Nomura has issued a cautious outlook on the tire sector, citing a sharp jump in natural rubber prices as a major headwind to margins. The firm noted that domestic rubber prices have surged 23% quarter-on-quarter, while international prices have seen an even steeper increase of 66% QoQ.
Typically, domestic rubber prices trade at a 10-15% premium to global prices, and Nomura warned that there could be further upticks in the domestic market. This could pose challenges for tire companies, as they may struggle to pass on the increased costs to consumers through price hikes.
Meanwhile, Kotak Institutional Equities has maintained a buy rating on IndiGo, raising its target price to Rs 4,200 from Rs 3,700. The firm expects the supply for the airline industry to grow at or below 12% until FY30, with IndiGo potentially adding capacity at a pace similar to or faster than the market.
In the aviation sector, Morgan Stanley noted that the Directorate General of Civil Aviation (DGCA) has decided not to extend the June 1 deadline for revised Flight Duty Time Limitation (FDTL) norms. This move aims to mitigate pilot fatigue, with IndiGo likely needing to add an additional 10-15% of pilots to comply with the new regulations.
Moving to the defense sector, Morgan Stanley has maintained an overweight call on Hindustan Aeronautics Limited (HAL), with a target price of Rs 3,636 per share. The firm highlighted a strong pick-up in order inflows in March 2024, with a promising near-term prospect pipeline.
In the financial sector, Jefferies reiterated a buy call on HDFC Bank, setting a target price of Rs 1,800. The recent resignation of Arvind Kapil was seen as a slight negative due to his seniority, but the firm emphasized the bank’s strong talent base and the importance of retention and smooth transition.
Lastly, Kotak Institutional Equities has reiterated an add call on Pidilite, raising its target price to Rs 3,075 from Rs 2,825. The firm believes the company is well-positioned to deliver double-digit volume and earnings per share growth over the next few years, with rural growth outpacing urban growth.
Overall, analysts are closely monitoring developments in various sectors, providing insights and recommendations to investors in a dynamic market environment.
