Share Market Highlights 29 January 2025: IT, auto stocks fuel market rally; Sensex hits 76,533, Nifty up 206 points

GS on SBI Card

Buy, TP Rs 912

Strong 3Q with PAT beating GSe by 4% driven by 2% operating profitability beat, & stable loan loss provisions.

Investors’ focus on asset quality heading into qtr where

1) mix of stage 2 assets improved sequentially 

2) absolute recoveries rose+23% YoY

3) incremental mgmt commentary was encouraging, highlighting an inflection point in asset quality cycle

4) quality of new sourcing improved

UBS on SBI Card

Neutral, TP Rs 800

Miss due to higher credit cost & weak fee income

Q3 spends declined 11% YoY; Margins stable QoQ at 10.6%

Management believes credit cost near peak

CLSA on SBI Card

Hold, TP Rs 780

3Q PAT missed est by 8% driven by higher credit costs.

Loan growth slowed down and NIM was stable.

A slightly weak fee income was offset by another good quarter on opex.

However, credit costs jumped from 9% to 9.5% QoQ and are up 200bp YoY

Bernstein on SBI Card

Underperform Call, Target Price At Rs620/Sh

Mgmt Notes: Peak Credit Costs Have Been Reached, With Reduced Flow From Delinquencies 

No Guidance Was Provided On The Pace Of Improvement Or The New Normal For Credit Costs

However, Management Emphatically Declared That The Bottom Had Been Hit

Nuvama on SBI Cards

Maintain Buy, TP at 885 vs 850

Credit Cost rose again by 8% QoQ to 9.4% in Q3FY2

CEO is confident that credit cost would decline from Q4FY25

SBI Cards would benefit if RBI cuts the repo rate

Better asset mix is emerging, with reductions in Stage 2 and Stage 3 compositions and improving delinquencies.

HSBC On SBI Card

Reduce Call, Target Rs580/Sh

Growth Outlook Has Weakened Following Q3

Asset Quality Outlook Remains Unclear Too

Cut EPS By 10.8%/11.2% For FY25/FY26 To Reflect Higher Credit Costs.

Improvement In Asset Quality Remains Elusive

CLSA on MGL

Maintain Outperform, TP Rs1,710

Positive surprise on margins beats PAT

Volumes comes inline with expectations

Lower taxes offset higher than depreciation and interest costs

Macquarie on MGL

Maintain Outperform, TP Rs1,280

Earnings largely inline-margin miss

Believe current decline in margins is prices in and now upside is there

Build 8% CAGR volume growth from FY24-27E

Risks includes rising input gas prices and further cuts in APM gas allocation

Jefferies on IGL

Upgrade to Buy from Underperform, TP Rs505 (from Rs295)

Co has managed significant volume of long term LNG contracts at attractive prices

