siemens, BEL.

  • Prefer UltraTech, ICICI Bank, Union Bank, Canara Bank, IndusInd Bank in indirect plays.

Jefferies On Adani Enterprises

  • Jefferies maintains 'buy' on Adani Enterprises with a target price of Rs 3,8000

  • Management highlighted gradual rollout of GH2 ecosystem - to be most capex heavy and profitable venture

  • Airports business to benefit from growth in traffic, non-aero trends

  • Copper facility to commission by Mar/Apr-24

UBS On Reliance

  • UBS reiterates 'buy' on Reliance Industries Ltd.

  • Target price hiked to Rs 3,420, from Rs 3,000.

  • Improved earnings visibility of consumer businesses.

  • Potential tariff hike by Reliance Jio will complement strong subscriber addition.

  • Strong subscriber addition to drive a 20% CAGR in Reliance's Digital Ebitda over FY24-26E.

  • Demand optimism for Reliance Retail in the near-term.

  • Core retail revenue/Ebitda estimates for FY25 and FY26 raised to 1%/4% and 1%/6% respectively.

  • Capex intensity could decline beyond fiscal 2024.

  • The brokerage expects debt to come down by $10 billion over next two years

Nuvama On Prince Pipes

  • Nuvama retains 'buy' on Prince Pipes with a target price of 737.

  • Acquisition valued at 55 crore with revenue potential of 100-120 crore at 13-15% margin

  • Company will need to free up bandwidth to revive the unit

  • Flattish fourth quarter, cut earnings per share by 9% in FY24, FY25 & FY26

Jefferies On Shriram Finance

  • Shriram Finance, with a target price of Rs 2,750, among Jefferies' top picks

  • Healthy loan growth to sustain with new products to aid growth.

  • Growth in addressable used commercial vehicle pool can be tailwind after fiscal 2026.

  • Margins expected to be range bound, operational expenditure can ease over FY24-26E.

  • Steady asset quality and credit costs expected.

  • Housing subsidiary to unlock value.

  • 1.6x FY25E price-to-book-value ration is in line with five-year average.

ICICI Securities On IndusInd Bank

  • ICICI Securities reiterates 'buy' on IndusInd bank with target price of Rs 2,000.

  • Favourably placed on growth, NIM and asset quality troika.

  • Retail deposit growth above peers and could sustain.

  • Ripe for re-rating with RoA expansion and amongst highest NII/PPOP growth.

  • FY25-26E RoA estimated at ~1.9% vs 1.6% five-year average.

  • Valuations at ~1.7/1.4x FY25/26E adjusted book value are much attractive.

  • Less than three-year term renewal of incumbent managing director and CEO key risk.

Kotak Institutional Equities On Brigade Enterprises

  • Kotak upgrades Brigade to 'add', keeps target price unchanged at Rs 1,025.

  • Stock has corrected 16% on concerns of ban on construction activity in Bengaluru.

  • Strong prospects across development, leasing and hospitality.

  • Bengaluru’s water crisis could get worse before it gets better.

  • Currently trades at 6X adjusted EV/Ebitda on FY2026E earnings.

  • Current weakness, an opportunity to add.

Morgan Stanley On Torrent Power

  • Morgan Stanley 'underweight' on Torrent Power, with target price of Rs 963.

  • The company won a 300MW renewable energy wind-solar hybrid project, worth Rs 3,650 crore, at tariff of Rs3.65 per unit.

  • It won a TBCB project for cost of Rs 4,712 crore.

  • The average levelised tariff of Rs 5 crore per annum.

  • Both projects to be completed in 24 months.

  • The brokerage expects downside risk on both with mid-teens IRR.

  • FY27 Ebitda can see a 7-8% upside as both projects get commissioned.

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