From ICICI Bank to Cipla: These top stock picks by Axis Securities can see up to 44% up

ICICI Bank: The brokerage has a target price of ₹1,000 for the private sector lender, indicating an upside of 33 percent. As per Axis, the bank has been outperforming its peers and has been ticking most boxes on growth, margins and asset quality. Higher loan growth, improving operating profits, and a strong provision buffer coupled with a strong deposit franchise will help the bank achieve ROAE/ROAA expansion over FY23-24E, it noted. On the valuation front, Axis believes the bank continues to be on a comfortable footing. Deterioration in the retail asset quality and delay in the resolution of stressed assets are key risks, it added.

Bajaj Auto: Axis has a target price of ₹4,350 for the auto major, indicating an upside of 13 percent. Bajaj Auto is well-placed to capitalize on demand normalization and premiumization trends in the 2-Wheeler industry which should support profitability and operational performance going forward, stated the brokerage. Moreover, it expects the company to gain further market share in exports, driven by its market leadership position, brand equity, and enhanced distribution network. Bajaj Auto remains its preferred pick in the 2-Wheeler segment given reasonable valuations and strong medium-term growth prospects. Protracted pick-up in demand, commodity pressures, supply chain issues, and high fuel prices are the key risks for the stock, it added.

Tech Mahindra: The brokerage has a target of ₹1,700 for the IT major, indicating a huge upside of 44 percent. Axis believes Tech Mahindra has a superior services mix and multiple long-term contracts that are well-spread across the verticals, reducing its dependency on any one vertical. Furthermore, it foresees healthy tractions in Communications and Enterprise verticals which will greatly accelerate the company’s revenue growth moving forward.

Maruti Suzuki: Axis has a target price of ₹9,800 for the auto major, indicating an upside of 22 percent. As per the brokerage, Maruti could emerge as the biggest beneficiary of demand recovery in the post-COVID period, considering its stronghold in the Entry-Level segment and a favourable product lifecycle. New launches, targeted at filling the gaps in its portfolio, are likely to improve the overall product mix, it noted, adding that the company would gain further market share, driven by an expected shift towards petrol & CNG vehicles. Going forward, it expects new product launches to resume with a mix of product upgrades and new model launches. It sees the company’s volumes to witness a strong growth CAGR of 16 percent over FY22- 24E. Commodity cost pressures and weak product cycle are key headwinds.

SBI: The brokerage sees a 42 percent upside in the stock and has a target price of ₹665 for the largest public sector lender. Amongst the PSU banks, SBI remains the best play on the gradual recovery of the Indian economy on account of its healthy PCR, robust capitalization, a strong liability franchise, and an improved asset quality outlook, said the brokerage. It believes normalization in credit costs and improved growth outlook should lead to double-digit ROEs of 14-15 percent over FY23-24E. A slower-than-expected recovery cycle is a key risk to its upside, stated Axis.

Bharti Airtel: The brokerage has a target of ₹900 for the telecom firm, implying an upside of 29 percent. As per Axis, the company’s business fundamentals remain strong and continue to improve. The management foresees significant revenue and profit growth potential, supported by expanding distribution in rural areas, investment in the network, and increasing 4G coverage, it added. It further noted that Airtel is gaining business momentum backed by strong customer addition and market share gains and the management is confident of gaining further momentum with favourable macroeconomic conditions diving data consumption, increasing penetration in tier 2 and 3 cities, and rising use of DTH and other digital services. Axis remains bullish aided by superior margins, stronger subscriber growth, and higher 4G conversions.

Cipla: Axis Sees the pharma firm rising 13 percent and has a target price of ₹1,125 for the firm. Cipla continues to focus on the demand levers in the chronic and acute therapies and complex products in its existing as well as pipeline portfolio, said Axis. The company’s active advancement of innovative consumer-centric products is expected to accelerate the augmentation of the global consumer wellness franchise across both India and South Africa, it added. Furthermore, Axis stated that the build-out of the respiratory portfolio would drive strong operating leverage for Cipla in the US business. This coupled with a sustained high single-digit growth in the India business along with further cost optimisation measures undertaken would aid the company, it pointed out.