Raise EPS 52%/55% for FY26/27E

See limited near-term impact on ROCE

Volume growth in Q3 muted, but outlook remains better

CLSA On IGL

Outperform Call, Target Rs440/Sh

Q3 PAT Was A Big Beat To Est

Mgmt Guided For A Healthy 10% Vol Growth Over FY26-27

Mgmt Upgraded Its Unit EBITDA Margin Guidance To Rs7-8/scm From Rs6-7/scm

Well-Planned RM Sourcing Should Offset Impact Of Cuts In Cheap Gas Supply

This Drives A 6-11% Increase In FY25-27 EPS

Price Hikes After Delhi State Elections On 5 Feb May Be A Catalyst

MS On Hyundai

Overweight Call, Target Rs2,261/sh

Co Reported A Weak Set Of Earnings In Q3

Weaker Export Mix And A Rise In Domestic Discounts Post The Festive Season

Maintain That Business Is At A Volume & Model-Cycle Trough

Model-Cycle Aligned With Capacity Expansion Could Play Out In FY27

Valuations Appear Supportive

Citi On Bajaj Auto

Sell Call, Target Rs7,900/Sh

EBITDA Slightly Ahead Of Estimates Due To Better Gross Margin

Mgmt’s Outlook Is Positive

Expectations Of 6-8% YoY Volume Growth For 2w Industry Over Near Term

Focus Is On Margin

Co Has Ceded Mkt Shr In High-Vol But Equally Competitive Entry-Lvl Bikes Segment

Rich Valuations Prevent Us From Being More Constructive

MS On Bajaj Auto

Overweight Call, Target Rs9,951/sh

Reported Standalone EBITDA Broadly In-line With Est

Mgmt Expects Domestic Motorcycle Ind To See Sustainable Growth Of 6-8%

Mgmt Expects More Than 125cc Segment To Grow Faster

Co Expects Exports To Grow At 20%+ YoY Going Ahead

EV Portfolio, Including The PLI Gains, Is Now EBITDA Positive.

Within 2-w, New Chetak 35 Platform Is Supporting Margin Improvement

Axis Capital on Bajaj Auto

Maintain Sell, TP Rs7,550 (from Rs8,000)

Q3 EBITDA largely in line with estimate

Exports continued to recover with strong YoY growth in LatAm and sequential growth in Africa

Despite new launches, the company lost over 100 bps market share in 9MFY25, which is a concern

Cut FY25-27E EPS by 7% on lower volume assumption

Nuvama on Bajaj Auto

Maintain Buy, TP Rs10,700

EBITDA slightly above estimate- due to better pricing/scale, PLI incentives and cost savings

Management has provided a positive volume outlook for the next three–six months

With exports growth at 20%-plus and domestic growth of 6–8%

2Ws to clock volume CAGR of 7% over FY25–27E

Revenue/EBITDA CAGR of 11%/12% over FY25–27E with an average RoE of ~35%

Macquarie on TVS Motors

O-p, TP Rs 2857

3Q FY25 saw a modest EBITDA beat led by better gross margin.

Believe market-share gains & margin expansion will drive industry-leading earnings growth & stock performance.

JPM on TVS Motors

OW, TP Rs 3130

Operating results broadly in line

Raise margin expectations for FY25 on management’s indication that all PLI benefits for fiscal year will be accounted for in March quarter

Were already accounting for PLI benefits in FY26-27 est.

UBS on Bosch

Sell, TP Rs 23600

Q3FY25 – All round miss

Revenues at Rs44.7bn grew 6% YoY.

Mobility rev up 2% YoY driven by 9%/24% growth in aftermarket/2W biz while power solutions saw a decline

Non-mobility performance was better 

Gross margins improved 70bps YoY.

MS On M&M Fin

Equal-Weight, Target Rs285/Sh

Stage 3 Coverage Cut From 59.5% To 50% Resulted In A Big PAT Vs. Est

However, Slippages Rising & PCR Guided At 51-54%

FY2026-27 Credit Costs (On Average Assets) Could Be Higher Than Guided 1.3-1.5%

Trim FY26 EPS Even With PCR Assumption Of Less Than 45%

HSBC On M&M Fin

Buy Call, Target Rs 320

Q3 Slight Miss On Operating Profit; Net Profit Beat Was Due To Release Of Provisions

While Ops Trends Are Stabilising, Slight Increase QoQ In Gross Stage 3 Assets

Nuvama On M&M Fin

Maintain Hold, TP 280

ECL refresh leads to sharp dip in credit cost; PCR falls to 50%

CEO reiterated the guidance of 1.3–1.5% credit cost and AUM growth in mid-to-high teens for FY26E

ECL reset already baked in, credit cost could remain volatile

Citi On Exide

Buy Call, Target Rs540/sh

Q3 Slightly Above Est, Reflecting Better Gross Margin

Demand In Replacement Auto Segment Has Been Strong In Both 2-w & 4-w Sub-Segments

Demand In Solar Segment Is Also Strong, Aided By Govt Incentives & Various ‘Solarisation’ Programs

However, Demand From Automotive OEMs Remains Muted

In Ind Infra Segment Too, Demand Is Weak Due To Lower Govt Spending