Kotak Institutional Equities on Cochin Shipyard Limited (CSL)
Kotak Institutional Equities has recommended a sell rating on Cochin Shipyard Limited (CSL), setting a target price of ₹860. The Indian government recently announced a ₹700 billion package aimed at enhancing domestic shipbuilding through capital assistance, legal reforms, and demand aggregation from Oil & Gas public sector undertakings (PSUs). This development, along with CSL’s Memorandum of Understanding with HD KSOE for commercial vessel construction, could serve as dual catalysts for the company’s shipbuilding aspirations. However, potential execution risks remain, given the complexities and capital intensity involved in scaling shipbuilding operations. As both initiatives are still in the preliminary stages, the report refrains from including any potential upside in current estimates.
Cyient Update
Kotak has also issued a reduction rating for Cyient, with a target price of ₹1,180. Highlights from a recent management meeting reveal that the organization is realigning itself with a new strategy under its newly appointed CEO. Client behavior appears unchanged despite reduced macroeconomic uncertainty. The transportation segment, particularly aerospace, is expected to sustain its growth, while the communications vertical is anticipated to perform better than last year. Conversely, the energy vertical continues to face challenges in the near term.
Motilal Oswal on Public Sector Banks
Motilal Oswal (MOSL) expressed optimism regarding India’s Public Sector Banks (PSBs), asserting they are well-positioned to maintain a return on assets (RoA) of approximately 1%. Strong liquidity and a robust funding profile should support stable credit growth. The market share for PSBs in credit is expected to decline at a slower pace compared to a 200 basis points annual reduction observed earlier. While net interest margin (NIM) pressures are anticipated, strategic rebalancing should mitigate the decline’s pace. Bond gains are also expected to provide crucial earnings support, with non-interest income rising to between 22-40%. The top recommendations include SBI and PNB, while Indian Bank is highlighted as a standout among mid-sized banks. A neutral outlook is maintained for Bank of Baroda and Union Bank of India.
Initiation on Piramal Pharma
Incred has initiated coverage on Piramal Pharma, assigning an ADD rating with a target price of ₹276. The company boasts a diversified three-engine model that includes the Contract Development and Manufacturing Organization (CDMO), Client Healthcare Group (CHG), and Pharma Contracting and Healthcare (PCH) segments. This blend of high-growth outsourcing capabilities with steady cash flows is emphasized. The company’s differentiation lies in its extensive CDMO expertise in complex modalities (ADCs/HPAPIs/peptides) and a geographically diverse footprint, including capacity expansion in the United States.
HSBC on Consumer Sector
HSBC views a recovery in the consumer sector, citing a favorable base, income tax cuts, and reductions in GST rates. They have re-evaluated estimates to reflect these GST cuts, anticipating a 5% increase in the FY27 EPS of brands like Britannia and Nestlé. The ratings for Britannia and Nestlé have been upgraded to Hold, with target prices adjusted to ₹6,140 and ₹1,270, respectively. Preferred equities in this space include Marico (BUY, target price ₹870) and Godrej Consumer Products (BUY, target price ₹1,470).
Citi’s Analysis of RBL Bank
Citi recommends a Buy rating for RBL Bank, with a target price of ₹300 following insights from a recent management meeting. Key takeaways suggest that net interest margins (NIMs) may have bottomed out in Q1, with improvements anticipated from Q2 onward. Advances are expected to grow, driven by secured retail and commercial banking, while microfinance institution (MFI) disbursements outpace repayments, alleviating concerns about portfolio deterioration. Other factors include improving core fee income and current initiatives on cost control, expected to show effects by Q3. The report projects a steady RoA improvement over the next four to six quarters.
Morgan Stanley on Sun Pharma
Morgan Stanley has assigned an Overweight rating to Sun Pharma, with a target price of ₹1,948. It anticipates the company will outpace the Indian pharmaceutical market due to a heavy chronic portfolio, volume growth, new launches, and enhanced engagement with prescribers. Sun Pharma is preparing for a Day-1 entry into India’s Semaglutide (GLP-1 injectable) market. With early uptake expected for Leqselvi and significant growth anticipated from Ilumya, the report emphasizes the company’s active scouting for Phase II/III assets to expand its specialty portfolio while maintaining minimal risk from Most Favored Nation (MFN) exposure.
Nomura on Glenmark Pharma
Nomura remains neutral on Glenmark Pharma, establishing a target price of ₹1,500. The company has announced an in-licensing agreement with Hengrui Pharma regarding Trastuzumab Rezetecan, an oncology drug. Glenmark will secure exclusive development and commercialization rights primarily in India and select emerging markets, coupled with an upfront payment of $18 million. Hengrui may also receive up to $1.1 billion in regulatory and commercial milestone payouts. Glenmark views this drug as a key contributor to its target of reaching $350-400 million in innovative drug revenues over the next 5-7 years.
CLSA on Hindustan Aeronautics Limited (HAL)
CLSA has given an Outperform rating for Hindustan Aeronautics Limited (HAL), assigning a target price of ₹5,436. The company recently achieved the first flight milestone of the 13th Light Combat Aircraft (LCA) Mk 1A, easing previous concerns regarding delivery timelines. GE is committed to delivering 12 engines in 2025 and a total of 20 engines in 2026, which are crucial for the final delivery of aircraft. The successful start of delivery for the first two fully armed Mk 1As is seen as pivotal for HAL, potentially leading to a repeat order worth ₹670 billion, adding significant value to its existing backlog.
