Stock Picks Today: RIL, Aurobindo Pharma, IOCL, BPCL, Container Corp, And More On Brokerages' Radar

Brokerages issued fresh views on RIL, Aurobindo Pharma, Container Corporation of India, Amber alongside commentary on OMCs, house appliances and auto sector.

MS India Strategy – Ridham Desai

• India is entering a strong earnings cycle, with medium-term stock market returns that could reverse its trailing underperformance
• Find India's structural premium to be justified by scale, growth, domestic capital formation, macro buffers and institution building
• Believe the entrepreneurial focus on balance sheet will remain the secret sauce for superior equity returns
• Earnings could compound at >15% in the next five years, putting the overall equity market at 10x FY31
• Sectors that seem to have these ingredients include:
• 1) Financials, including lenders, insurers, asset managers, exchanges, depositories and wealth platforms, which leverage different parts of financial deepening
• 2) Consumption, especially sub-sectors undergoing premiumisation
• 3) Industrials: energy, defense, fertilizers, semiconductors and data centers, among others
• 4) IT services, which is currently disrupted by AI, but could be resurgent when the world monetizes token spend.

Jefferies on RIL

• Maintain Buy; Cut TP to Rs 1675 from Rs 1695
• Reiterates AI aspirations
• Retail & FMCG - Manufacturing backward integration and export growth
• New Energy - Nearing monetization
• O2C should benefit from Petrochemical strength
• Recovery in Retail growth could rerate the stock

​MS on Home Appliances

• Xiaomi's entry into home appliances.
• India's FMEG market is crowded with multiple brands, consumer cohorts & price points.
• Building business in the traditional general trade channel will need sustained efforts, differentiated strategy and is likely to take longer.
• Continue to expect a commodity impact on margins for domestic players in the near term.
• See competitive intensity in the medium term.

GS on Auto Sector

• Eicher Motors – Maintain Buy; Hike TP to Rs 9100 from Rs 8400.

• M&M – Maintain Buy; Cut TP to Rs 3650 from Rs 4000.
• During periods of cooling fuel prices, demand came back fastest in scooters, entry level cars, premium motorcycles and premium hatchbacks.
• Highlight TVS Motor, Eicher Motors and Maruti Suzuki as best-positioned to see an added leg of volume growth.
• Rainfall across India has been 38% below the long-term average.
• Last time the monsoon was this deficient, M&M saw Tractor volume decline of 7% that year.
• M&M guidance is for mid-teens growth given for FY27.

HSBC on Aurobindo Pharma

• Maintain Buy with TP of Rs 1580
• Marching towards $2 bn US sales goal
• Execution of Lannett's complex generics portfolio and better capacity utilisation key to deliver deal synergies
• US launch of gAdvair inhaler will be a key catalyst

​Kotak Securities on OMCs

• IOCL – Upgrade to Reduce from Sell; Hike TP to Rs 150 from Rs 120
• BPCL – Upgrade to Reduce from Sell; Hike TP to Rs 320 from Rs 245
• HPCL – Upgrade to Reduce from Sell; Hike TP to Rs 400 from Rs 275
• Happy days back much sooner; War and woes are over
• Revert to $85/bbl from $95/bbl assumption for FY27
• Happy days are back much sooner for OMCs
• Full reversal of benefits unlikely
• OMCs unlikely to report losses in FY27

​JPMorgan on OMCs

• Petrol / diesel margins back above pre-conflict levels

• Losses on LPG are still elevated, but should also start to track oil down soon
• Earnings for Q1FY27 will likely be hurt by large inventory losses, but Q2 profitability should be better
• The OMC will have acquired material debt during the last few months - affecting valuations
• A major part of the restoration of profitability is on account of the reduction in excise duties
• Possible that the govt. keeps taxes low for some time - permitting debt repayment at the OMC
• Risk of an eventual increase in excise duties remains
• Forming a FY28 margin view is consequently difficult
• HPCL/BPCL and IOCL are likely to remain more near term tactical plays, moving up as (if) oil prices ease further
• Prefer BPCL/IOCL

​Jefferies on Container Corporation of India

• Maintain Buy with TP of Rs 600.
• Underperformed NIFTY by 50% due to weak industry growth /execution and, divestment plans losing momentum.
• Stock valuation doesn't factor in any potential benefits from Western Dedicated Freight Corridor (WDFC) connectivity to JNPT.
• Q1FY27 is expected to be weak, given a 5% YoY decline in Industry volume growth.
• Believe Concor is also a play on the potential easing of Middle East (ME) tensions.

​CLSA on Amber Enterprises India Ltd.

• Maintain Outperform with TP of Rs 8100.
• Oppo deal a significant opportunity.
• Value addition a key focus area.
• Calculate an EPS impact of 15%/21% in FY28/29.
• See this as a rerating event for Amber.
• But for incumbents like Dixon it could indicate higher competitive intensity.

Kotak Securities on Amber

• Maintain Buy; Hike TP to Rs 8710 from Rs 8150
• Strategic diversification into smartphone segment
• Mobile PLI 2.0 and Component PLI key triggers for Mobile EMS manufacturers
• Scaling volumes in line with guidance and backward integration into components will be key long-term triggers
• Revise FY28/29 estimates by 8%/15%

JPMorgan on Amber

• Maintain Neutral with TP of Rs 7650.
• Partnership structure - sublease arrangement hence minimal capex.
• Economics of mobile manufacturing - low margins, high ROCE.
• Strategy is to eventually get into component manufacturing.

Nomura on Dr Reddy

• Maintain Buy; Hike TP to Rs 1740 from Rs 1600.
• Strategic pivot in favor of brand businesses.
• Street expectations muted make risk-reward favourable.
• Constructive on Dr Reddy's - see upside risks to consensus earnings and valuations.
• Expect growth of the branded business to lift profit margins.
• Revenue mix change should support sustainable earnings growth.
• This in turn, drive a re-rating of the stock's valuation multiple.
• Biosimilar Abatacept, if launched, it can present 30%+ upside to FY28/29 estimates.
   

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