Latest news with #CLSA
Mint
6 hours ago
- Business
- Mint
CLSA and Morgan Stanley advise caution on Indian IT stocks; prefer Infosys, TCS, Wipro, Persistent, Coforge
As investor interest in technology stocks resurges, the Indian IT sector has staged a modest recovery in recent weeks. The Nifty IT index has risen nearly 4 percent over the past month, reflecting improving sentiment. However, global brokerage firms CLSA and Morgan Stanley remain cautious in their outlook, warning that weak discretionary spending and persistent global macroeconomic uncertainties could limit further gains. Despite the recent uptick, the Nifty IT index has lagged behind the broader markets in 2025, declining nearly 11 percent year-to-date, compared to a 5 percent gain in the Nifty 50. Both CLSA and Morgan Stanley believe the current environment is still challenging for the Indian IT sector. While the recent rebound in Nifty IT reflects investor interest, the ground reality across core verticals remains tepid. CLSA noted that discretionary IT spending remains soft, especially in segments like retail and automotive, although it also suggested that a broad-based economic slowdown could later prompt companies to ramp up their IT investments as a cost-optimization strategy. Morgan Stanley, echoing similar concerns, reported that interactions with IT companies revealed weak deal pipelines and limited demand recovery. The firm emphasized that any turnaround in the sector is likely to be gradual, uneven, and selective, depending heavily on geography, industry, and client budgets. Despite their shared caution, the two brokerages diverge in their near-term positioning strategies. CLSA remains relatively optimistic, highlighting potential in the banks, financial services, and insurance (BFSI) verticals, which it believes could see a V-shaped recovery. The firm also considers current valuations to be compelling, backing stocks like Infosys, Tech Mahindra, and Persistent Systems. However, it advised holding LTIMindtree, pending clearer earnings visibility. On the other hand, Morgan Stanley has taken a more defensive tone. While it acknowledged a slight improvement in revenue forecasts, it continues to foresee a prolonged slowdown in the sector for the next two years. Morgan Stanley advised investors to use any rally as an opportunity to book profits, citing stretched valuations relative to fundamental performance. The brokerage prefers TCS, Infosys, and Wipro among large-cap names and backs Coforge and Mphasis in the mid-cap space. Conversely, it recommends avoiding HCLTech, LTIMindtree, and Tech Mahindra. Notably, Tech Mahindra was downgraded to 'Underweight' with a target price of ₹ 1,575, while Wipro was upgraded to 'Equal-Weight' with a target of ₹ 265. In terms of strategy, CLSA suggests staying invested, particularly in companies with strong order books and sectoral tailwinds, such as BFSI. In contrast, Morgan Stanley urges caution, advocating a rotational approach where investors trim exposure during rallies and focus on undervalued, defensive large-cap stocks. Valuation-wise, CLSA believes Indian IT stocks are attractive when compared to their long-term averages, making selective opportunities worth exploring. Morgan Stanley, however, pointed out that while valuations have come off their peaks, they are not cheap, especially in the context of muted growth expectations. It added that further correction is possible if earnings growth fails to meet estimates in the upcoming quarters. In summary, global brokerages CLSA and Morgan Stanley advise a measured and selective approach to Indian IT stocks. While recent gains may reflect early signs of recovery, macroeconomic fragility, inflationary pressures, and weak discretionary IT spending continue to pose challenges. CLSA sees opportunity in BFSI-focused IT names at current valuations, while Morgan Stanley urges caution, advising investors to lock in profits during rallies and adopt a defensive allocation strategy until stronger signs of recovery emerge. For investors, the key will be to differentiate between short-term optimism and long-term resilience within the IT space. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Mint
8 hours ago
- Business
- Mint
Kaynes Technology shares surge 4% as QIP launch aims to raise ₹1,600 crore
