Most times, we offer our readers a host of stocks that brokerage houses recommend a ‘Buy’ on with potential for strong upside. However, it’s a bit different today. Nuvama Institutional Equities has retained a Reduce rating on these 3 stocks, and they expect the downside in some of these counters to be as much as 24%.
Wondering what’s driving Nuvama’s analysis? Well, here is a detailed report on why Nuvama is retaining the ‘Reduce’ call and the key challenges ahead-
Nuvama on Prince Pipes: Volumes the big worry
Nuvama slashed the target price on Prince Pipes to Rs 239 from Rs 251, implying a downside of 24% from the current levels. The brokerage has maintained its ‘Reduce’ on the stock.
The company’s management guided for high single-digit volume growth in FY26. “Given sectoral pressure and weak volumes, we are cutting FY26 EPS by 29% and FY27 EPS by 13%. Prince Pipes posted mixed earnings for Q2FY26. EBITDA margins improved 190 basis points YoY to 9.3% due to a favourable product mix and cost optimisation efforts by the company. The second quarter of FY26 was marred by muted demand across all categories and volatile PVC prices, leading to low channel inventory.
Nuvama on Finolex Industries: Guidance reduced
Nuvama cut the target price for Finolex Industries to Rs 179 from Rs 180, implying a downside of almost 5%. The brokerage maintained its ‘Reduce’ rating on the stock. The cut in price target comes after the guidance for the same was reduced given a tough operating environment.
Finolex Industries also posted mixed Q2FY26 results. Pipe volumes slipped 6% YoY, impacted by subdued demand, an extended monsoon, and intense competition. The company’s EBITDA margin improved to 15.2%. Management has trimmed the volume growth guidance from double-digit to mid-single digit, and believes FY26 margin would be 10–12%. Finolex Industries has cash to the tune of Rs 2,400 crore.
Nuvama on Shyam Metalics: Lower steel realisations
Nuvama has retained its ‘Reduce’ call on Shyam Metalics, while raising the target price to Rs 828 from Rs 760. The new target price implies a downside of 3%. Shyam Metalics posted Q2 FY26 results in line with the brokerage’s estimates. Its consolidated EBITDA came in at Rs 540 crore, down 8% QoQ. Lower steel realisation was offset by higher metalics and carbon steel volume, along with lower CoP.
The company has undertaken 80% of the capex announced, and the majority of capex is likely to be completed by FY27, which will help drive future earnings growth. The management is working on the next expansion phase, primarily funded by internal accruals.
