JPMorgan noted that domestic steel stocks underperformed global peers by an average of 11-15 per cent over the last one to six months. The Ebitda per tonne for the steelmakers likely peaked in the June quarter of FY22 and the companies were also exposed to coking coal price inflation. As such, margins of Indian steel companies fell.
That said, JPMorgan noted that the domestic steel demand is seasonally strong in March and June quarters and maintained a ‘Buy’ on
with a target of Rs 1,850. It also likes SAIL and has a target of Rs 165 on the scrip.
In the case of banks, Morgan Stanley has an ‘Overweight’ rating on the sector, as it believes 2022 is a confluence of pre-provision operating profit (PPoP) growth acceleration and lower credit costs. This, it said, will be helped by high loan growth and a turn in the rate cycle.
Morgan Stanley said balance sheets and profitability today are much better than they have been. “Another big catalyst is the turn of the interest rate cycle, particularly for large banks,” it said.
The brokerage has a target of Rs 1,025 for ICICI Bank, Rs 2,050 for HDFC Bank, Rs 1,000 for Axis Bank and Rs 680 for SBI.
Meanwhile, Nomura India has maintained a ‘Neutral’ stance on Mindtree with a target of Rs 4,744 as deal wins continue to stay sluggish. Growth was made up by small projects, it said.
The margin outperformance was the key highlight in Q3 results. Strong execution drove healthy revenue growth while client metrics were tracking in the right direction, it added.