Mahindra Group stock gets Nomura upgrade, may rise nearly 20%

The Indian information technology (IT) sector could see a marginal improvement in revenue growth in 2026-27 (FY27), with mid-caps likely continuing to outpace their large-cap peers, according to Abhishek Bhandari, Executive Director of Technology and Internet at Nomura.

Bhandari is now more positive on the sector than last year, citing early signs of artificial intelligence (AI) related spending and favourable currency movements.

Nomura's recent report projects that revenue growth for large-cap IT companies could improve to 4.5% in the next financial year, up from the current 3%. A key factor influencing profitability is the Indian rupee's exchange rate against the US dollar. Bhandari explained that a 1% depreciation in the rupee typically translates to a 25 to 30 basis point improvement in margins for the IT sector. "That's a very short-term thing. Eventually, if you look at the long-term trends, the currency benefit is not kept by the IT companies; it's eventually passed on to the clients," he clarified.

For the upcoming year, Nomura forecasts the rupee to average around ₹89 to the dollar, compared to approximately ₹87.5/$ this year. Based on this, the firm is factoring in a close to 30 basis point margin improvement for large-cap IT companies.

Addressing investor sentiment, Bhandari acknowledged significant pushback, largely centred on AI and its potential impact on growth. He said that globally, the tech narrative is focused on identifying "winners versus losers," and Indian IT services are currently perceived as "AI losers." This perception stems from the sector not having significantly participated in the AI wave so far and facing revenue deflation from accelerated discounting offered to clients.

"The pushback generally what we get from the clients is, you know, when will that perception of IT companies being an AI loser change into the other side," Bhandari stated. He added that even without considering AI, the sector is viewed as having low growth compared to the highs seen during the COVID-19 period.

However, Bhandari argued that the long-term outlook remains promising. He pointed out that historically, IT services businesses have benefited from technological shifts, as enterprises invariably anchor themselves to new technologies where innovation is concentrated. "This time is not going to be any different, according to us. It's more of a timing issue," he asserted. The delay, he explained, is longer than expected because clear winners in the AI space have yet to emerge, with new and better models appearing constantly, making it difficult for enterprises to commit to a specific AI stack.

Despite these challenges, Nomura's stance on the sector has turned more positive. Bhandari highlighted emerging evidence that the narrative around AI is improving for IT services. "We are already seeing evidences of the POC (proof-of-concept) projects moving to point solutions, which is generally the start of AI spending," he said.

He also pointed to commentaries from global IT service firms, such as Cognizant, which indicate the beginning of smaller AI-related projects. Furthermore, he anticipates that as large global cloud companies seek to monetise their significant AI investments, spending on the application layer will increase, creating opportunities for Indian IT services firms to participate.

Revenue growth for Indian information technology (IT) companies is poised for a marginal improvement in the upcoming financial year, though negative investor perception surrounding artificial intelligence (AI) remains a challenge, according to a recent Nomura report. In an interview with CNBC TV18, Abhishek Bhandari, Executive Director for Technology and Internet at Nomura, detailed the firm's outlook, projecting that large-cap IT firms could see dollar revenue growth accelerate to 4.5% from the current 3%, with mid-caps continuing to outpace their larger peers.

Addressing the impact of currency fluctuations, Bhandari explained the short-term benefits of a depreciating rupee. "The math is typically 1% depreciation in rupee yields around 25 to 30 basis point improvement in margins for the IT sector," he stated. However, he clarified that this is a temporary advantage, as these gains are eventually passed on to clients over the long term. For the next financial year, Nomura forecasts the rupee to average around ₹89 to the dollar, compared to ₹87.5 this year, leading the firm to bake in a nearly 30 basis point margin improvement for large-cap companies.

The primary pushback from investors, Bhandari noted, is centered on the perception of the IT services industry as an 'AI loser'. "Globally the big narrative going on in the tech space is identifying winners versus losers… and IT services in general are perceived to be quote unquote AI losers because they haven't really participated in the AI wave so far," he said. This perception has been compounded by revenue deflation from accelerated discounting that firms are forced to offer customers.

Despite this, Bhandari argued that IT services businesses are historically predicated on technology changes and ultimately benefit from them. He believes the current cycle will be no different, attributing the delay to the rapid pace of innovation in AI. With new and better models emerging constantly, enterprises find it difficult to anchor themselves to a single AI stack, thus postponing large-scale spending. "It's more of a timing issue. The delay actually has been longer than expected because the winners in AI is still not identified," Bhandari explained.

Reflecting this evolving landscape, Nomura has adopted a more positive stance on the sector compared to the previous year. Bhandari highlighted emerging evidence that is shifting this perspective. "We are already seeing evidences of the POC (proof of concept) projects moving to point solutions which is generally the start of AI spending," he observed. He also pointed to commentary from global IT giants like Cognizant, which are indicating the commencement of smaller AI projects.

Ultimately, Nomura anticipates that the large cloud companies that have invested heavily in AI infrastructure will need to start monetising those investments. This will inevitably drive spending on the application layer, where Indian IT services companies are well-positioned to participate. "The narrative on AI is likely to get better from the IT services point of view," Bhandari concluded, signaling a cautiously optimistic outlook for the sector.

By Itsuki Okuda / Yomiuri Shimbun Staff Writer

Nomura Holdings Inc. announced that it completed its acquisition of three companies, including a U.S. asset management firm, from major Australian financial group Macquarie Group Ltd. The move accelerates the firm's overseas expansion in investment management, which it views as a growth area.

