BoFA Sec on Autos
Drivers in place for auto upcycle: Cost of ownership, Credit, Crude. See vol growth at 8% CAGR over F25-28E, 0.8x nominal GDP
2W: Upgrader market given high HH penetration, rising financing & aspiration. Cycle & rural to benefit Eicher & TVS. Buy EIM
PV: Growth shift from premiumization to penetration. Buy: MSIL proxy to cycle & SUV launches, MM’s prdt strength class apart
Raise POs to factor improved growth outlook. Preferred picks in sector are Maruti, Eicher and Mahindra
Eicher – Rating Buy, TP up from ₹6,300 to ₹7,500
MSIL – Rating Buy, TP up from ₹14,000 to ₹17,000
M&M – Rating Buy, TP up from ₹3,750 to ₹4,000
Bajaj Auto – Rating Neutral, TP up from ₹8,850 to ₹9,600
Hero Moto – Rating Neutral, TP up from ₹4,800 to ₹5,650
TVS Motors – Rating Neutral, TP up from ₹2,900 to ₹3,725
Hyundai – Rating Neutral, TP up from ₹2,200 to ₹2,700
Ola – Rating Underperform, TP up from ₹45 to ₹48
GS on Ola Electric
Buy, TP Rs 72
Believes that its Gen 3 scooter platform and improving service infrastructure should support its steady state market share goal of 30%-35% in India’s still young Electric 2W mkt
Co is committed to in-house cell production, but is now more focused on 5 GWh rather than 20 GWh of capacity.
EBITDA breakeven on the Auto business is expected during the course of FY26.
MS on Steel
Turn constructive on steel spreads expansion
Expect domestic steel prices to expand as demand improves
China anti-involution theme is also gaining traction
Global macro factors also turning favorable.
Raise steel prices est. by 3% each for F2027/28
Expect select steel stocks to outperform overall India Materials space over next few months
Upgrade JSW to OW, TP Raised to Rs 1300
Upgrade Tata Steel to OW, TP raised to Rs 200
Upgrade SAIL to EW, TP raised to Rs 140
Maintain EW on Jindal Steel, TP raised to Rs 1150
Nomura on Ceat
Buy, TP Rs 4037
Camso benefits to be visible by FY27-28F
Focus on integration challenges in near term; long term potential intact
Following GST cut, Ceat remains a potential key beneficiary of OE demand uptick in PV/2W (44% of revenue) & high replacement exposure (48% of revenue) driving margin tailwinds
Nuvama on Ceat
Upgrade to Buy, TP Rs 3900
Attended conference call on completion of the Camso buyout. Highlights:
Revenue run rate is USD130–150mn, and utilisation 50%.
EBITDA margin is in low teens, but can increase to 20% over medium term.
Of the acquisition amount of USD225mn, USD138mn has been paid, USD43mn shall be paid in FY27E and the remaining USD44mn would be paid in FY29E
CITI on Vedanta
Buy, TP Rs 500
Vedanta has emerged as highest bidder for JPA – total bid of Rs161bn, NPV at Rs125bn – staggered payment plan.
Assets: real estate, cement, power, fertilizer, hospitality, E&C.
At this point there are various uncertainties
Vedanta’s net debt/EBITDA ex HZL would be 2x as of Mar26.
Uncertainty around this news could create an overhang on stock
JPM on Amber Ent
Neutral, TP Rs 8150
Announced that its subsidiary ILJIN Electronics will be raising Rs12bn through an issue of equity shares & compulsory convertible preference shares to multiple investors (Chryscapital, Two Infinity Partners, Raptor Investments, Incred).
