Short Call: Bulls ride the railway gravy train, life insurers look at better days, autos struggle, Texmaco, Maruti, Godrej Consumer in focus

Competition for market share likely to keep margins under pressure in the cement sector.

Railway stocks are on a white-knuckle roller coaster ride, with more believers in the story than skeptics. Railway Minister Ashwini Vaishnaw's recent announcement of 2,500 new general passenger coaches, 10,000 additional coaches, and 50 new Amrit Bharat Trains is what has got bulls into overdrive in these stocks.

The long-term narrative sounds promising, but newcomers to the party could do well to remember the fact that returns are a factor of the price at which you buy an asset. Already, stock prices of many railway firms have doubled or trebled over the last year.

Also, railway stocks are riding the high tide in PSU stocks in general, based on the assumption that the government will rejuvenate PSUs. Investors overlook that the government is sitting on both sides of the table as a supplier (railway companies) and the purchaser (Indian Railways), besides having the power set the rules. And investors seem to be ignoring pricey valuations and potential downside to operating numbers if the companies are unable to execute well.

Market veterans even draw parallels to the meteoric rise of EPC and realty stocks from 2003 to 2007, followed by a spectacular crash. Some of the high fliers went under, some others took a long time to recover, while some of the best performers in recent times are yet to regain the peaks of 2007-08.

Not a pretty picture for the auto sector, writes Chirag Jain of Emkay Global in his report. Retail sales are slowing, order books are shrinking, inventory levels (~60 days) and discounts are rising, Jain says. With majority of new ICE SUV launches now behind and small cars yet to show conclusive signs of revival, volume growth is likely to be muted in the days ahead.

Things are beginning to look up for the sector write Krupal Maniar and Harshal Mehta of Antique Stock Broking. Annualised premium equivalent (APE) for the June quarter grew 19 percent year-on-year. The duo believe the worst in terms of margins seems is behind as the product/ distribution mix have stabilised, regulatory risks are priced in and valuations are attractive.

More bad than good developments for the cement industry during the June quarter, write Mangesh Bhandang and Sanjit Tambe of Centrum. Weak demand because of elections, labour shortages, severe heat wave and timely monsoon. Also, competition for market share likely to keep margins under pressure. On the positive side, power and fuel costs expected to decline further because of lower coal and petcoke prices.

Nuvama initiates coverage with 'buy' rating and target price of Rs 331.

Bull Case: Poised for robust growth driven by surging railway capex and a strong influx of wagon orders, with improvements in execution and financial metrics. Potential demerger and focus on rail components could further enhance its valuation.

Bear Case: Risks from concentration in its wagon segment, vulnerable to slowdowns in orders from Indian Railways. New entrants and competitive pressures could squeeze margins, while uncertainties around the rail-EPC subsidiary demerger pose additional concerns.

Reported its business update for the first quarter of FY25.

Bull Case: Outlook for GAUM (Godrej Africa, US, and Middle East) business positive. The heatwave in Central and North India could boost growth in certain categories.

Bear Case: Currency devaluation in Nigeria continues. Issues in South African shipping routes can continue to disrupt supply. Rural recovery may take longer to materialise.

UP exempts registration fee on hybrid vehicles.

Bull Case: Series of launches planned in ICE and EV sectors to support market position. Average selling prices (ASPs) likely to rise slightly compared to the previous quarter. Improved net pricing and scale to enhance profitability.

Bear Case: Hyundai India's IPO adds competitive pressure. Earnings growth potentially moderated by premiumisation trend. Competitive pressure in new UVs. Commodity price spikes.

(With inputs from Harshita, Zoya, Lovisha, and Neeshita)