Stock Picks Today: IndiGo, HAL, BEL, Hindustan Zinc, Trent, Kaynes Tech And More On Brokerages' Radar

A host of global and domestic brokerages have released fresh views on Interglobe Aviation Ltd., Hindustan Aeronautics Ltd., Bharat Electronics Ltd., Hindustan Zinc Ltd. and Trent Ltd. ahead of Tuesday's session.

They have also outlined sector trends across defence and hotels.

• B&K has initiated a Buy rating on Hindustan Aeronautics with a target price of Rs 5,610, stating that India’s defence aerospace landscape is at an inflection point and HAL’s strategic relevance is higher than ever.

• The brokerage has initiated a Buy rating on BEL with a target price of Rs 513, noting that India’s defence modernisation is becoming increasingly electronics-led and BEL is leading this shift.

• B&K believes BEL is best placed to benefit from India’s push towards indigenisation.

• The firm has initiated a Hold rating on Bharat Dynamics with a target price of Rs 1,406, highlighting that India’s guided-weapon ecosystem is undergoing a structural scale-up.

• It notes that while the underlying industry and business remain attractive, valuations appear rich.

Goldman Sachs

• Goldman Sachs maintains a Buy rating on IndiGo but has cut the target price to Rs 5,700 from Rs 6,000, citing ongoing operational disruptions.

• It expects higher costs but believes IndiGo’s industry position remains unchanged.

• The brokerage notes that the stock may remain volatile until clarity emerges on potential regulatory action against the airline.

BofA

• Bank of America maintains a Buy rating on IndiGo and has cut the target price to Rs 6,600 from Rs 6,700, stating that flight disruptions appear to have passed their worst phase but rostering-related cost headwinds may persist.

• It has reduced third quarter net-income estimates by 9% to factor in operational disruptions.

• The brokerage highlights risks from higher labour costs, regulatory pressures and pricing-related challenges.

• B&K has initiated a Buy rating on Hindustan Zinc with a target price of Rs 610, stating that its industry-leading cost position provides a strong competitive moat.

• The brokerage highlights transformative capacity expansion underway at the company.

• It adds that silver leverage provides significant upside optionality.

• The firm notes forward integration through the DPI/NPK fertiliser plant.

• It expects de-bottlenecking activities to drive near-term production growth.

JPMorgan

• JPMorgan maintains an Overweight rating on Kaynes with a target price of Rs 7,550, stating that the stock is trading below its bear-case scenario and is the cheapest on a PEG basis.

• The brokerage notes that fundamentals on revenues and margins remain unchanged.

• It highlights that a key concern has been stretched working capital and receivables.

• Higher working-capital assumptions imply a bear-case fair value of Rs 4,900.

• The stock now trades at 0.7x PEG, which is the lowest in its coverage universe.

• JPMorgan expects improving receivables and a better net-working-capital cycle over the next two quarters to act as key drivers for the stock.

Macquarie

• Macquarie maintains an Outperform rating on Kaynes with a target price of Rs 7,700, stating that while there were no irregularities, regaining investor confidence will require management effort.

• It notes that Kaynes defended itself against accounting-irregularity reports by admitting disclosure shortfalls but denying any misconduct.

• The brokerage finds the clarification reasonable but highlights that doubts raised on multiple fronts have muddied investor perception.

• Macquarie believes strong cash-flow generation, organic growth, booking of cash subsidies and a change of auditor are needed to restore confidence.

• Macquarie maintains an Outperform rating on Trent with a target price of Rs 6,000, noting that the company is strengthening Zudio to outpace competition.

• It states that like-to-like growth has been impacted by store splits.

• The brokerage highlights that the company is leveraging the proven success of Westside to drive this transformation.

• It notes that disciplined cost control is supporting healthy margins and attractive returns.

• Citi observes a lack of confidence in the cement sector due to subdued demand and pricing trends, resulting in limited excitement around the space.

• The brokerage expects cement companies to witness Ebitda per tonne expansion once demand growth starts to accelerate.

• It notes that consensus on aluminium remains positive, with investor interest in both Hindalco and Vedanta.

• Citi expects LME aluminium upside to drive stock performance.

• It sees little optimism in steel due to weak expectations from China, uncertainty around safeguard duties, and stretched valuations.

• The brokerage expects steel stocks to correct eventually.

• Morgan Stanley maintains an Overweight rating on Coforge with a target price of Rs 2,030, citing continued optimism on revenue growth trends.

• It highlights strength in verticals such as travel, with a strong focus on driving wallet-share gains.

• MS expects Coforge to maintain a steady margin and cash-flow profile going forward.

• Macquarie maintains a Neutral rating on Siemens with a target price of Rs 3,100, noting that the company has made a second attempt to sell its LV Motors business for Rs 2,200 crore, with the price unchanged from its first attempt.

• The brokerage states that the history of business carve-outs from the company has been a major investor concern.

• It adds that such carve-outs tend to reduce the overall canvas of the industrial play.

• Macquarie notes that with the sale of the motors business, the scope of Siemens India’s motion business is reduced.

• It adds that the valuation of the motors business now appears optically better given its deteriorated operating performance.

• The firm states that the vertical demerger of the Energy business helped unlock value and was a positive move.

• It cautions that a slump sale deprives existing shareholders of benefitting from any potential valuation uplift due to the nature of such transactions.

• Macquarie states that the hotel sector is in a favourable position with high visibility of sustainable double-digit growth.

• It notes that a 12% valuation correction since August has created an attractive entry point.

• Checks indicate that hotels have returned to double-digit revenue growth in third quarter.

• Macquarie expects such growth to remain sustainable due to strong GDP growth, GST reforms, seasonal strength, a low base and the addition of renovated or new rooms.

• Its pecking order in the sector is Lemon Tree, followed by ITC Hotels and Chalet Hotels.

• Jefferies has added Godrej Properties, BPCL, JSW Energy, AU Bank, Axis Bank and SAMIL to its model portfolio.

• It has reduced allocations to ICICI Bank, NTPC, Tata Steel, Crompton Consumer and Indigo.

• The firm remains overweight on lenders, telecom, property, autos, cement and power.

• It remains underweight on IT, staples, pharma and industrials.