Leading global and domestic brokerages have released their latest analysis and recommendations on several key Indian stocks, including JSW Steel, Tata Consumer Products, Kotak Mahindra Bank, and Dr. Reddy's Laboratories. These calls provide crucial insights for investors navigating the dynamic equity markets.
Brokerage Bullishness on JSW Steel and Tata Consumer
Morgan Stanley has reaffirmed an 'overweight' rating on JSW Steel with a target price of Rs 1,300 per share.
Analysts highlighted that the company is poised to leverage its project execution capabilities alongside the technological expertise of its partner, JFE of Japan, to capture multi-decade growth opportunities. A significant development underpinning this view is the new pact between JFE and JSW.
Under this agreement, JFE will invest approximately Rs 15,800 crore in two tranches to acquire a 50% stake in a new entity. This investment implies an equity valuation of Rs 31,500 crore for the newly formed company. As part of the deal, JSW Steel is set to receive a substantial Rs 24,500 crore in cash from the slump sale of its stake. Additionally, JSW will get another Rs 7,900 crore through equity dilution following a share swap agreement with the promoter company that holds a 17% stake.
In the consumer goods space, HSBC has initiated coverage on Tata Consumer Products with a 'buy' recommendation and a target price of Rs 1,340. Analysts view the Tata Group's flagship food and beverages company as having significant potential to expand and deepen its distribution network to fuel future growth.
They forecast a robust 26% compounded annual growth rate (CAGR) for its growth portfolio between FY25 and FY28. This portfolio is expected to contribute 37% of the company's India revenue by FY28, a substantial increase from 28% in FY25. HSBC has assigned a premium valuation of 55 times price-to-earnings, betting that the company's aggressive acquisition strategy and distribution push will yield strong returns.
Mixed Views on Pharma and Banking Giants
Motilal Oswal Securities maintains a 'buy' on Aurobindo Pharma with a target of Rs 1,430. The brokerage notes that the company's broad-based growth momentum is strengthening. Key positives include its domestic Penicillin-G/6-APA manufacturing, which is positioned for a healthy upside. Furthermore, its ventures into biosimilars, biologics contract manufacturing (CMO), and expansion in the European Union are driving diversification beyond its legacy businesses.
On the banking front, CLSA has a 'hold' rating on Kotak Mahindra Bank with a target price of Rs 2,350. Analysts have raised an interesting possibility: Kotak Bank acquiring IDBI Bank, which the government has slated for divestment.
CLSA believes such a deal could be earnings per share (EPS) accretive for Kotak Bank, given IDBI Bank's clean balance sheet and strong deposit franchise. However, they caution that the acquisition may not necessarily address Kotak Bank's issue of excess capital and could potentially introduce human resources (HR) integration challenges. The final value creation for Kotak would heavily depend on the funding structure of the potential purchase.
Jefferies Cautious on Dr. Reddy's Labs
Contrary to the bullish calls, Jefferies has an 'underperform' rating on Dr. Reddy's Laboratories with a target price of Rs 1,130. Following meetings with company officials, analysts reported that the pharma major remains confident about its first-wave generic launches in Canada, India, and other emerging markets like Brazil.
A key milestone is on track: the US Food and Drug Administration (FDA) filing for its biosimilar Abatacept, considered Dr. Reddy's most significant asset, is scheduled for this month. Approval is anticipated within 12 months. Jefferies also noted that the company's merger and acquisition (M&A) strategy will focus on acquiring specific brands rather than entire companies.
Disclaimer: The recommendations and views expressed by various brokerages are their own and do not represent the views of this publication. Investors are advised to consult with certified experts before making any investment decisions.
