Stock Recommendations Today: HCLTech, MGL, Coal India, REC, Power Finance Corp On Brokerages' Radar
Morgan Stanley, Citi and JM Financial share their calls on various stocks on Tuesday.
HCLTech Ltd.'s third quarter financial results have invited largely positive reactions from brokerages. They expect medium-term recovery with improvements in IT investments and discretionary spending next year, while margin pressures are likely to continue in upcoming quarters.
Morgan Stanley has initiated coverage on Mahanagar Gas Ltd. with a positive outlook, while JM Financial has downgraded Coal India Ltd.'s rating and cut the target price.
NDTV Profit tracks what analysts are saying about various stocks and sectors. Here are the analyst calls to keep an eye out for on Tuesday:
Brokerages On HCLTech
Citi
Citi maintained a 'neutral' rating on HCLTech, with target price revised to Rs 1,920 per share (earlier Rs 1,915), implying a downside potential of 2.6% over previous close.
Third quarter results largely in line with expectations.
Strong cash flow conversion and good growth in tech and financial services segments.
Headcount declined by 2% YoY; weak fourth quarter guidance which highlights organic decline and increased hardware/software costs.
Deal durations are shortening, with total contract value down 10% YoY to $2.1 billion.
Challenges persist in Europe, particularly in the auto sector.
Medium-term recovery expected with improvements in IT investments and discretionary spending next year.
Margin pressures likely to continue in upcoming quarters.
Positive on Annual Contract Value trends but cautious on March quarter outlook.
Infosys Ltd. and Wipro Ltd. are the next key earnings to watch.
Nomura
Maintained 'buy' with target price of Rs 2,000 per share.
Q3 was a mixed bag; revenue was below consensus estimate.
Lifts bottom-end of fiscal 2025 estimated revenue growth guidance due to HPE’s CTE acquisition.
Deal pipeline at record high, deal duration decreasing.
GenAI to drive demand in legacy tech modernisation, data and cloud.
No change to EPS.
Bernstein
Maintained 'market perform' rating with target price of Rs 2,000, implying 1% potential upside.
Delivered a resilient quarter with overall revenue growth.
Management commentary was positive; in-line with up-cycle outlook in 2025.
Deal wins were at $2.1 billion, on improving trajectory.
FY26 growth outlook is better than FY25, with soft fourth quarter.
Valuations are inline with TCS and Infosys, keeping risk-reward in the balance.
Morgan Stanley
Maintained 'equal-weight' rating, with target price of Rs 1,970 per share.
Third quarter services business in line with projections.
Lower-than-expected revenue guidance offset by positive management commentary.
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HCLTech Q3 Review: Brokerages Split On Outlook — Nomura Positive, Citi And Bernstein Cautious
Morgan Stanley On Mahanagar Gas
Morgan Stanley initiated coverage on MGL with 'overweight' at Rs 1,606 per share target, a potential 25% upside.
Mumbai's travel needs key to MGL's value creation.
Mumbai vehicle population to rise 13% more by FY30.
More than 125 billion annual miles market to leave untapped opportunity for MGL.
MGL's market position can more than double, as CNG takes further share.
Every oil to CNG converted vehicle provides 20 years of assured cashflows.
Likes MGL's strategy to provide cash incentives for heavy vehicle conversions to CNG.
Margins to be lower due to LNG market gas sourcing.
Volume growth to be structurally higher.
Key risk: Slower CNG demand on new public transport, higher costs.
JM Financial On Coal India
JM Financial downgraded Coal India to 'hold' from 'buy'; target price cut to Rs 362, from Rs 601 apiece.
Coal India likely to achieve one billion tonnes of production by fiscal 2030, missing its FY27 target.
Increasing production of low-grade coal expected to impact realisations negatively.
Declining plant load factors of thermal power plants pose a challenge.
Higher commercial and captive mining reduces growth opportunities for Coal India.
Limited impact from new thermal power plants to constrain performance momentum.
FY25-27 EPS estimates cut by 9-13%.
Projected revenue, Ebitda, net profit CAGR for FY24-30 at 4%, 1%, and 11%, respectively.
Nuvama On Jindal Stainless
Upgraded to 'buy' from 'hold' with a target price of Rs 836 per share (previously Rs 756), implying a 38% upside.
Earnings have bottomed out in the third quarter.
Volume growth to pick up in the second half of current fiscal; exports to recover next year.
Freight rate and change in US regime will drive investment and infra spending; lead to demand improvement in FY26.
Rise in profitability shall be due to improved volume, product mix and recovery in the export market from FY26.
Organic capex to drive over 45% return on capital employed; a net cash company in two years.
Valuing the stock at 8.5 times the fiscal 2027 EV/Ebitda estimate.
Nuvama On India Property
Affordable and mid-income segments took backseat while luxury demand surged.
Slowdown in urban consumption cast a shadow on the retail realty space.
Expects supply to improve and buoyancy in housing sales to sustain.
Lack of launches amid expensive stock valuations tempered returns in second half of calendar year 2024.
Improving launches and potential interest rate cuts should aid performance in 2025.
Remains positive on property stocks from a medium-term perspective.
Top picks: Prestige Estates, Brigade Enterprises.
Nuvama On Apar Industries
Nuvama initiates 'buy' with a target price of Rs 12,700 per share, implying a 21% upside.
Apar is a favoured play on India’s T&D capex super-cycle, which is expected to drive demand for high value-added and efficient conductors.
Estimates 10-12% volume growth for the conductor segment and Rs 40,000 Ebitda per metric tonne by fiscal 2027.
The C&W segment is expected to grow at 25-30% compounded annually in three years.
Key risks: Global shocks, intense competition, poor working capital management, and potential slowdown in T&D ordering.
Valued at 38 times the blended price-to-earnings.
Macquarie On REC, Power Finance Corp.
Maintained 'outperform' rating on both, with REC target price at Rs 700 (52% upside) and PFC at Rs 660 (63% upside).
Indian Renewable Energy Development Agency increase in gross non-performing asset due to slippage of one waste and bio energy account into NPA.
This could be the primary reason for the weak stock-price performance of PFC and REC.
Does not expect downgrade of any large accounts to GNPAs for both REC and PFC.
Expects credit costs to remain negative for both companies.
Growth to remain broadly stable at 15% and 13% YoY for REC and PFC, respectively.
Structural story intact, expects credit risk to remain lower.
Macquarie On Sun Pharma
Maintain 'Outperform' rating with a target price of Rs 2,100, a 20% potential upside.
Ilumetri peak sales revised upwards which bodes well for the company.
Sun Pharma receives royalties and milestone payments on Ilumetri.
Guidance revision represents cumulative upside of $40-45 million.
