TCS Review
Nomura
Neutral, TP Rs 4150
2Q: Modest miss at rev, but significant miss at margins
BSNL deal drives growth in 2Q
Pipeline near record-high levels, TCV moderates while being within comfort band
1.6%-2.4% cut in FY25-26F EPS
Jefferies
Buy, TP Rs 4735
2Q missed est. with de-growth in North America & margin miss being key -ves
Though, steady hiring & continued recovery in BFSI bodes well
Moreover, ramp down of BSNL deal may provide scope to improve margins
Cut est by 1-2%
HSBC
Buy, TP Rs 4540
2Q reflected a painfully slow demand recovery, though TCS alluded to some client-specific issues as well
Revenues barely grew on a sequential basis (ex of passthrough) which led to a rare margin fall as well for TCS
MS
OW, TP Rs 4910
F2Q25 : Lower than expectations
Quality of revenue growth is weak & miss on margins
+ves
BFSI revenues grew QoQ by 1.9% in USD terms & for 1st time in last 5 quarters it turned +ve on YoY growth in cc terms
JPM
OW, TP Rs 5100
A rare miss – several knotty one-offs, but with silver linings
Given TCS also pointed out lengthening sales cycles and signings were unimpressive, fear there is still a lack of a broad-based macro recovery
Would use any sharp correction to add
UBS on Kotak Bank
Neutral, TP Raised to Rs 1950
Cyclical headwinds for NIM, CASA while credit costs rise
NIM sensitivity to rate cuts relatively high
Stability in core biz key for re-rating
Val fair(2x FY26E P/BV) & price in most concerns
CITI on Cipla
Buy, TP Rs 1870
Hengrui’s product is 1st interchangeable version & can garner significant market share as well as can result in price decline
If there is further delay in Cipla’s Goa facility resolution, generic Abraxane opportunity would significantly be diminished
CITI on Indus Tower
Buy, TP Rs 500
Believe share price correction over last 1M provides an attractive buying opportunity
Reiterate +ve Catalyst Watch
3 key events to monitor:
1) 2Q results
2) Conclusion of Voda Idea’s (delayed) bank funding
3) Waiver (by gov’t) of bank guarantee
Jefferies on Bandhan Bank
Buy. TP Rs 240
Partha Sengupta appointed MD&CEO for 3yrs
Should be +ve as he was earlier Dy. MD & Chief Credit Officer at SBI & then MD&CEO of IOB
He has also worked in West Bengal, a key market for Bandhan
Also, bank will receive Rs3.1bn as CGFMU claim
Investec on Bandhan BK
Sell, TP Rs 180
24% recovery from CGFMU & appointment of a new CEO
Financial impact of overall CGFMU audit is lower than expectations
Continue to believe BK will need to raise confidence capital at some stage to boost its capitalization
Nomura on Credit Access
Downgrade to Reduce, TP cut to Rs 950
State elections including Maharashtra, Bihar & Jharkhand are coming up; these states form 28% of its total AUM where there might be disruptions
Steep decline in disbursements/AUM growth; asset quality also deteriorates
MS on Tata Elxsi
UW, TP Rs 6860
With muted 2Q, F25e rev growth exceeding F24 appears a tall task
Healthcare may recover from 3Q & transportation deal wins to support growth, but emerging industry caution in European auto, ltd growth visibility in media, & premium val keep us UW
