Brokerages have highlighted opportunities across IT, infra and industrial sector issuing fresh calls on Tata Consultancy Services, KEC International, Citi while also sharing their outlook on hospital sector.
Jefferies on TCS
- Maintain Underperform with TP of Rs 1800
- Uninspiring growth, Rising margin pressures
- While pick up growth in UK surprised positively, weak growth across other key regions
- Rising margin pressures should keep TCS's earnings growth in check
- Cut estimates by 1-2% and expect a subdued 4% EPS CAGR over FY27-29.
UBS on TCS
- Maintain Neutral with TP of Rs 2565
- Q2 – overall inline; AI growth remains healthy
- Hiring uptick and strong growth in AI revenues are encouraging for the sector.
Kotak Securities on TCS
- Maintain Add; Cut TP to Rs 2320 from Rs Rs 2450
- Growth push risks margin stability
- Inline quarter on growth and margins; reasonable growth in overseas business
- Muted deal wins disappoint a tad
- AI revenue growth accelerates but difficult to extrapolate
- Growth investments hurting margin profile.
Citi on TCS
- Maintain Sell; Cut TP to Rs 1840 from Rs 1875
- Largely inline Q2; margin pressure ahead
- AI key driver of growth; FY27 margins likely lower than earlier comments
- Expect muted low single-digit revenue growth trajectory to continue
- Expect growth challenges to continue weighing on stock/sector multiples.
JPMorgan on TCS
- Maintain Overweight with TP of Rs 2300
- Q2 print - in-line growth and margin
- Cautious optimism on sideways demand
- Demand uncertainty prevails
- Intention is to take margins up from current levels in H2
- However we believe this will be a function of how growth pans out given seasonal weakness.
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Kotak Securities on KEC International
- Upgrade to Add from Reduce; Cut TP to Rs 400 from Rs 470
- Gradual recovery underway
- Key beneficiary of strong domestic T&D pipeline
- MENA recovery to be gradual; cables to drive growth
- See near term earnings pressure; gradual recovery expected from H2FY28.
UBS on Citi
- Maintain Neutral with TP of Rs 2565
- Q2 – overall inline; AI growth remains healthy
- Hiring uptick and strong growth in AI revenues are encouraging for the sector.
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Jefferies on Hospital
- Government of India plans to extend 30% price caps to non-scheduled cancer drugs
- This is to address concerns around excessive trade mark-ups and improve affordability
- Although near-term margin could be impacted, believe this will be transitory
- But importantly, regulatory uncertainty eases for now
- Concerns around consumable markup remain but any impact on Ebitda is likely to be manageable.
GS on Hospital
- Assessing the impact of anti-cancer drug margin capping
- Discussions with hospitals and industry personnel seem to suggest that the impact is likely to be minimal across most multi-specialty hospital chains
- Onco medicines are likely only <5% of hospitals (Max/ Fortis might be slightly higher) revenues and <2-2.5% of EBITDA
- Hospitals can recoup the losses via marginal repricing of services like drug administration charges, etc
- Checks seem to suggest that hospitals earn a margin of 30-50% on an avg. on onco drugs
- Analysis suggests <2% potential cuts to EBITDA even in a bear case
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