Brokerages' Radar
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Brokerage commentaries on Thursday threw highglighted opportunities across sectors ranging from energy infrastructure and hotels to auto, pharma and housing finance, while analysts also assessed the implications of regulatory developments in healthcare and clean mobility.
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Among sectoral calls, brokerages remained broadly positive on hospitals despite concerns around medicine pricing regulations, arguing that the impact on profitability is likely to be manageable.
Haitong Securities On Varroc Engineering
- Initiate Outperform, TP Rs 1219/share
- Content-per-vehicle is the real EV story, not just volume growth
- Overseas breakeven is the key earnings lever
- Underlying margins are improving
- Expect revenue/EBITDA/PAT to compound at 17.7%/22.6%/39.7% over FY26–29E
- Overseas business breakeven by Q4FY27 adds 100bps to consolidated margin in FY28
Emkay on Ethos
- Reiterate BUY on Ethos and TP of Rs3,400
- At GPHG event, Ethos reiterated its long-term vision to scale the business 10x
- Ethos sees potential of ~300 boutiques over the next 5-6 years
- Key expansion roadblocks largely resolved
- Healthy balance sheet provides headroom to sustain new watch expansion
Nuvama on Galaxy Surfactants
- Reiterate 'buy' with revised TP of INR3,265 (earlier Rs 2,927)
- Galaxy benefits from rising crude.
- With crude above $100/bbl, Reformulation tilting towards oleochemicals, uplifting EBITDA/ton
- FY30 target of 2x volumes and 2.5x EBITDA is on track
- AMET volumes gradually coming back
- Leave-on category journey on track
Axis Capital On Persistent Systems
- Maintain Buy-TP at Rs 7210/share (from Rs 6980/share)
- Nagarro delisting possible now – removes overhang
- Even if Persistent fails to get 90% stake that allows a squeez eout of the remaining shareholders, the delisting can proceed now.
- Expect operational integration to start in Q3FY27
- Expect synergy benefits to be visible by Q1FY28.
- If the extended open-offer window (23 Sep to 6 Oct) results in >90% shareholding, then a squeeze-out would be possible
- Full integration would be likely by Q4FY27
Jefferies On Chalet Hotels
- Maintain Buy, TP Rs 965/share
- Visibility on strong growth over next 5 years
- Driven by existing pipeline (9-10% keys CAGR) and potential new adds/M&A
- Aims to build Athiva Brand into pan-Indian premium hospitality brand
- Co targets higher leisure mix and selective market expansion
- High margin commercial portfolio provides recurring cash flow
Jefferies On Energy
- Daily ships through Hormuz are at mid-single digits.
- Saudi has restarted oil tanker loading from its Yanbu port after restoring E-W pipeline.
- Physical crude premium at US$ 16/bbl.
- US is considering a diesel export ban.
- EU diesel crack of US$ 95 benefits RIL.
- OMCs' marketing margins are in the red.
- EU gas storage is at 5-year low with Spot LNG at US$ 26/mmbtu.
- Petchem spreads are up 84% since the start of the conflict.
Jefferies On Energy
- US$20bn Green Energy Corridor capex plan announced
- Positive for Power Grid and power equipment makers
- To evacuate up to 135GW of renewable energy across states
- Deploy 50 GWh of BESS capacity.
- GoI now envisaging large capex and providing substantial financial support for Inter-State Transmission Projects.
- Order inflows to increase-power equipment makers like Hitachi, GV TD, Siemens Energy and CG Power.
- EPC players doing transmission work orders to go up as well.
Macquarie On Indian Hospitals
- Cost of medicines, consumables and implants accounted for ~21% of private hospital revenues on average in FY26.
- Companies do not separately disclose pharmaceutical related cost, estimate approximately two-thirds of this is attributable to pharmaceuticals.
- Sensitivity analysis suggests that changes to medicine pricing and margin structures could have a meaningful impact on sector profitability
- EBITDA implications ranging from the high-single to double digits.
- Assume that hospitals are able to offset 60% of the revenue impact through repricing of treatment packages and other service components
- The next Supreme Court case hearing is scheduled for October 12.
Jefferies On Hospitals
- Est 2-5% impact on hospital Ebitda
- Multiple levers to negate impact of price cuts
- Past price actions on regulatory noise have been attractive entry points
- Fortis, Manipal Hospitals, Apollo Hospitals, Max Health and Medanta is pecking order.
HSBC On Hospitals
- Pricing control discussion may pertain to only a few drug classes
- Max Health, Fortis, Global Health (Medanta), and Narayana Health have revenue exposure of 17-21% to schemes.
- ster and Apollo have revenue exposure of 9-11%
- Manipal Health has 14% exposure to CGHS and other govt health programs.
- Prefer Aster and Apollo Hospitals
BOFA On Hospitals
- Regulatory news flow driven correction tends to be short lived
- Risk from the Parliamentary Committee recommendation seems like a low probability
- Drugs/consumables account for 25-30% of tertiary care bill, a large part of the pharmacy drugs have regulated margins (16-20%)
- Increasing insurance penetration has led to package/bundled pricing for procedures that do not have product/service specific margins
- Reiterate Buy on Apollo Hospitas, Fortis Health & Neutral on Max Health.
Axis Capital On Hospitals
- Pharmacy remains a high margin area for hospitals and thus will be exposed to regulatory scrutiny.
- Mark-up example cited by the Supreme court is an exception rather than the norm.
- Believe some recommendations of the parliamentary panel may be considered
- Hospitals generate around 15-17% of its in patient revenue (or around 12-15% of total revenue) from medicines
- KIMS revenue contribution from pharmacy is 20-22% which is at a higher end of Industry average.
- Hospitals generate 15% of its revenue from inpatient pharmacy.
