Brokerages have highlighted opportunities across automobile and farm equipment, IT, aviation, real estate, life insurance and asset management sector issuing fresh calls on M&M, Tata Elxsi, Prestige Estate, IndiGo, Urban Company, ICICI Life, alongside a broader view on India strategy.
Kotak Neo on M&M
- Maintain Buy; Cut TP to Rs 4000 from Rs 4175
- Correction offers a compelling entry point
- Cyclical concerns drive a disproportionate de-rating
- Reverse DCF implies a 3-3.5% volume CAGR over FY29-50
- M&M's pricing power, led by its large SUV dominance, positions it well for margin recovery
- The tractor slowdown reflects a weak monsoon and a high base rather than any change in mechanization drivers
- Cut FY27-29E standalone EPS by 5-8%.
Kotak Neo on IndiGo
- Maintain Buy with TP of Rs 5900
- Line of sight to financial rationality is emerging for the sector
- Pricing has increased enough to restore sector profitability as crude corrects
- Demand destruction has been significant but partly reversible
- Premiumization is likely to accelerate
- The case for Indigo delivering 4X peak PBT over next five years is strengthening
JPMorgan on Tata Elxsi
- Maintain Neutral; Cut TP to Rs 3200 from Rs 3400
- Auto ex-EU surprises positively; Margins to expand at a slower pace
- Ebit margins surprised positively as the one-time headwinds of 1Q reversed largely in Q2
- Cut earnings by 10-11%, mainly driven by 200-240 bps margin cuts over FY28-29E.
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Nomura on Prestige Estates
- Maintain Buy with TP of Rs 1900
- Q2 pre-sales beat; sector remains resilient
- Q2 has turned out to be the third-strongest quarter over the past 10 quarters
- Expect its launch momentum to significantly improve into the year.
Citi on Prestige Estates
- Maintain Buy with TP of Rs 1850
- Presales in-line with estimates
- New launch offtake in H2 remain key monitorable
- Achieved 40% of its FY27 presales guidance.
UBS on Urban Company
- Maintain Buy with TP of Rs 180
- To consider potential fund-raise; could bolster competitive position
- View this positively, as added capital could strengthen its balance sheet
- It could help protect market leadership in a competitive market environment.
Bernstein on ICICI Life
- Maintain Market-Perform with TP of Rs 680
- Margin expansion covers for softer new sales growth
- Margin expansion was driven by favorable mix shift in the new sales
- Growth continued to be lopsided with strong growth in retail protection & annuity segments, and in the partnership channel.
GS on ICICI Life
- Maintain Neutral; Cut TP to Rs 500 from Rs 525
- Product mix driving margin improvement
- Remains cautious of forecasting topline growth but remains focused on Protection and Annuities
- Reiterated that it has all the levers to deliver sustainable VNB growth over the medium term.
Jefferies on ICICI Life
- Maintain Buy; Cut TP to Rs 670 from Rs 685
- VNB Margin Below Expectation; Risks Are Priced In
- Margins low as the group funds mix was higher
- APE growth led by group business
- Banca and agency grow slowly despite a favorable base
- Cut FY27-29e VNB by 2% due to lower retail protection mix.
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Jefferies on AB Capital
- Maintain Buy with TP of Rs 475
- Well positioned amid rising rates; among top NBFC picks
- Should benefit from rising rates as 70% floating-rate assets and 56% floating liabilities support NIM expansion
- AUM should grow at 26% CAGR over FY26-28, led by healthy momentum in unsecured and steady growth in secured loans
- Fee income risks from proposed tighter insurance commission norms are lower than peers
- Benign unsecured environment and limited rural exposure should keep asset quality steady
- Valuations seem reasonable
CLSA India Strategy – Vikash Jain
- The hand that giveth taketh away
- FII sell most of what they bought in two months; Domestic mutual fund inflows rebound
- FII selling of $4.1bn equated to 84% of their inflows in the prior two months,
- Large selling from active funds was only partly negated by passive inflows
- FIIs shifted weight in financials, energy, IT and autos by reducing discretionary ex-auto and healthcare
- FII turned neutral on financials after three months of being underweight
- In contrast, inflows into domestic mutual funds rose 25% supported by both active and passive funds
- However, the ratio of discontinued SIPs vs new SIPs climbed to an 18-month high
- Mid- and small-cap funds saw record inflows but flows into large-cap funds remained depressed
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