Brokerage Views: Citi On DMart, L&T Finance, Morgan Stanley On Class 8 Trucks And More

Top brokerages from Citi to Morgan Stanley and Macquarie have taken interesting stock calls on a variety of sectors on Thursday especially on Avenue Supermarts Ltd. after its fourth-quarter business update.Citi maintained a 'sell' call on the DMart owner, while Morgan Stanley is 'overweight' on the stock.For L&T Finance Ltd., Citi expects two-wheeler, microfinance lending, and retail housing to be robust.India's benchmark indices ended little changed amid volatility on Wednesday, ahead of the Fed Chair's speech at the Macroeconomics and Monetary Policy Conference.However, the Nifty Midcap 150 hit a fresh lifetime high during the day and settled higher for the eighth day in a row. The Nifty Smallcap 250 closed with gains for the ninth day in a row.The NSE Nifty settled 18.65 points, or 0.083% lower at 22,434.65, and the S&P BSE Sensex declined 27.09 points, or 0.037% to end at 73,876.82 on Wednesday. NDTV Profit is tracking what brokerages are putting out on specific stocks. Here are all the top calls you need to know about this Thursday..What brokerages have to say on Avenue Supermarts..The brokerage maintains 'sell' rating with a target price of Rs 3,200 per share. Expects revenue per square feet will continue to be impacted by inferior product mix and new store additions in smaller towns. Is cautious at the current valuation, given risks around store additions, earnings and the P/E multiple. .Is 'overweight' with a target price of Rs 4,695 per share.DMart's fourth-quarter revenue was marginally higher than brokerage's estimate.Improving trends in growth and efficiency metrics support its thesis on the ability to re-engineer growth with its grocery-first strategy.The large grocery market and DMart's business model keep the brokerage excited about the business and the stock..Maintains an 'outperform' rating, with a target price of Rs 4,500 apiece.Encouraged by healthy sales momentum in DMart, which bolsters brokerage's expectations with DMart's value proposition.No material change in price-based competitive intensity drives constructive outlook..Has a negative view on Indian OMCs and a 'sell' call on Indian Oil Corp, Bharat Petroleum Corp, Hindustan Petroleum Corp.Target price for IOC, BPCL, HPCL are at Rs 115, Rs 440, Rs 320 apiece, implying 34%, 8%, 48% downside, respectively.Key concerns are lack of pricing freedom on petrol, diesel and LPG.Gap in reported GRM versus estimates based on product slate has widened.Russian crude benefit seems highest for BPCL, and least for HPCL.Marketing margins on non-transport fuels recovered from FY23 levels..The brokerage has a target price of Rs 199 per share against the current market price of Rs 170.05 on BSE. Citi believes that trends in two-wheeler, microfinance and retail housing should be robust.Higher retail mix should be yield accretive and should aid in expanding margins further, offsetting the impact of higher funding costs. Supported by fee income, the brokerage expects income to assets ratio to inch-up.As it proposed to create contingency buffer on unsecured portfolio, credit cost is expected to remain elevated at over 2.6%.operational expenditure to assets will likely remain elevated given senior hirings, branding campaigns, retail roll-out and tech investments..The government considering mandating power generation companies to operate gas-based power plants. All Indian plant load factor averaging at 14% in 11M FY24. Higher PLF levels in the summer to lead to gas demand.The brokerage expects incremental gas demand of up to 20 mmscmd for a short period. Key short-term beneficiaries: GAIL, PLNG, and GSPL; Citi prefers GAIL. .Price elasticity of non-traditional supply expected to rise over medium term, supporting iron ore prices, says Citi.Non-traditional iron ore supply to China surged to 158 million tonne in 2023, up 3.6% p.a. post-pandemicFaster growth in more price elastic non-traditional iron ore supply should not be a surprise, says the brokerage.India emerges as dominant non-traditional supplier; Ukraine and Iran witness declines.Anticipated growth in Indian steel production may reduce exportable surplus, boosting supply price elasticity.Exports from Iran and Ukraine are unlikely to increase materially any time soon.Expect price elasticity of non-traditional supply of iron ore into China increasing over time..Citi Research maintains sell on Dabur India.Price target raised to Rs 520 against Rs 510 earlier, implying 2.1% downside.The brokerage trimmed FY24-26E earnings estimates by 0-1% on recent demand trends.Roll forward EPS estimates to 40x in December 2025, as opposed to September 2025 expected earlier; target multiple remember unchanged..Citi maintains sell on Federal Bank with a target price of Rs 135.Federal Bank growth numbers ahead of estimates.Wholesale credit growth grew at 15%, while retail grew at 25%.Deposit growth at 18.4% was approximately 2% above estimates.NIM trajectory will be a key to watch out for, expect QOQ expansion, says Citi.Earnings to be impacted by wage revision and AIF hit of Rs 100 crore, the brokerage said..Citi maintains buy on Zomato with a price target of Rs 175.The brokerage sees quick commerce margins to expand to 7-8% of GMV over medium term.It expects household budgets to shift from monthly purchases to top-ups.It expects quick commerce to be a $25 billion business by 2030, with 25-30% CAGR.Quick commerce companies to have substantial first-mover advantages when they reach scale.Citi maintains sell on RBL Bank with a target price at Rs 257 apiece. Advances growth in line with estimates, driven by retail. Wholesale advances lagged with 7% year-on-year growthWith a steep deposits growth, loan-to-deposit contracted. NIMs expected to moderate quarter-on-quarter in build-up of liquidity. Credit costs are expected to stay elevated with the return on asset closer to 1%. .March Class 8 orders of 1.7 lakh came are below expectations.Class 8 orders could continue to see month to month volatility.Truck stocks have soared on improving PMIs, strong FY24 guides, and increasing belief in FY24 pre-buy effect. Yet to see substantial improvement in freight markets and large fleet operators. Class 5-7 orders were at 2.42 lakh units in March, up 18% year-on-year and 27% month-on-month. Class 8 backlogs will have fallen by 9,000 units and ended at 1.66 lakh units. .The brokerage's top picks are ABB India Ltd., Larsen & Toubro Ltd., and Kirloskar Oil Engines Ltd.Domestic ordering momentum sees moderation in Q4 FY24 with the impending election.Sees healthy uptick in ordering momentum post Q1 FY25.Export weakness has bottomed out, sees pickup from Q4 FY24.Election schedule may have a near-term impact on inflows and working capital.Expects L&T and KEC to witness material improvement in margins in 2H FY25.Sees green shoots in private sector capex from auto, cement, metals and PLI-led capex..Brokerage forecast revenues for companies under coverage to increase 14% year-on-year in Q4 FY24. Rise will be led by 27% YoY growth in the two-wheeler segment’s production volumes. Mid-to-high single-digit increase in ASPs due to price rises and richer product mix. Expects Ebitda for companies under coverage to increase 33% YoY in Q4 FY24, led by raw material tailwinds and operating leverage benefitsMahindra and Mahindra Ltd., Tata Motors Ltd., and Motherson Sumi and bearing companies remain top picks. Maruti Suzuki Ltd. and Eicher Motors Ltd. expected to report strong earnings performance.

Brokerage Views: Citi On DMart, L&T Finance, Morgan Stanley On Class 8 Trucks And More

Here are all the top brokerage calls you need to know this Thursday morning.

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