Adani Green to GAIL: Macquarie rates 4 stocks ‘Outperform’ with up to 29% upside potential

Here’s a look at what is driving Macquarie’s latest calls.

Macquarie on Escorts Kubota: ‘Outperform’

Macquarie retains an ‘Outperform’ rating on Escorts Kubota with a target price of Rs 3,485, implying an upside of 13.4%.

The brokerage says the company’s June quarter earnings reflected healthy demand despite margin pressure. Revenue rose to Rs 3,178.9 crore from Rs 2,483.4 crore a year earlier, while EBITDA increased to Rs 355.4 crore from Rs 325 crore. Adjusted profit after tax grew to Rs 387.3 crore from Rs 372.6 crore. However, EBITDA came in about 4% below Macquarie’s estimate because construction equipment margins were weaker than expected.

Macquarie notes that management has raised its FY27 tractor industry growth outlook from around flat earlier to mid-single-digit growth. It also expects Escorts Kubota to gain market share through new product launches, improving demand in its core markets and gradual gains in non-core regions. Construction equipment demand is expected to grow 12% to 14% during FY27, while export growth is likely to improve in FY28 after remaining largely flat this year because of the global macro environment.

“Escorts Kubota should benefit from market-share gains in FY27E despite moderating industry demand YoY,” Macquarie says.

Macquarie on Maruti Suzuki India: ‘Outperform’

Macquarie maintains an ‘Outperform’ rating on Maruti Suzuki India with a target price of Rs 15,257, implying an upside of 8.4%. While the brokerage said the automaker’s June quarter earnings missed estimates, it continues to see a stronger second half as margin pressures begin to ease. 

The brokerage said EBIT came in around 15% below its estimate as operating margin dropped to 4.8% because of adverse commodity prices and foreign exchange impact. It expects some of this pressure to reverse in the coming months, helped by the June price hike, another price increase effective from August, and improving product mix. At the same time, it cautioned that higher depreciation costs from new capacity additions could weigh on margins over the next four to six quarters. 

Macquarie also noted that management remained optimistic on demand, backed by commissioning of new capacity, strong domestic demand and improving exports, including electric SUVs. The brokerage quoted the company as saying it is “confident it can deliver 10% domestic volume growth.” It added that improving export mix and stronger realisations could provide additional support going forward. 

Macquarie on GAIL: ‘Outperform’

Macquarie retains an ‘Outperform’ rating on GAIL (India) with a target price of Rs 205, indicating an upside of 16.2%. The brokerage believes the company’s June quarter earnings were significantly ahead of expectations, although it expects some of the exceptional profitability seen during the quarter to moderate over the rest of the financial year. 

According to Macquarie, the earnings beat was driven primarily by exceptionally strong gas marketing margins, while transmission volumes also improved with support from higher demand from the power sector. Even though gas marketing volumes declined year-on-year, the segment delivered a sharp rise in EBIT because of favourable price-index movements. The brokerage also noted that management maintained its FY27 guidance for gas marketing profitability and reiterated its capital expenditure plan of Rs 11,500 crore for the year. 

Macquarie says the company’s long-term investment case remains intact despite expecting quarterly profitability to normalise. The brokerage stated, “our medium-term positive thesis on the natural gas segment in India is underpinned by our bearish outlook on gas prices in 2H CY26 and CY27.” It therefore continues to maintain its positive recommendation on the stock. 

Macquarie on Adani Green Energy: ‘Outperform’

Macquarie maintains an ‘Outperform’ rating on Adani Green Energy with a target price of Rs 1,800, implying an upside of 29.1%. The brokerage believes the company’s latest power purchase agreements improve earnings visibility while reducing merchant power price risk. 

Macquarie adds Adani Green has shifted around 3.7 GW of merchant and commercial and industrial capacity into long-term fixed power purchase agreements with Powerpulse Trading Solutions, while also contracting battery energy storage capacity. It believes the move materially improves cash flow certainty and supports the company’s large expansion plans through lower financing costs. The brokerage also notes that almost all operational capacity is now under contracted arrangements, significantly reducing exposure to fluctuations in merchant electricity prices. 

Explaining why it remains constructive on the stock, Macquarie said “Credit, not tariff, is the prize.” It also states that “With almost all operational capacity contracted, merchant price sensitivity is effectively removed, providing improved cash flow visibility.” The brokerage added that its base case continues to factor in around 30% EBITDA compound annual growth over the next five years, supported by the company’s execution pipeline.

Conclusion

Across these four companies, Macquarie’s positive stance rests on different business drivers rather than a common sector theme. Even though near-term challenges remain, the brokerage continues to retain ‘Outperform’ ratings on all four companies based on their medium-term earnings prospects and business fundamentals.

​Disclaimer: Investment recommendations, target prices, and brokerage ratings mentioned in this article belong to the respective financial institution (Macquarie) and do not reflect the opinions of this publication. The stock market is subject to market risks, and past performance or target estimates are not indicative of future returns. Readers are advised to consult a SEBI-registered financial advisor or perform their own independent analysis before making any investment or trading decisions.

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