Brokers flag mixed Q2 scorecard: cement and cigarette margins under pressure, staffing and depository firms beat estimates

No new exchange filings were analysed by Orivam today, so this wrap draws entirely on broker research published through the day, almost all of it from HDFC Securities working through the Q2FY27 earnings season.

The cigarette-to-cement corner of the market showed strain. HDFC Securities kept its ADD rating on ITC with a target of INR300, pointing to a 21% YoY drop in cigarette revenue and a 27% decline in cigarette EBIT, even as non-cigarette revenue and EBIT rose 22-23%; the note expects per-stick profitability to recover only by Q4FY27. Cement names told a similar story of volume gains undercut by weak pricing: Sagar Cements saw 22% YoY volume growth but subdued realisations and higher costs squeezed unit EBITDA, with HDFC Securities holding its ADD rating and INR190 target unchanged. Birla Corporation's unit EBITDA declined for the same reasons, prompting HDFC Securities to trim its target to INR1,080 while keeping an ADD rating. Greenpanel Industries fared worse, with a weak quarter and soft outlook leading the broker to cut earnings estimates and its target to INR170, though the BUY rating stands.

Elsewhere, several companies beat expectations. Central Depository Services posted revenue growth of 34.7% QoQ and 23.7% YoY on strong primary-market activity, with profit beating estimates by about 12%; HDFC Securities maintains BUY with a target of INR1,570. Syrma SGS Technology reported 74% YoY revenue growth and raised its own guidance to 40-45% growth, prompting the broker to lift its target to INR1,800 while keeping BUY. Quess Corp's General Staffing-led revenue growth led HDFC Securities to raise earnings estimates by 6-10% and its target to INR390, retaining ADD. IRM Energy's Q2FY27 EBITDA grew 77.2% YoY, supporting a revised BUY target of INR352. LIC Housing Finance beat earnings estimates on negative credit costs, though loan growth stayed subdued at 4.6% YoY, with the ADD target revised to INR660.

A few names missed. NTPC Green Energy's revenue, EBITDA and profit missed estimates by 16.7%, 15.1% and 52.3% respectively due to grid curtailment issues, though HDFC Securities retained BUY with a lowered target of INR115. Neogen Chemicals' EBITDA and profit also came in below estimates, but the broker kept its BUY call and INR2,580 target on the strength of its organolithium and electrolyte businesses. Aarti Industries beat on EBITDA and profit by 18% and 34% respectively, yet HDFC Securities maintained a REDUCE rating at INR502, citing revenue concentration risk and rising input costs.

In consumer and real estate, Aditya Birla Lifestyle Brands grew topline 11.2% YoY in line with estimates with expanding margins, keeping its BUY rating and INR135 target. Lodha Developers reported Q2FY27 presales of INR50.3 billion, up 10.2% YoY and 8.8% QoQ, reiterating its FY27 presales guidance of INR240 billion, with HDFC Securities holding its target at INR1,299 on the strength of the data centre premium at its Palava project.