Shares of Kaynes Technology rose 4 percent in intra-day trading on Friday, June 20, following the launch of its Qualified Institutional Placement (QIP) issue to raise up to ₹ 1,600 crore. The semiconductor and electronics systems design and manufacturing company opened its QIP on Thursday, setting a floor price of ₹ 5,625.75 per share, a marginal 0.3 percent premium over Thursday's closing price. The fundraising is being managed by Motilal Oswal Investment Advisors, Nomura, and Axis Capital. Kaynes Technology India has projected revenue of ₹ 4,525 crore for FY26, with EBITDA margins expected to improve by 50 basis points to reach 15.6 percent. The company's confidence is backed by a strong order book and expansion into new business areas. Jairam Sampath, Whole-Time Director and CFO, underlined the export growth opportunity. 'We will have some US major company orders getting executed. We will start doing additionally about ₹ 200–300 crore of exports. These are US- and Europe-based companies in both aerospace and automotive segments,' Sampath said. Adding to its global footprint, Kaynes' subsidiary, Kaynes Semicon Pvt Ltd, recently signed an asset purchase agreement with Japan's Fujitsu General Electronics Ltd. The deal, valued at 1.59 billion Japanese yen, includes the acquisition of production lines for power modules, further solidifying the company's expansion into semiconductor manufacturing. Despite Kaynes' bullish outlook, brokerage CLSA issued a cautionary note last month. While it raised its price target to ₹ 6,230 from ₹ 5,400, it downgraded the stock to 'Hold' from 'Outperform'. The rating adjustment followed the company's strong Q4 results, marked by improved margins, though the growth figures came in slightly below CLSA's expectations. CLSA pointed to increased working capital requirements as a drag on operating cash flow (OCF), though it anticipates this issue will normalise in the coming quarters. The brokerage also noted Kaynes' strategic focus on emerging segments such as Outsourced Semiconductor Assembly and Test (OSAT) services and bare board manufacturing, which are expected to contribute meaningfully to revenues from the end of FY26. While CLSA acknowledged the timely execution of these projects could act as catalysts for stock performance, it flagged that the recent sharp rise in stock price warranted some caution, hence the downgrade. On Friday, Kaynes Technology's stock climbed as much as 3.9 percent to ₹ 5,825.50. The stock remains over 25 percent below its 52-week high of ₹ 7,824.95, touched in January 2025, and well above its 52-week low of ₹ 3,729.70, seen in July 2024. Over the last one year, the stock has advanced more than 45 percent. However, it has lost 5 percent in June so far, following three consecutive months of gains—up 4 percent in May, 21 percent in April, and 14.5 percent in March. Before that, it saw a 13.5 percent decline in February and a steep 35 percent correction in January.
Business Upturn
8 hours ago
- Business
- Business Upturn
REC shares rise over 2% as RBI finalises favourable project finance norms; CLSA sees 37% upside
By Aditya Bhagchandani Published on June 20, 2025, 09:30 IST Shares of REC Limited climbed 2.25% to ₹392.30 on Friday, June 20, after the Reserve Bank of India released its final guidelines on project financing—offering significant relief to financiers. The final rules are seen as much softer than the earlier draft and have eased concerns over regulatory capital erosion for non-banking financial companies (NBFCs) like REC and PFC. As per the new RBI norms, the Provision Coverage Ratio (PCR) for projects under construction has been set at 1% of the total project cost, while for under-construction Commercial Real Estate (CRE) exposures, it will be 1.25%. In the operational phase, provisions will ease further—0.4% for regular project exposures, 0.75% for CRE and residential housing, and 1% for operational CRE assets. CLSA noted that unlike the earlier draft—which suggested standard PCRs of up to 5%—the final guidelines are far more accommodating. Analysts had feared a 200–300 basis point impact on CET-1 ratios for companies like REC, but the final norms significantly reduce that pressure. CLSA, which has a high-conviction 'Outperform' rating on REC, projects a 37% upside. The brokerage noted that the Ministry of Power is actively working to ease right-of-way and clearance challenges in the power infrastructure space—key hurdles that REC and PFC had cited in their lowered FY25 growth guidance. The new norms, effective October 1, also shift focus to better project appraisal. Disbursements will now only be permitted after securing all regulatory approvals and land access, as per CLSA. REC's market cap now stands at ₹1.03 lakh crore, and the rally is seen as a positive response to RBI's calibrated and sector-sensitive regulatory approach. Ahmedabad Plane Crash Aditya Bhagchandani serves as the Senior Editor and Writer at Business Upturn, where he leads coverage across the Business, Finance, Corporate, and Stock Market segments. With a keen eye for detail and a commitment to journalistic integrity, he not only contributes insightful articles but also oversees editorial direction for the reporting team.
