According to CNBC TV18, Nuvama's Nikhil Ranka expects Indian stocks to have limited downside at current valuations, predicting double-digit earnings growth by FY27 after two years of slower growth. Ranka stated that at close to 17 times FY28 earnings, it is difficult to see much downside for the markets unless a major macroeconomic event unfolds. He noted that early indications from quarterly results did not suggest major cuts to earnings estimates, with expectations for earnings growth to continue into FY28. The brokerage's outlook highlights three key factors: order execution, margin recovery and cash generation across power, infrastructure and defence sectors.
As reported by CNBC TV18, large private sector banks could see their net interest margins (NIMs) improve by 15-20 basis points over the next two to three quarters as interest rates on loans adjust upwards. Ranka pointed to banks raising foreign currency non-resident (FCNR) deposits with three- and five-year lock-in periods, allowing them to secure funding at lower rates. If yields on loans rise by 70-75 basis points, large private banks could see their NIMs improve by 15-20 basis points, combined with loan growth of 15-16% to support operating profit growth of around 20%. The brokerage expects banks to deliver around 20% operating profit growth, with a possible STT cut seen as more likely than capital gains tax relief.
According to reports from The Financial Express, brokerage house Nuvama has identified its preferred stocks across power, infrastructure and defence for Q2FY27. The brokerage sees opportunities across power equipment, infrastructure and defence sectors, with preferred names including Kalpataru Projects International (KPIL), Skipper, Bharat Heavy Electricals (BHEL), Solar Industries India and GE Vernova T&D India. These selections are based on growth prospects, valuations and expected improvement in execution capabilities. As per the latest report, Nuvama identifies domestic transmission and distribution demand, healthy buildings and factories orders, and improving export payment inflows as potential drivers of a second-half recovery, expecting better working capital management to support cash flows.
As reported by The Financial Express, EPC companies have faced execution challenges, partly due to disruptions in the Middle East. However, Nuvama believes the sector could be moving towards a recovery, even though the September quarter may not mark a clear turning point. The brokerage expects KPIL to report revenue growth of 9% year-on-year, with an EBITDA margin of 8.9%. Skipper, which has no Middle East exposure in its order book, is expected to post revenue growth of 11.5% and a margin of 10.8%. Nuvama retains its 'Buy' rating on both companies, valuing KPIL at 14.6 times estimated FY28 earnings per share against a target multiple of 16 times and a bull-case multiple of 18 times. Skipper is valued at around 17 times earnings, compared with Nuvama's target multiple of 20 times.
According to The Financial Express, high-voltage transmission and distribution companies are expected to maintain strong operational performance. Nuvama estimates execution growth of 45.6% year-on-year, while operating profit margins could expand by 270 basis points to 22.4%. The brokerage notes that "HV T&D is expected to sustain its robust execution momentum, with execution growth of 45.6% YoY and blended margin expanding 270bp YoY to 22.4%." Among non-power industrial companies, the brokerage expects sequential margin improvement as earlier price hikes begin to flow through. It estimates order inflow and revenue growth of 19.4% and 13.1% respectively, although margins could remain 220 basis points lower year-on-year. Nuvama prefers GE Vernova T&D India due to its valuation, earnings growth and business portfolio, noting "We like Voltamp on expected margin recovery, robust order inflows supported by new capacity expansion" with a valuation of 26 times earnings against a target multiple of 30 times.
According to The Economic Times, Nuvama has initiated coverage on HFCL with a 'Buy' rating and a target price of ₹380, implying a 56% upside from its reference price of ₹244. The brokerage expects the company's shift towards telecom and networking products, along with rising demand from data centres and exports, to drive strong earnings growth. HFCL has been moving away from its earlier focus on turnkey contracts towards optical fibre, telecom products and data centre connectivity. Products accounted for 83% of revenue in Q1FY27, compared with 27% in FY21, as per Nuvama. The brokerage expects HFCL's revenue, EBITDA and adjusted profit to grow at CAGRs of 39%, 68% and 92% respectively, between FY26 and FY29. Nuvama forecasts EBITDA to rise from ₹762 crore in FY26 to ₹3,599 crore by FY29, while adjusted profit is expected to increase from ₹312 crore to ₹2,203 crore. The company also has a USD 1.1 billion long term OFC supply agreement, with export orders standing at ₹12,250 crore at the end of FY26 when the total order book was ₹21,200 crore. HFCL has undertaken large-scale fibre network deployment contracts under the BharatNet programme and secured turnkey projects from private telecom operators, including Reliance Jio.
According to CNBC TV18, Ranka expects the rupee to trade between 94 and 97 against the US dollar in the near term, citing the narrowing gap between US and Indian bond yields. The difference between the US 10-year government bond yield and India's 10-year yield has narrowed to around 210 basis points, compared with a historical level of about 250 basis points. If the US yield remains near 5.2%, India's 10-year yield could move towards 7.75%, making Indian debt less attractive to foreign investors once potential rupee depreciation is taken into account. For consumer staples, Ranka sees limited further downside after years of single-digit earnings growth, noting that Hindustan Unilever has fallen from around 50 times one-year forward earnings to about 36-37 times based on FY28 consensus earnings per share of roughly ₹50-53. In IT, he expects high single-digit earnings growth but sees little scope for valuation multiples to rise significantly from the current 15-16 times earnings, following the recent rally.
