Leading global brokerages have released their latest analysis and target prices for several key Indian companies, highlighting specific growth drivers and potential risks. The reports cover firms in the pharmaceuticals, consumer goods, retail, and power sectors, offering insights for investors.
Pharma and Consumer Goods in Focus
In the pharmaceutical space, HSBC maintains a 'buy' rating on Dr Reddy's Laboratories with a target price of Rs 1,430. Analysts believe the opportunity for generic semaglutide, a drug used for diabetes and weight loss, remains strong for the company in the Canadian market. Dr Reddy's has reportedly replied to queries from Health Canada regarding its application. The GLP-1 class of drugs, which includes semaglutide, continues to be a key focus segment for the company. Approval from Health Canada is viewed as a major potential catalyst for the stock. Beyond this, Dr Reddy's is also advancing its long-term drivers, including biosimilars.
Turning to the consumer sector, Goldman Sachs has reiterated its 'buy' call on Titan Company with a target of Rs 4,500. The brokerage notes that the company anticipates a healthy 15-20% growth in its core jewellery business over the medium term. Impressively, Titan has managed to sustain its jewellery margins despite facing market headwinds. The company's consolidated EBIT (Earnings Before Interest and Taxes) growth is outpacing the standalone jewellery EBIT growth, largely propelled by the robust performance of Caratlane, its watches division, and other emerging businesses. Furthermore, Titan's eyewear segment is performing well in the premium category, and the company is actively exploring strategies to capture opportunities in the mass market.
Retail Recovery and Power Sector Expansion
For retail major Trent, Bernstein has an 'outperform' rating but has reduced its target price to Rs 5,000. Analysts suggest that the company's revenue growth may have hit a trough. The expected recovery is predicted to be driven by several factors: a positive turn in like-for-like sales for split stores due to a favourable base effect, a projected 20% compounded annual growth rate (CAGR) in the Zudio store network over the next three years, an overall improvement in consumer demand, and growth in the Westside business. However, Bernstein cautions that a key risk remains heightened competition, including the opening of more rival stores and attempts to replicate Zudio's successful fashion formula.
In the infrastructure domain, CLSA has an 'outperform' rating on Power Grid Corporation of India with a target price of Rs 342. The brokerage highlights the company's foray into Battery Energy Storage Systems (BESS) as a positive development. Power Grid has emerged as the preferred bidder for a 150 MW project. Its strategy of setting up BESS units within existing transmission substations is seen as advantageous, with the company likely to secure the BESS concession at a bid 11% above the lowest price. CLSA expects Power Grid to scale its BESS portfolio to multiple gigawatts, leveraging its competitive edge of accessing capital at interest rates roughly 100 basis points (1 percentage point) lower than private sector players.
Policy Impact on Cigarette Major
Finally, Macquarie has an 'outperform' rating on ITC with a target of Rs 480. Analysts point out that the government's proposal to introduce a new cess on cigarettes, intended to replace the existing compensation cess, creates uncertainty regarding future taxation for industry players. This change could lead to a transition period as the market adapts to the new fiscal system.
(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.)
