AB Capital, MCX, PB Fintech, Muthoot: Morgan Stanley shares fresh targets for 14 stocks

Aditya Birla Capital, PB Fintech, Shriram Finance, Muthoot Finance and MCX are among 14 stocks where Morgan Stanley has revised its price targets on June 24. LIC Housing Finance Ltd, Home First Finance, ICICI Prudential Life Insurance, HDFC Asset Management Company Ltd and HDFC Life are a few other stocks it is revised price targets on.

"We revisit forecasts and prices targets, as we factor in frontloaded rate cuts by RBI and equity market moves into our EPS estimates and cost of equity assumptions. Our ratings and preferred picks are unchanged. We see limited upside and more dispersion in stock returns over the next 12 months," Morgan Stanley said.

For prime home loans by housing finance companies (HFCs), a 25 basis point front-loaded rate cut could pressure net interest margins (NIMs) for a few quarters, until funding costs begin to decline meaningfully. A key factor to watch is how aggressively banks compete in this segment going forward, Morgan Stanley said.

In contrast, fixed-rate lenders may start to see NIM improvement sooner. 

"However, we expect only limited long-term expansion due to the Reserve Bank of India’s emphasis on monetary transmission. We have significantly raised our earnings per share (EPS) forecasts for L&T Finance (LTF, Underweight), driven by stronger microfinance (MFI) loan growth expectations. That said, our FY26–27 estimates remain 7–10% below consensus," Morgan Stanley said.

Morgan Stanley said its revised price targets for lenders largely reflect a lower cost of equity (COE), influenced by declining government bond (g-sec) yields. 

The biggest changes in price targets are for ABCL (Overweight), Muthoot Finance (Equal-weight), Manappuram Finance (Equal-weight), and L&T Finance (Underweight). Our ratings and overall outlook remain broadly unchanged.

In the case of non-lenders, Morgan Stanley made notable forecast adjustments for capital markets and platform stocks. 

"At MCX (Underweight), average daily traded value and transaction revenues have rebounded sharply in April–June after a weak previous six months. We now align our FY26 estimates with the year-to-date trends," it said.

The foreign brokearge said investor sentiment for capital market and platform stocks has improved sharply amid recent market gains. 

However, it believes valuations are well above sustainable levels. 

While this could prove temporary—as seen in past cycles—it is difficult to predict when sentiment might shift. 

"Therefore, we assign a higher probability to bullish outcomes for names like HDFC AMC (Equal-weight), MCX (Underweight), and PB Fintech (Underweight), recognizing that elevated prices could persist for some time," Morgan Stanley said.