Brokerage radar: ICICI Lombard gets an upgrade, focus on HDFC Bank, power finance cos

Stock Market Trend

Explore the latest brokerage calls and analyst insights on today's active stocks and sectors. Our coverage includes updates on the power finance sector as well as individual stocks like HDFC Bank, Avenue Supermarts and ICICI Lombard.

Citi On M&M Fin Services
Neutral Call, Target Rs 310/Sh
Co’s June Disbursements/Business Assets Growth Broadly In-line With Estimates
For Q1FY25, Disbursements Of `12,730 Cr Saw Growth Of 4.6% YoY
Business Assets Saw A Growth Of 3.7% QoQ In Q1
Collection Efficiency Of 95% In Jun’24 Was Below 96% Each In May’24 And Jun’23
For Q1, The Collection Efficiency Stood At 94%, Stable YoY
As Expected, With Seasonality Q1, Witnessed An Increase In GS3 To 3.6% From 3.4% As Of FY24
We Bake-In Credit Cost Of Nearly 2.4% For Q1 And Estimate RoA Of 1.5%
NIMs, Are Anticipated To Moderate From A High Base

Citi On Avenue Supermarts
Sell Call, Target Rs 3,400/Sh
Q1GY25 Update Shows No Sign Of Growth Acceleration; Watch Out For Margin Trajectory
Co’s Q1FY25 Update Highlighted 18.4% YoY Revenue Growth
Revenue Per Store Saw 3% Five-Yr CAGR (5.3% YoY)
Rev/sqft Saw -1.5% 5-Yr Cagr (5% YoY Assuming Avg Store Size Of New Stores In-line With TTM Store Size)
Believe Revenue/sqft Continues To Be Impacted Due To Adverse Product Mix
Believe Revenue/sqft Continues To Be Impacted Due To New Store Additions In Smaller Towns
Store Additions During The Quarter Were 6, 3/10 In Q1FY24/Q1FY23 And 41/40 In FY24/FY23
Remain Cautious On Co At The Current Valuation Given Risks Around Store Additions
Maintain Sell Rating, Implying 56x Mar’26 P/E (Vs Current Valuation Of 78x Mar’26 P/E)

Antique On Patanjali Foods
Buy Call, Target Rs 2,144/Sh
Co Has Approved The Proposal To Acquire Patanjali Ayurved’s HPC Biz For `1,100 Cr
Believe The Acquisition Is A Positive Move And Should Add To Co’s Growth Levers
The Acquisition Is Expected To Improve The Profitability Of Overall Business
The Acquisition Is At A Very Attractive Valuation Of 0.4x FY24 Sales/ 2.2x FY24 EBITDA
In Our View, HPC Biz Profitability Is Stable & Sustainable Compared To The Oil & Food Biz
Post The Acquisition, FMCG Revenue Contribution Would Increase To 36% From 30%
Post The Acquisition, Profitability Contribution Will Rise To More Than 94%, Based On FY24 Financials
Incorporate The HPC Acquisition And Increase Our EPS By 4%/ 17%/ 24% For FY25/FY26/FY27

CLSA On ICICI Lombard
Upgrade To Outperform From Hold, Raise Target To Rs 2,000/Sh
Co’s Motor Insurance Premiums Registered 31% YoY Growth In 2MFY25
Co’s Motor Ins Premiums Far Ahead Of Ind’s 15%
Worsening Of Peers’ Motor Third Party Loss Ratio Leading Them To Curtail Growth
Premiumisation Of Cars & Benefits From Motor Vehicle Act Could Also Be Aiding Motor Book
Have Raised Our Overall Premium Growth Estimate By Only 2% In FY25
believe momentum in motor book could persist.
We Lift Our Target Price As We Raise Our Gordon-Based Target PE Multiple To 30x
See 11% Potential Upside From Here

Bernstein On REC, PFC
Initiates Buy Call On REC, Target Rs 653/Sh
Initiates Buy Call On PFC, Target Rs 620/Sh
They Are One Of Our Most Preferred Plays In Power Cycle
Investors Are Under-Estimating The Duration And Intensity Of This Power Cycle
NPA Risk For Both Is Much Lower This Cycle
Both Have Better ROEs (>20%) & Growth (15%) Than Power Peers
They Are Trading Cheaper Than All Of Them, Despite The Rally