From ITC to SBI: ICICI Direct lists 5 stocks that positively surprised in Q2 earnings

AIA Engineering: The brokerage is positive on the stock with a target price of ₹3,240, indicating a potential upside of 20 percent. AIA is India’s largest manufacturer and supplier of high chrome wear, corrosion and abrasion resistance castings used in cement, mining and thermal power plants. AIA reported a strong set of Q2FY23 numbers with its revenue up 50 percent YoY at ₹1,228.7 crore and PAT at ₹244.3 crore, up 77 percent YoY. Its sales volumes also rose owing to product mix and price increases to pass through higher input costs. It expects revenue, and EBITDA at AIA to grow at a CAGR of 14.2 percent, and 20.5 percent, respectively, in FY22-24E aided by sustained margins in the range of 20-22 percent.

ITC: The brokerage has a ‘buy’ call on the stock with a target of ₹405, indicating an upside of 21 percent. ITC continued its growth momentum across categories in Q2FY23. The cigarettes category has benefited from stable taxation and market share while the FMCG business is witnessing strong growth specifically in the underpenetrated foods category, it said. Further, the paperboard business not only benefited from pricing growth but is also gaining volumes across user industries and the hotels business has benefited from pent-up demand conditions after two years of Covid-impacted occupancies, it added. It believes ITC would continue to grow in its core business of cigarettes and FMCG with stable taxation & softening of raw material prices and remains positive on ITC from a long-term growth perspective.

Axis Bank: The brokerage was positively surprised by this private sector lender's Q2 results. It has a ‘buy call on the stock with a target price of ₹1,000, indicating a 16 percent upside in the stock. Axis Bank posted robust business and operational performance while asset quality continued to improve during the quarter, said the brokerage. Credit growth remained strong at 17.6 percent YoY at ₹7.30 lakh crore, driven by an uptick in the mid-corporate, SME and retail segments. Healthy traction in advances coupled with a surge of 36 bps QoQ in margins led to a strong jump of 31.1 percent YoY and 10.4 percent QoQ in NII to ₹10,360 crore, it added. Slippages remain steady while the GNPA ratio declined 26 bps QoQ to 2.5 percent. Focus on risk-adjusted business growth, improving margin trajectory and cost to asset at 2-2.5 percent will aid return ratios and sustainability of performance to drive valuation ahead, noted the brokerage.

State Bank of India: The brokerage has a 'buy' call on the stock with a target price of ₹700, indicating an upside of 17 percent. SBI reported a strong operational performance with NII growth at 12.8 percent YoY to ₹35,183 crore, led by 30 bps QoQ improvement in NIMs (domestic) and high loan growth. The bank reported gross credit growth at 20.8 percent YoY to ₹29.5 lakh crore (above estimates). PAT grew 73.9 percent YoY to ₹13,263 crore, the highest ever quarterly profit, noted the brokerage. On the asset quality, fresh slippages declined while the GNPA ratio also fell. It added that the bank has consistently seen upbeat performance with healthy credit growth, steady margins and lower slippages with adequate provision buffer.

Maruti Suzuki: The brokerage is bullish on the stock with a target price of ₹11,200, indicating a 26 percent upside in the stock. Maruti Suzuki posted a robust performance in Q2FY23 with its total operating income at ₹29,931 crore, up 12.9 percent QoQ amid 10.6 percent QoQ growth in volumes at 5.2 lakh units. Margins also surprised positively this time and were up 204 bps QoQ to 9.3 percent. PAT in Q2FY23 came in at ₹2,062 crore, up 2 times QoQ, driven by higher operating margins as well as higher other income. The brokerage is bullish on the back of industry tailwinds of the underpenetrated PV segment domestically, benign RM price outlook and robust order book. Building in the positives, it expects sales and PAT to grow at a CAGR of 25 percent, and 68 percent, respectively, over FY22-24E.