Stock Market Highlights 01 July 2024: Banking and IT stocks push Sensex to all-time high, Nifty hits new lifetime record


BofA Sec on Banks

Buy on HDFC, ICICI, Axis, Kotak

Valuations and consensus EPS momentum remain favorable in the near term

The outperformance of the big 4 private banks is expected to continue till Q1FY25 results

Big 4 private banks expected to outperform given stable growth and NIM outlook

Conditions and flows remain supportive

Any revival in EM flows will benefit large capital banks

Continue to like PSBs, but don’t expect Q1FY25 to be a major stock catalyst

Consensus earnings upgrades are likely to resume only after Q2FY25

GS on Newland Labs

Buy Call, target Rs 9,100

The company's primary focus remains on small molecule CDMO projects in human health

Opportunities abound in the health sector, growth potential is good

Differentiated offerings include Agile project management

Differentiated offerings include expertise on regulatory affairs for NCE development

Management will continue to focus on SMID Biotech where there is scope for value addition

Accelerate filings in the Specialty API segment

Kotak Institute on JB Chemicals

Start buying, target Rs 2,025

The company offers a healthy cocktail of a strong domestic franchise

The company offers a strong CMO presence and a measured export strategy, backed by unparalleled execution

Having grown primarily organically until FY22, the company has outperformed IPM over the past decade

The company outperformed IPM by 600 bps in the last decade

The company is currently ranked 22nd in IPM

Strong 17%/19% EBITDA/PAT CAGR expected over FY24-27

Strong EBITDA/PAT CAGR supported by improved MR productivity in India

Nomura's opinion on Bharti Airtel

Buy Call, target Rs 1,650

The company increased tariff plans by 13-21%; No change in entry level unlimited 5G plan at present

The industry outlook remains strong with focus on value creation and monetization

Company management hints at Rs 300 ARPU in FY26

The company will need another tariff hike of 20% in FY26

Tariff reform now appears on the horizon

Tariff reform will lead to stronger industry revenues and better health of the industry

Jefferies on Bharti Airtel

BUY, TP raised to Rs 1740

The company's tariff hike was about 2% lower than expectations of 10-21%

While its tariff premium over Jio for feature phone users has increased, the premium for smartphone users has decreased

This will help the company add data subscribers

UBS attacks Bharti Airtel

Neutral, TP Rs 1480

The scope of price hike is smaller than Jio

On the Macquarie U.S.L.

Underperform call, target Rs 1,000

Elections and heat wave impact Q1 sales

Volume growth likely to remain subdued in Q1FY25

Prestige sales expected to grow 10% for Q1FY25

Standalone EBITDA growth is expected to be similar to sales growth at 8% as a result of cost control benefits

Amara Raja on MS

Underweight call, target Rs 967

The company is now at par with Exide in terms of capacity, but is lagging behind in terms of adding customers and increasing timelines

Finns' return on Li battery business still unclear as EV battery deflation continues

So, stay selectively overweight; prefer Exide over Amara

MS on steel

Steel stocks performed well on hopes of continuation of policy reforms

Supported by improved macro sentiments in China

Steel stocks in our coverage are up 21% on a weighted average basis in the last six months

Steel stocks outperformed Sensex by 10 ppt

Believe me this improved performance is an exaggeration

Kotak Institute on Indigo

Buy Call, target Rs 5,700

Air fares will gradually increase over time due to passenger paying capacity and losses

Air travellers' willingness to pay may be tested in the near future

May impact near-term load factor and pricing strategies of airlines

IndiGo is the only airline making money, increasing airfares over time is a good move

UBS on L&T Finance

Initial buy, TP Rs 230

Believe Company is now on its way to expanding its B/S after more than 5 years, as it nears completion of its loan book shift from wholesale to retail

Leads the rural portfolio (45% of AUM) and is likely to benefit from potential government increase in rural spending

The market is also underestimating its ROA trajectory

Expected elimination of the remaining portion of its bulk exposure could lead to a 30bp improvement in RoA; hence expect RoA to reach 2.9% by FY26E compared to 2.2% in FY24

Risk-reward is favorable; trading at 1.6X FY26E P/B

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