In a recent market update, Morgan Stanley has issued an ‘Overweight’ rating for Reliance Industries Limited (RIL) and Adani Ports, indicating strong confidence in these stocks’ performance. Additionally, the firm has given a ‘Buy’ call for Graphite Electrodes, signaling a positive outlook for this sector.
Key Highlights
MS On Reliance
Overweight Call, Target `3,046/Sh
Re-Rating Potential Takes Center Stage As Monetisation Cycle Picks Up
Expect A Steady Re-Rating , Earnings Catch-Up Will Be A FY26 Event
Multiple Catalysts From Improving Retail & Energy Earnings Keep Us Overweight
Co Remains In Top Five In Regional Preference Order.
MS On Adani Ports
Overweight Call, Target `1,517/Sh
Acquires Container Terminal At Tanzania Port
30-Yr Agmt To Operate & Manage Ct2
95% Stake Acquired Through Consortium JV (EAGL) For $39.5 m
Cargo Volumes Were Flat YoY In May’24 & +5% YoY For YTDFY25
Shutdown Of Gangavaram Port Led To Volume Loss Of 6 mmt In April-May 2024
Jefferies On Graphite Electrodes
Buy Call On HEG, Target `2,800/Sh
Despite Strong 70%+ Utilisations, Pricing Pressure Dragged FY24 Pat For GRIL & HEG
Est Margin Pain To Continue In FY25, & Hence Cut Est
But Are Cautiously Optimistic On A Gradual Revival Thereafter
Recent Recovery In Global PMIs Is Driving Optimism
New EAF Steel Capacities Are Coming Up
Graftech Cut 24,000 t Of Its GE Capacity In Feb 2024
Jefferies On Industrials
FY24 Order Flow Rose 35% YoY For Our Industrial Stocks Incl
Siemens’ Sizeable `25,500 Cr FY23 Railways Order & 44% YoY Excluding It
ABB, Siemens, Thermax Combined Saw 8% YoY Order Growth
If The Current Govt Retains Majority, It Adds Wings To The Strong Sector Outlook
L&T, HAL , Siemens, ABB, Data Patterns, Thermax & KEI Are Top Picks
Jefferies On M&M
Hold Call, Target `294/Sh
For May’24, M& M Fin AUM Growth Moderated Slightly To 23% YoY
Disbursement Growth Improved To 6% YoY Vs 4% YoY Growth In April
Collection Efficiency Improved MoM To 96% Vs 89% Reported In April
Stage 2 & 3 Assets Were Below 10%
At 1.8x March 25 BV, Valuations Appear Reasonable
Better Visibility On RoA Expansion Is Needed To Drive Re-Rating
Implications for Investors
Morgan Stanley’s ratings suggest strong investment opportunities in RIL, Adani Ports, and Graphite Electrodes. Investors looking to diversify their portfolios and capitalize on growth sectors may find these stocks particularly appealing.
Quick Review:
Q1.Why did Morgan Stanley rate RIL as ‘Overweight’?
Ans. Morgan Stanley rated RIL as ‘Overweight’ due to its diversified business model, strategic investments, and strong financials.
Q2.What makes Adani Ports a favorable investment?
Ans. Adani Ports’ strategic locations, infrastructure growth, and operational efficiency contribute to its favorable investment outlook.
Q3.Why is there a ‘Buy’ call on Graphite Electrodes?
Ans. The ‘Buy’ call on Graphite Electrodes is driven by rising steel production, capacity expansions, and technological advancements.