Fund raise will be for organic & inorganic opportunities
Believe funds raised could be used to fund capex on bare PCB – multi-layer PCBs through Ascent Circuits, where it will invest Rs9.9bn, & HDI PCBs through Korea Circuit JV, where it will invest Rs32bn
CITI On Indus Tower
Buy, TP Rs 460
Bharti Airtel has increased its stake by 0.26% through open-market purchases over Aug 25 – Sep 1
Amid concerns of Indus deferring payouts, which has led to a sharp correction in stock in last 2 mths, believe stake hike by Bharti sends a +ve signal of confidence
Nomura on Swiggy
Initiate Buy, TP Rs 550
Food Delivery business on steady profitability path & a key cash generator
Quick commerce — challenger position remains but profitability likely to improve
Well funded for scaling QC further, risk of dilution is low
Macro slowdown could also pose a risk to growth assumptions for online FD business
Nomura on Eternal
Buy, TP Rs 370
Food Delivery on steady growth path and improving profitability
Quick Com — CM bottoming out; inventory-led model to aid margin expansion
Key risk slowdown in FD & competition in QC
Assign 40x FY28F EV/EBITDA to FD business & a 1.2x EV/GOV to QC biz
Jefferies on Samvardhana Motherson
Buy, TP Rs 110
Outlined an ambitious gross revenue target of $108bn by FY30 (5x FY25 gross revenues) with 25-33% expected from non-auto (FY25 4.5%).
More than the absolute number, what stands out to us is SAMIL’s huge growth appetite and a strategic pivot from autos to a broader manufacturing ambition spanning sectors including electronics & aerospace.
Like SAMIL’s strong manufacturing capabilities and its expanding addressable market.
Jefferies on TBO Tek
Buy, TP Raised to Rs 1800
Announced acquisition of Classic Vacations, a premium US-based luxury travel wholesaler, for $125M (11x EV/EBITDA).
1st material acquisition after Jumbonline (in Europe) in 2023, & in line with roll up strategy of incubating new source markets
Deal strengthens CO’s presence in premium outbound market, especially in North America (currently 5% of overall GTV)
Nuvama on Spicejet
Hold, TP Rs 40
Posted Q1FY26 EBITDAR of Rs 123m vs Rs 2.8bn in Q1FY25 on lower ASKM (-28%), PLFs (-736bp) and higher CASK (+8%).
Highlights:
i) ASKM crashed 28% YoY due to operational fleet reduction
ii) Q1 yields inched up 2% YoY (IndiGo: -5% YoY).
iii) Operational fleet expansion likely delayed due to no material change in fleet post Rs 30bn QIP & resulting restructuring of lessors’ dues.
iv) Read-through from IndiGo management for Q2FY26 indicates a stable revenue environment; SJ’s scheduled flights were flat YoY in Q2.
v) Revival likely to be gradual post-QIP with turnaround a key monitorable
Cutting FY26E/27E EBITDAR by 14% each
IIFL Cap Upgrades Britannia
Believe that the market is under-appreciating the GST rate cut benefit to Britannia
Over half of the portfolio in price pointed packs (PPP), the extra volume fill to pass on GST benefit will result in a 6% volume/sales uplift and nearly 10% EPS benefit factoring in operating leverage benefits.
We expect Britannia to clock ~10%/~15%/~18% sales/Ebitda/EPS growth for the next 4 quarters, pushing up PE multiples in addition to an EPS upgrade (we upgrade 4%/6%/ 6% after factoring in a cut for recent palm oil inflation) and value at 55x Sep 2027 to arrive at a target price of Rs7200, a 18% upside.
We upgrade from ADD to BUY.
JM Financial on IT Tariff News
There is no alternative (TINA), Our base case is Services will be spared.
Technical factors aside, no other country has the scale and skill that India brings in IT Services.
Unlike factories for goods, replacing software engineers at this scale in a short span is unfathomable.
Even if there is a potential increase through taxes, IT Services players, if willing, can pass those on to end-clients.
JM Financial IC on Angel One
Initiate coverage on Angel One with a BUY rating and target price of INR 2,700
Valuing the company at 19x FY27e EPS of INR 141
The company is amongst the largest retail brokers in India, with over 32mn clients, of which 9mn+ are NSE active.