ET NEWS

Shares of Sun Pharmaceutical fell as much as 2.8% on Tuesday to an intraday low of Rs 1,610 on the BSE after Bank of America Securities downgraded the stock to 'underperform' from 'neutral', citing risks to premium valuations and slower-than-expected execution in speciality drugs.Bank of America Securities lowered its target price on Sun Pharma to Rs 1,570 from Rs 1,730, stating it expects consensus earnings and valuations to face pressure. “While we could continue to see the company pursuing more speciality M&A, this optionality is priced in with downside risk from disappointment in scale-up of its recently acquired (and launched) speciality assets,” the brokerage said.The research house flagged that the company's market-friendly new launches, particularly speciality drugs, have yet to fully reflect in earnings despite optimism around its psoriasis treatment, Ilumya.Speciality execution keyBofA said that while Ilumya has exceeded initial expectations, consensus estimates remain ahead of realistic reimbursement challenges and competitive landscapes for other speciality products.The brokerage noted that nearly 75% of Ilumya’s revenue comes from Medicare Part B drugs, making Sun Pharma’s earnings particularly vulnerable to pricing pressures from MFN inclusion. A 10% price reduction, it said, could dent the company’s earnings per share (EPS) by 4%.Valuation concernsThe brokerage noted that Sun Pharma trades at a forward price-to-earnings multiple of 25.5 times versus its 10-year average of 25.5 times. “We see risk to consensus earnings and premium valuations,” it said.Sun Pharma shares have fallen over 14% so far in 2025 and are down nearly 9% over the past 12 months. The stock has also declined close to 5% in the last month.From a technical standpoint, the stock is currently trading below eight of its eight key simple moving averages (SMAs), including the 5-day, 10-day, 20-day, 30-day, 50-day, 100-day, 150-day, and 200-day SMAs, indicating bearish undertones in the short-term to long-term charts.Also read | YES Bank shares down 20% in 1 year. Can RBI’s nod to SMBC deal push the stock towards Rs 23?The Relative Strength Index (RSI) stands at 52.2, suggesting the stock is neither overbought nor oversold. Meanwhile, the Moving Average Convergence Divergence (MACD) is at -9.4 and remains below the centre line, reinforcing the ongoing bearish trend.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

Global brokerage firm UBS has resumed coverage on Mukesh Ambani-led Reliance Industries Ltd (RIL) with a ‘Buy’ rating and set a 12-month price target of Rs 1,750, citing the company’s strong positioning in India’s digital ecosystem and its emerging presence in the new energy segment.In its latest research note, UBS stated that it expects RIL to perform well over the next 12–18 months, following a period of underperformance versus the MSCI India index. The brokerage highlighted that the group’s earnings transformation over the past five years has laid the foundation for potential value unlocking across multiple business verticals.UBS expects Reliance Jio to reach a stage of “maturity” over the next 12–18 months, marked by mid-teen revenue growth and rising cash flows.Meanwhile, the retail segment is anticipated to witness improved growth in the “teens” range, as the ongoing B2B restructuring concludes and recent store expansion efforts begin to yield results.In addition, the new energy vertical is expected to start contributing meaningfully to EBITDA from FY27 onwards, driven by 10GW of solar PV capacity and 15GWh of battery capacity targeted by that time.The sum-of-the-parts (SOTP) valuation model used by UBS to arrive at the Rs 1,750 target price includes:EV/EBITDA multiples of 8.5x for the O2C (oil-to-chemicals) business, 5.0x for oil and gas, and 9x on FY30e EBITDA for new energy;A FY27e EV/EBITDA multiple of 33x for retail, based on sub-segment analysis;And a DCF-based valuation for Jio, implying a FY27e EV/EBITDA multiple of 14x.UBS noted that between FY2015 and FY2025, the EBIT contribution of Reliance’s retail and telecom businesses has increased from nearly zero to 48%, while the company’s overall P/E multiple has expanded from 10x to 20x.For context, Indian retail companies currently trade at P/E multiples ranging from 40x to 60x, and telecom peers command 35x to 40x.Given the upcoming value-unlocking potential in RIL’s non-cyclical, high-growth segments, UBS believes there is further scope for re-rating in the stock.At around 11:40 AM, shares of Reliance Industries were trading 1% lower at Rs 1,398.60 on the BSE.Also read: Did HDFC Bank shares really fall 62%? All you need to know(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

