Nomura has upgraded its recommendation on IndusInd Bank to a ‘Buy’ now. The other big ‘Buy’ recommendations by Nomura include top large caps like Voltas and Sun Pharmaceuticals. The brokerage sees upside of as much as 28% on one of these stocks. Read to know the full analysis.
Nomura on IndusInd Bank: Revival in performance as fundamentals improve
Nomura upgraded IndusInd Bank to ‘Buy’ from ‘Neutral’ and raised the target price to Rs 1,050, compared to Rs 700. The new price target sees an upside of 28%. The past few months have been turbulent for Indusind Bank owing to governance failings and accounting lapses. However, the bank has undergone a significant clean-up of its books and has taken one-time provisions to address legacy issues. “We also compare the lender’s scenario to the likes of RBL (in 2021) and Yes Bank (in 2018), where we had seen leadership exits, but these were largely driven by market concerns over asset quality,” said Nomura.
While the near-term stock performance was muted, a revival of performance over the medium term was seen as fundamentals improved. Furthermore, IndusInd Bank has a strong business model in retail, which should aid in faster improvement of profitability over the medium term. “We increase FY27-28 EPS estimates by 14-16% led by higher NII and lower credit costs,” said Nomura.
Nomura on Voltas: Volumes up in June
Nomura maintained its ‘Neutral’ rating on Voltas despite unseasonal rains in April and May. The brokerage house has a target price of Rs 1,290 on the stock. Nomura believes that the effect of unseasonal rain was partly offset by a modest improvement in June. Secondary sales declined 20–25% on year in April and May, impacted by unseasonal rains and an early monsoon, said Voltas’ management. Despite this, Voltas gained market share in April. However, the demand trends remain weak, with 6-8 weeks of channel inventory and no major pricing actions yet, though promotional offers have been prevalent. The company expects to maintain high-single-digit margins going ahead, contingent on seasonal demand trends, said Nuvama.
According to management, domestic project momentum is expected to pick up in FY26 after last year’s election-led disruption. “We will still imply downside risk to our flat YoY industry volume estimate in Q1. While other peers have also lowered their industry guidance to 10-15% now (15- 20% earlier), we factor in 10% industry growth in FY26,” said Nomura.
Nomura on Sun Pharmaceuticals: Stability a key catalyst
Nomura has a ‘Neutral’ rating on Sun Pharmaceuticals, with a target price of Rs 1,970, an upside of 17%. Sun Pharma’s recent management changes are viewed as a “continuity with gradual transition to the next generation,” suggesting stability rather than a major catalyst for a rating change. Kirti Ganorkar’s elevation to Managing Director is seen as a continuity given his long association and success in the domestic formulation business, which contributes significantly to profits.
Talking about Halol facility’s situation, the market already incorporates the Halol plant’s issues, with no material upside expected from its resolution. Even if the USFDA clears the site, the impact is anticipated to be only “marginally positive”. Any revenue upside would be “immaterial” due to Sun Pharma‘s large base.