HDFC Securities Trims Targets Across Paints and Retail as Margin Pressure Dominates Broker Notes

No corporate filings were analysed by Orivam today, so this wrap draws entirely on broker research published through the day.

HDFC Securities issued a wide sweep of notes spanning retail, paints and footwear, and the common thread was margin pressure despite decent top-line growth. On Avenue Supermarts (DMART), the brokerage flagged standalone revenue growth of 18.4% YoY to INR192bn with same-store sales growth of 9.5%, but noted EBITDA margin contracted 28bps YoY to 7.3% and APAT grew just 7.6%, lagging both revenue and estimates. It cut its target to INR4,000 from INR4,100 while keeping an ADD rating, though a separate note in the same batch kept the target unchanged at INR4,100.

The paints sector saw target cuts across the board. HDFC Securities trimmed Asian Paints to Rs 2,900 from Rs 3,000, Berger Paints to Rs 540 from Rs 550, and Kansai Nerolac to Rs 200 from Rs 215, citing gross margin contraction of roughly 120-200bps tied to raw material inflation, while keeping ratings unchanged (ADD, ADD, REDUCE respectively).

In footwear and apparel retail, the brokerage downgraded Metro Brands to BUY from ADD with a target of Rs 1,030, arguing a 30% stock correction had outpaced any fundamental damage, while downgrading V-Mart Retail to ADD from BUY and cutting its target to Rs 850 from Rs 875 on limited upside after a rally. Bata's target was cut sharply to Rs 610 from Rs 720 with a REDUCE rating on expected underperformance versus Metro Brands, and Relaxo's target was trimmed to Rs 400 from Rs 420.

Elsewhere, HDFC Securities raised targets on Eternal (to Rs 395), Trent (to Rs 3,100) and Titan (to Rs 4,500, despite a REDUCE rating), while cutting Swiggy's target to Rs 460 on expected rising quick-commerce losses and Aditya Birla Lifestyle Brands' target to Rs 135. Poonawalla Fincorp's earnings beat estimates on NIM reflation, but the brokerage kept a REDUCE rating on elevated credit costs and a sub-par RoE outlook, revising its target to Rs 395.