- Expect a worse case impact of 2-3% on revenue and 7-9% on EBITDA.
CITI On LIC Housing Finance
- Maintain Buy, TP Rs 710/share
- Priority of double-digit disbursement growth
- Deliberate mix shift toward non-housing and project finance (targeted to double YoY). AUM expansion
- Gradual glide toward high-single-digit AUM growth as management deliberately calibrates growth against margins.
- Competitively priced lending rates (7.15%) could pressure near-term NIMs
- Reiterated NIM guidance of 2.5-2.6%.
- Upgrade of a large restructured developer account (~Rs4.5-4.6bn) is expected in 3Q,
- Targeting GS3 below 2% by FY27-end.
CITI On Auto (CAFE 3 Norms)
- Targets are more stringent vs CAFE1/2, the standards also get progressively stricter every year.
- Comprehensive guidelines for clean energy vehicles, carbon-neutrality benefits and technology incentives.
- For OEMs, there is now absolute clarity on CAFE 3, after a fairly long period of uncertainty
- Tradability of credits provides a buffer against penalties for certain OEMs
- Current model portfolio runs the risk of not meeting the standards.
- For OEMs with credits, sale of credit could add to the revenue.
- In PVs, Maruti, M&M and Hyundai are Buys (in that order), while Tata Motors PV is a Sell.
BOFA On Auto(CAFE 3 NORMS)
- Norms favor EVs but concessions soften the transition ask
- On current emissions, Tata and Maruti are best placed to meet the norms
- Respite for M&M and Hyundai due to lesser compliances
- The final CAFE 3 norms remove an overhang that has weighed on the industry for the past couple of years
- M&M is already ramping up its EV business with 12% of its SUV vols coming from E-SUVs
JP Morgan On Pharma & CDMO
- View is constructive on India-facing franchises and CRDMOs
- Selective on diversified generics.
- Clear acceleration in domestic formulations
- Sustained outperformance led by chronic therapies, alongside a sharper strategic push into women's health as a category.
- GLP-1 remains early-stage, but it is shaping up as a large and fast-growing opportunity
- US outlook is mixed: Generics remains a choppy pool of opportunities
- Biosimilars are a tangible growth vector in India and emerging markets
- On costs, higher inputs and freight can pressure margins for some, but currency remains a supportive tailwind year on year.
- Top picks: Divi's, Torrent Pharma.
CLSA On Vodafone Idea
- Retain Hold, TP Rs 13/share
- Planned US$4bn debt raise but spectrum repayment of ~US$3bn in FY29
- Will retain revenue share at 13% although has lost 3mn mobile subscribers YTD to which drag ARPU.
- Estimated spectrum debt is huge at Rs1303bn/US$13.7bn
- Though repayments to Govt. are only Rs 67-167bn in FY27/28 same will jump from FY29 to Rs270bn/US$2.8bn annually.
- Further government equity conversion in VIdea in lieu of spectrum debt is possible but likely only if Govt. ownership falls below 49%
HSBC On Zydus Life
- Maintain Hold, TP Rs 1100/share
- US launch of Saroglitazar will be a key milestone in Zydus's R&D effort
- Assume a gradual sales build-up for the brand
- Believe execution remains key to achieving its aspirational EBITDA margins of 28-30% in the next five years
- Zydus aspires for FY30-31 EBITDA margins of 28-30%
Morgan Stanley On IT
- Persistent System-Initiate Overweight-TP Rs 6150/share
- Hexaware Tech-Initiate Overweight-TP Rs 600/share
- Persistent as a structural beneficiary
- Hexaware as a recovery play.
- Prefer challengers over Tier-1 vendors in the new technology cycle
- Higher growth visibility and TAM expansion
- Bold efforts having the potential to offset deflationary forces
- Challengers have sustained a 10-40% premium to large caps since 2021
- May see further polarization ahead.
Morgan Stanley On Indian Utilities
- India still needs more GW
- Value is shifting from headline capacity to dependable, dispatchable and deliverable GW.
- Firm thermal retains scarcity value, while storage, customer access and grid readiness will increasingly determine renewable monetisation.
- Preferred names include Adani Power, JSW Energy, Adani Energy Solutions
Citi On LG Electronics
- Maintain Buy, TP Rs 2025/share
- Adding Upside 90-Day Catalyst Watch
- Remains a top pick in Indian durables coverage.
- Resilient execution with its two-track strategy (Premium and Essential)
- Delivering strong growth without margin dilution in Q2.
- acceleration in exports and increased adoption of Essential series should drive further revenue growth and margin improvement.
Citi On Havells
- Maintain Buy, TP Rs 1525
- Adding Upside 30-Day Catalyst Watch
- Favorable risk-reward following the recent stock correction.
- Expect an improvement in growth trajectory driven by continued strength in its Cables & Wires business
- believe profit growth could continue to outpace revenue growth in the medium term as well.
- Margins should also benefit from operating leverage in ECD and Cables & Wires bundled with moderation in losses for Lloyd.
Nomura On Capital Goods
- GEC-III to add tailwinds to transmission capex cycle
- Additions of transmission lines and substations is likely to be substantially higher in this phase
- Execution track record of previous phases a mixed bag
- Greenfield projects under GEC-III will be awarded under the TBCB route, which is likely to augur well for private transmission companies
- Top picks-GE Vernova T&D, Hitachi Energy India and CG Power to be the major beneficiaries.
UBS On Aurobindo Pharma
- Maintain Neutral, TP at Rs 1800 (From Rs 1400)
- Improving growth profile, upside priced in
- Broader growth, but risk-reward appears balanced
- Revenue and EBITDA CAGRs of 13%/14% over FY26-29E
- Diversification broadens the growth runway
- Raise EPS estimates by 7-9% for FY27-29E
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