Nomura acquired all shares of the three companies for about 1.8 billion dollars. It said that the acquisition represents the largest overseas deal in the company's history.

The combined assets under management (AUM) of the three companies, entrusted to them by investors and others, total about 166 billion dollars. Following the acquisition, 35% of the AUM in Nomura's Investment Management Division is expected to come from overseas, up from 16% at the end of 2024. About 60% of revenue from the investment management business is also projected to come from overseas, up from about 30% at the end of 2024.

With the acquisition, Nomura will establish a new organization primarily based in New York and Philadelphia to smooth integration. Business will be conducted under the "Nomura Asset Management" brand, including for the three companies that were formerly owned by Macquarie.

"The successful close of this transaction marks a significant step toward our 2030 Management Vision, boosting our assets under management and diversifying and strengthening our platform," said Kentaro Okuda, Nomura Holding's president and group CEO, in a statement.

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This article is from The Yomiuri Shimbun. Neither Dow Jones Newswires, MarketWatch, Barron's nor The Wall Street Journal were involved in the creation of this content.

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Shares of GAIL are expected to be in focus on Monday, December 1, after multiple brokerages released fresh views and ratings in the wake of the long-awaited transmission tariff revision issued by the PNGRB.

Under the new structure, GAIL's transmission tariff has been set at ₹65.7 per MMBtu, up from the current ₹58.6 per MMBtu. The 12% increase is well below the ₹78 per MMBtu the company had originally proposed.

CLSA has maintained its 'Outperform' rating with a target price of ₹200 per share.

The brokerage sad that the regulator approved a 12% hike against GAIL's request for 33%, conceding on several parameters within its own framework to limit the burden on consumers.

According to CLSA, this effectively pushes a larger hike to April 2028. The brokerage also flagged the possibility of legal challenges or a review of the order.

CLSA had built in a 20% increase in its estimates; the lower revision now poses downside risks of about 7% to FY27CL EPS and 8% to fair value. While calling this a one-time hit and a negative for sentiment, CLSA said any correction would present an attractive buying opportunity.

HSBC, which has a 'Buy' rating and a target price of ₹235, said the PNGRB's interim order lifts tariffs by 12% versus GAIL's demand for 33%, with the final review pushed out to 2028.

Although the outcome disappointed the market in the near term, HSBC believes a smoother transition will support both volume and value growth. The brokerage flagged risks from a sharp drop in marketing margins or a steep rise in LNG prices that could dent domestic demand.

Nomura also remains positive on the stock with a 'Buy' call and a ₹214 price target. It highlighted the lower-than-expected tariff hike but still expects around 18% y-y EBITDA growth in FY27F on the back of the 12% tariff increase and 9% volume growth.

Nomura said gas marketing earnings could hold strong despite higher Henry Hub prices. It has trimmed FY27/28F EBITDA estimates by 7% and 6% to factor in the lower tariff outcome and weak realisations in the LPG production segment.

Speaking to CNBC-TV18, GAIL's management said the tariff revision will add about ₹1,200 crore to transmission EBITDA this year and roughly ₹1,350 crore in the next.

Director of Finance Rajesh Kumar Jain added that the gap between the company's expectations and the PNGRB order is around ₹5 per MMBtu, and GAIL will review the decision to determine if a relook is required.

GAIL shares closed 4.09% lower on Friday at ₹176.28 and are down 8% so far in 2025.

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The shares of Anthem Biosciences jumped around 4 percent on November 28 after Nomura issued a bullish note for the stock. The shares of the company hit an intraday high of Rs 651 apiece.

The newly-listed stock is currently more than 14 percent from the IPO price of Rs 570 apiece. However, it is down nearly 10 percent from its listing price of Rs 723.05 apiece. By the end of the session on Friday, the stock pared some gains to close at Rs 636 apiece.

Nomura on Anthem Biosciences:

Nomura initiated coverage on Anthem Biosciences with a ‘Buy’ rating, and a target price of Rs 740 per share. This implies an upside potential of nearly 18 percent from the stock’s previous closing price.

The international brokerage said that the company is well-positioned to benefit from the CRDMO opportunity. It expects the firm to post sales growth of 14 percent/18 percent/22 percent, and earnings improvement of 27 percent/21 percent/26 percent in FY26-28.

Nomura however cautioned that the company’s revenue growth may slow down in the near-term due to a high base. But steady growth in base products and new launches will likely drive acceleration in FY27-28, the brokerage added.

New launches, capacity expansion and strong end-market demand support positive medium-term outlook, Nomura added, further saying that the company can sustain 17 percent growth in calendar year 2024-2029, outpacing the industry’s 13 percent growth in the contract research, development and manufacturing organisation segment.

Anthem's stable leadership with employee attrition below peers has led strong operating performance with industry-leading profit margins and return ratios, Nomura said, adding that it believes that the company has a wider customer base and a strong "fee for service" strategy when compared to peers.

Anthem Biosciences share price history:

The shares of the company had made a strong market debut on July 21 this year, listing with a premium of nearly 27 percent over the IPO price at Rs 723.05 per share on the NSE. This came after the Rs 3,395-crore initial public offering (IPO) of the company saw strong investor interest during its three days of public bidding, being subscribed nearly 64 times between July 14 and July 16.

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(With inputs from Reuters)

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