Mint
9 hours ago
- Business
- Mint
Kaynes Technology shares surge 4% as QIP launch aims to raise ₹1,600 crore
Shares of Kaynes Technology rose 4 percent in intra-day trading on Friday, June 20, following the launch of its Qualified Institutional Placement (QIP) issue to raise up to ₹ 1,600 crore. The semiconductor and electronics systems design and manufacturing company opened its QIP on Thursday, setting a floor price of ₹ 5,625.75 per share, a marginal 0.3 percent premium over Thursday's closing price. The fundraising is being managed by Motilal Oswal Investment Advisors, Nomura, and Axis Capital. Kaynes Technology India has projected revenue of ₹ 4,525 crore for FY26, with EBITDA margins expected to improve by 50 basis points to reach 15.6 percent. The company's confidence is backed by a strong order book and expansion into new business areas. Jairam Sampath, Whole-Time Director and CFO, underlined the export growth opportunity. 'We will have some US major company orders getting executed. We will start doing additionally about ₹ 200–300 crore of exports. These are US- and Europe-based companies in both aerospace and automotive segments,' Sampath said. Adding to its global footprint, Kaynes' subsidiary, Kaynes Semicon Pvt Ltd, recently signed an asset purchase agreement with Japan's Fujitsu General Electronics Ltd. The deal, valued at 1.59 billion Japanese yen, includes the acquisition of production lines for power modules, further solidifying the company's expansion into semiconductor manufacturing. Despite Kaynes' bullish outlook, brokerage CLSA issued a cautionary note last month. While it raised its price target to ₹ 6,230 from ₹ 5,400, it downgraded the stock to 'Hold' from 'Outperform'. The rating adjustment followed the company's strong Q4 results, marked by improved margins, though the growth figures came in slightly below CLSA's expectations. CLSA pointed to increased working capital requirements as a drag on operating cash flow (OCF), though it anticipates this issue will normalise in the coming quarters. The brokerage also noted Kaynes' strategic focus on emerging segments such as Outsourced Semiconductor Assembly and Test (OSAT) services and bare board manufacturing, which are expected to contribute meaningfully to revenues from the end of FY26. While CLSA acknowledged the timely execution of these projects could act as catalysts for stock performance, it flagged that the recent sharp rise in stock price warranted some caution, hence the downgrade. On Friday, Kaynes Technology's stock climbed as much as 3.9 percent to ₹ 5,825.50. The stock remains over 25 percent below its 52-week high of ₹ 7,824.95, touched in January 2025, and well above its 52-week low of ₹ 3,729.70, seen in July 2024. Over the last one year, the stock has advanced more than 45 percent. However, it has lost 5 percent in June so far, following three consecutive months of gains—up 4 percent in May, 21 percent in April, and 14.5 percent in March. Before that, it saw a 13.5 percent decline in February and a steep 35 percent correction in January. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
Time of India
13 hours ago
- Business
- Time of India
IT stocks face mixed forecast: CLSA optimistic, Morgan Stanley warns of rally fatigue
CLSA and Morgan Stanley have contrasting views on India's information technology ( IT ) sector ahead of the June quarter results. CLSA remains upbeat and expects a V-shaped recovery, while Morgan Stanley is cautious, and has advised investors to trim positions after the recent rally. Agencies by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now
