HDFC Securities research report’s outlook and valuations: “The YTD EPS upgrades (consensus) have been led by mid-tiers such as Tata Elxis, Mindtree, Mastek, and Persistent Systems, ranging from 20-40 percent and, within tier 1, by Wipro (~15%). We expect the sector (coverage universe) to post 13 percent and 14.5 percent USD revenue/APAT CAGR over FY21-24E compared to 6.5/7.5 percent over the past five years. The mid-tier valuation premium relative to tier 1s may sustain, based on its relative outperformance (>500bps growth outperformance over FY21-24E as compared to 250bps earlier). We roll over valuations to Sepemtember-23E and increase target multiples for most of the companies in our coverage universe. We remain broadly constructive across the sector and ahead of consensus on growth/EPS; our preferred picks are Infosys, HCLT, Mphasis and Zensar.”
Motilal Oswal’s research report on Hindustan Unilever
As the number of COVID-19 cases started to reduce, mobility improved, restrictions were progressively lifted, stores remained open for a longer time, and modern trade (MT) reopened in a phased manner. Demand in Jul-Aug’21 has been better than that in Jun’21. General trade (GT) remains resilient, while MT has improved. However, MT is still not back to its Aug’19 levels owing to lower ‘Big Day’ sales. Rural markets continue to remain resilient on the back of a strong Rabi crop, good Kharif sowing, and monsoons ahead of its long period average. Rural resilience is expected to continue. Urban markets have seen an uptick in momentum.
We maintain our Buy rating with a TP of INR3,280 per share.
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