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In recent assessments by major financial institutions, Morgan Stanley and BNP Paribas (OTC:) have updated their ratings on several Indian companies, reflecting a mix of market opportunities and challenges faced by different sectors.
Morgan Stanley has assigned an underweight rating to Indiabulls Housing Finance with a target price of ₹103. This valuation comes after the company’s second-quarter results, which saw a substantial 43% beat on pre-provision operating profit (PPOP), driven by increased total income and reduced operating costs. On the other hand, Grasim Industries received an overweight rating from Morgan Stanley, with a target price set at ₹1985. Despite a weaker-than-expected EBITDA from its chemicals segment in the second quarter, the company’s viscose segment performance and ongoing progress in its paint business launch, coupled with expansion in its B2B e-commerce operations, contributed to the positive outlook.
Simultaneously, BNP Paribas has given a buy rating to both Ashok Leyland and Mahindra & Mahindra (M&M). Ashok Leyland’s target price has been set at ₹220, buoyed by the anticipation of strong demand stemming from government infrastructure spending and industrial activities. The firm has maintained its volume growth forecast for fiscal year 2024 at 8-10% year-over-year for medium and heavy commercial vehicles (MHCV) and 4-5% for light commercial vehicles (LCV). Additionally, Ashok Leyland projects significant defence revenue of ₹8 billion for FY24. Following a beat on results and optimistic commentary, BNP Paribas increased its margin estimates for FY24-26 and earnings per share (EPS) projections for FY25-26 by approximately 2-3%.
For M&M, BNP Paribas set a target price of ₹1905 (USD1 = INR83.060) after the company’s automotive and farm equipment sectors (FES) revenue surpassed estimates in the second quarter of FY24. With the resolution of steel shortage issues and an expected ramp-up in SUV production, M&M is positioned for recovery in FES margins following one-off impacts.
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