Stock Picks Today: Nestle, Tech Mahindra, Wipro, Yes Bank, Polycab, And More On Brokerages' Radar

Brokerages have highlighted opportunities across banks, IT, cables and wires, AMC and insurance sector issuing fresh calls on Nestle, Tech Mahindra, Wipro, 360 One, Yes Bank, HDFC Life, HDFC AMC, Polycab, Persistent Systems while also sharing their outlook on CAS.

Macquarie on Nestle

• Maintain Neutral; Cut TP to Rs 1570 from Rs 1575
• Q2 sales momentum extends, watching inflation
• See recent sales momentum moderating as a stronger base kicks in
• Rising inflation poses a growing risk to rural demand
• Elevated valuations leave limited room for rising demand and margin risk
• Cut FY27/28/29 EPS by 4-5% each, factoring in rising risks to both demand and margins from inflationary pressures and a more volatile commodity environment

GS on Nestle

• Maintain Neutral; Cut TP to Rs 1475 from Rs 1575
• Growth moderation ahead as base effect sets in
• Nestle was a major beneficiary from GST rate cuts and thus saw a significant growth acceleration starting Q3
• Cut FY27/28/29 EPS estimate by 2% to build in growth moderation

MS on Nestle

• Maintain Equal-weight with TP of Rs 1538
• Q2 Beat: Strong Top-line Growth Momentum Sustains
• Rising food inflation remains a key challenge
• Continued strong momentum on growth and margin delivery are positives
• Believe today's stock reaction seems overdone.

Kotak Neo on Tech Mahindra

• Maintain Buy; Hike TP to Rs 1870 from Rs 1750
• All-round performance raises conviction on next leg of journey
• Reports another quarter of both healthy growth and margin expansion
• Expect strong growth momentum to sustain and raise growth estimates
• Significant opportunities available for margin improvement in the medium term.

Jefferies on Tech Mahindra

• Upgrade to Hold from Underweight; Hike TP to Rs 1540 from Rs 1260
• Improving growth outlook
• Margin expansion continued as expected, a greater focus on growth may limit margin expansion beyond FY27
• Raise FY27-29 EPS by 4-6%
• Expect TechM to deliver 6%/12% CAGRs in cc revenues and EPS over FY27-29.

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Bernstein on 360 One

• Maintain Outperform with TP of Rs 1330
• Wealth flows remain strong
• Other income and AMC business drag

Bernstein on HDFC Life

• Maintain Outperform with TP of Rs 810
• Q2FY27 - Better growth
• Some regulatory impact ahead
• Company expects to bring down expense ratios to the new proposed caps through the proposed commission cuts
• Company expect a near-term growth impact in the broker channel, with limited dislocation in agency & bank channel.

Kotak Neo on HDFC AMC

• Maintain Buy with TP of Rs 2800
• Higher yields drive core earnings beat
• Core earnings growth ahead of estimates at 16% YoY
• Equity mix up 140 bps QoQ; overall yields improve sequentially
• Find valuations reasonable to remain constructive

Jefferies on HDFC AMC

• Maintain Buy; Hike TP to Rs 3050 from Rs 2950
• Q2 operating Beat Led by Better Yields & Lower Opex
• Blended yield improved led by a higher share of equity-oriented AUM in overall mix
• Continued to scale up its alternate business with the launch of new funds
• See 3-yr EPS CAGR of 13%.

Kotak Neo on Persistent

• Maintain Buy; Hike TP to Rs 6500 from Rs 6250
• Reasonable quarter with a few rough edges
• Robust revenue growth but marginally lower profitability
• Deal TCV growth moderates but enough to sustain near-term growth
• Likely to maintain growth leadership in the medium term.

Jefferies on Wipro

• Maintain Underperform; Hike TP to Rs 155 from Rs 150
• Growth outlook remains weak
• 45% YoY decline in deal wins point to a weaker growth outlook
• Cut US$ revenue estimates by 2% but raised EPS estimates by up to 2% due to forex
• Over FY27-29, expect a 4.5% EPS CAGR, which, along with a 5% dividend yield, makes the risk-reward profile unattractive.

ALSO READ | Stocks To Watch Today: Wipro, Tech Mahindra, L&T Finance, Maruti Suzuki, Yes Bank & More

Jefferies on Polycab

• Maintain Buy; Cut TP to Rs 11040 from Rs 11100
• Another Quarter, Another Beat
• C&W EBIT pared to 14.2% on high base last year, FMEG EBIT rose notably to a high of 10%
• View Polycab as play on power/capex and est FY26-29e EPS CAGR at +22%

Jefferies on CAS

• SEBI Removes Uncertainty; Bigger positive for Brokers vs Exchanges
• SEBI has changed the methodology to compute the settlement price of index derivatives on expiry day
• This should reduce expiry-day volatility under the Closing Auction Session
• Benefiting brokers whose orders remain below pre-CAS levels
• With premium turnover for exchanges back to pre-CAS levels, earnings upside may be limited

MS on YES Bank

• Maintain Underweight with TP of Rs 17
• Supreme court's order on AT1 bonds - prima facie, a negative
• Await details on the percentage of these ATI bonds that will actually be allowed to be written off
• The post tax amount of Rs 6300 cr implies 12% of net worth and shaves off 190 bps of Yes bank's current CET I of 14%
• This has been an overhang for the stock and the stock has seen a sharp reaction post this news
• Will watch out for any review petition and clarification by the bank
• Detail that we will be looking for in the decision is whether the loss absorption feature of ATI bonds has been fundamentally challenged or does the decision have more to do with the process followed by the administrator

Citi on YES Bank

• Maintain Sell; Cut TP to Rs 17.5 from Rs 22
• AT1 Bonds Write-Down Reversed; Reopens Capital Chapter
• Estimate a 250 bps CET-1 hit to 11.5% (principal only, assuming coupon payment is discretionary and non-cumulative)
• Will erode book value by 13-14% and necessitating a capital raise to restore buffers.

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