The Indian stock market saw renewed interest in IT counters this week, with Infosys, TCS, HCL Tech, and Wipro emerging as top gainers. The sector, which has been struggling with global uncertainties, is finally showing signs of recovery, but experts caution against expecting a sharp turnaround.Speaking to ET Now, Deepak Shenoy, Founder of Capitalmind, explained that the biggest drag on IT firms in recent months has been tariff-related uncertainty. “Clients were waiting for clarity on tariffs before making long-term commitments. Now that most tariff definitions are better understood, companies can go ahead with plans they had put on hold for nearly six months,” he said.Shenoy added that while this may lead to gradual recovery, investors should not expect a rapid surge. “The IT rally right now is more about catching up on delayed revenues. Long-term momentum will depend on how effectively companies adapt to AI and diversify their revenue streams. Once firms become leaner and integrate AI-driven solutions, select players could outperform significantly,” he noted.Beyond IT, realty, metals, and pharma stocks also provided strong support to the market on Monday. However, the banking index was under pressure despite management commentary suggesting that net interest margin (NIM) stress has bottomed out.Shenoy highlighted two key challenges for banks. First, falling interest rates could trigger competitive pressure on lending. “Banks have not meaningfully reduced rates over the last two or three cut cycles. With short-term rates dropping sharply, NIMs are likely to contract as competitive pressures build,” he said.Second, the government’s recent ban on real-money gaming is likely to impact transaction flows. “UPI data showed around 35 crore transactions linked to real-money gaming in just one month. That float is now disappearing, and it will pinch banks that benefited from this activity,” Shenoy explained.On valuations, Shenoy believes private sector banks are relatively more attractive at this point. “PSU banks have had a good run, but valuations there leave little room for upside. In contrast, private banks are trading cheaper and could offer better opportunities,” he said.Also read: Patel Retail shares list at 20% premium over IPO priceWith IT staging a cautious comeback and banks grappling with structural headwinds, investors may need to stay selective. As Shenoy put it, “There are pockets of opportunity, but this is not the time to chase momentum blindly.”

Hours after getting fired by US President Donald Trump, Federal Reserve Governor Lisa Cook said that the President has no authority to fire her from the central bank, and she will not resign.Cook's remarks come after receiving a letter by Trump earlier saying he was removing her from the Fed effective immediately."President Trump purported to fire me 'for cause' when no cause exists under the law, and he has no authority to do so," Cook said in a statement. "I will not resign. I will continue to carry out my duties to help the American economy as I have been doing since 2022."Trump cited accusations made last week by Bill Pulte, his appointee to the housing finance regulator, who claimed that Cook improperly listed two primary residences in 2021 to secure lower mortgage rates. Cook has retained prominent attorney Abbe Lowell, who said Trump’s “reflex to bully is flawed and his demands lack any proper process, basis or legal authority.” The unprecedented move is expected to trigger a legal battle that could go up to the Supreme Court. Legal experts noted that Fed governors, unlike cabinet officials, cannot be removed at will by the president. They serve 14-year terms and can only be dismissed “for cause,” usually for misconduct in office, a process that requires due proceedings. Cook, appointed by President Joe Biden in 2022 as the first Black woman governor of the Fed, was narrowly confirmed in the Senate with Vice President Kamala Harris breaking a 50-50 tie. Trump’s decision has raised concerns over the independence of the US central bank, long considered vital for its ability to take politically unpopular decisions such as raising interest rates to curb inflation. Markets reacted with caution on Monday night, with stock futures and the dollar slipping slightly. Senator Elizabeth Warren called the attempt illegal and “an authoritarian power grab that blatantly violates the Federal Reserve Act.” If successful, the move would give Trump’s appointees a majority on the Fed board, potentially shifting monetary policy in favor of lower borrowing costs.(With inputs from AP)