Citi on State Bank of India (SBI)
Citi has resumed its Buy rating for the State Bank of India (SBI), setting a target price of ₹1,050. Projections for FY26-27 suggest a loan growth of 13-14% year-on-year, with NIMs expected to range between 2.8-2.9% and stable credit costs of 40-45 basis points. The bank is viewed as a preferred choice among public sector banks.
Macquarie on Financials
Macquarie highlights two challenges currently facing banks: sharp margin compression and weak loan growth. A recent stake sale by YES Bank may provide some relief. Credit costs are anticipated to remain elevated, leading to subdued or declining earnings growth across several banks. Macquarie suggests tactical pair trades for the second quarter of FY26, recommending long positions in HDFC Bank and ICICI Bank, while shorting Indian Overseas Bank. They also propose long trades in PFC and REC while shorting Mahindra & Mahindra Finance, and a long position in Aditya Birla Capital against SBI Cards.
Goldman Sachs on Tata Consumer Products
Goldman Sachs has changed its rating to Buy for Tata Consumer Products, increasing the target price to ₹1,290 from ₹1,270. The adjustment is attributed to improved visibility of a margin recovery driven by lower tea prices, minimal disruptions from GST compliance, and an expected rebound in core business growth following a weaker June quarter.
UBS on Dixon Technologies
UBS has upgraded Dixon Technologies to Buy, with a raised target price of ₹23,000. The company is poised for a significant growth phase through backward integration into non-semiconductor smartphone components like displays and camera modules. This transition could enhance EBITDA margins by 110 basis points by FY28, despite the phase-out of the mobile production-linked incentive (PLI) scheme by FY26. Dixon is projected to achieve revenue of $11 billion by FY28, representing a 2.5x increase from FY25.
Jefferies on Radico Khaitan
Jefferies has issued a Buy recommendation for Radico Khaitan, with a target price of ₹3,590. The company’s growth momentum is reported to be robust following a strong Q1. Despite a tax hike impacting sales in Maharashtra, several growth drivers are expected to enhance profitability, with manageable inflation across key inputs. The balance sheet is anticipated to transition into a net cash position by FY27.
CLSA on Bharti Airtel
CLSA has given an Outperform rating to Bharti Airtel with a target price of ₹2,035. Nxtra, its data center subsidiary, is expected to benefit from the new data center policy, planning to double its capacity to 400 MW. While Nxtra currently constitutes only 10% of Airtel’s operations, it is experiencing rapid growth, which could contribute positively to the overall business.
Citi on India’s Economic Outlook
Citi’s October Monetary Policy Committee (MPC) analysis indicates a potential dovish outlook, with a slight bias towards an outright rate cut. They foresee a likelihood of an “insurance” rate cut to mitigate growth risks or a “dovish pause” with assurances for future action if necessary. The study leans towards expecting the RBI opting for an “insurance” rate cut.
Investec on ICICI Bank
Investec has provided a Buy rating for ICICI Bank with a target price of ₹1,745. The management expects a gradual increase in loan growth, with NIM compression anticipated to be less severe than previously thought. They also note that funding costs have positively adapted to repo rate cuts while remaining selective in the higher-priced wholesale lending segment.
Avendus Spark on Niva Bupa
Avendus Spark recommends an Add rating for Niva Bupa, setting a target price of ₹90. While the reported Gross Direct Premium Income (GDPI) growth may face challenges due to yearly fluctuations, the report suggests that Niva Bupa’s higher exposure to health or diversified policies will contribute to a less volatile growth trajectory. Calibrated porting is expected to support better growth moving forward.
Jefferies on India Strategy
In a recent report, Jefferies noted a consensus Underweight position among foreign investors in India. Amid significant underperformance year-to-date, there is an emphasis on identifying bottom-up investment opportunities to lower Underweight positions. Optimism surrounding GST cuts as a catalyst for consumption remains, although partially priced in. The report suggests a likely near-term market bounce despite concerns over potential equity supply impacting a 12-month outlook.
Incred on Cement Industry
Incred reported that the cement industry is currently passing on the benefits of GST cuts with price reductions ranging from ₹10-30 per bag. These new rates are projected to take effect nationally within a week. Experts believe this trend should positively impact long-term affordability and boost demand sentiment post the festive season, although price hikes may be capped until mid-October 2025 due to increasing costs from global pet-coke prices, limiting the industry’s capacity to mitigate cost pressures.
MOSL on Gland Pharma
Motilal Oswal has maintained a Buy rating on Gland Pharma, setting a target price of ₹2,340. A revival in performance is expected from niche approvals in the U.S. market and enhanced high-value offerings from Cenexi sites. Upgrades to Cenexi’s capabilities are projected to increase revenue and profitability, with earnings anticipated to grow at a 27% compound annual growth rate (CAGR) from FY25 to FY27. The valuation of Gland is established at 33 times the 12-month forward earnings, representing a 20% discount from its 10-year average.
