September stock picks: Axis Securities lists 5 largecaps with up to 30% upside potential

ICICI Bank: The brokerage is bullish on the private sector lender with a target price of ₹1,250, indicating an upside of 30%. The bank has been outperforming its peers and has been firing on all cylinders. ‘ICICIB has ticked most boxes on growth, margins, and asset quality. We continue to like ICICIB for its (1) Strong retail-focused liability franchise, (2) Buoyant growth prospects, (3) Stable asset quality along with healthy provision cover, (4) Adequate capitalization, and (5) Potential to deliver robust return ratios,’ it said. Strong asset quality metrics should keep credit costs benign and enable ICICIB to deliver a consistent RoA/RoE of 2-2.2%/17-18% over FY24-25E, it estimated. It also expects ICICIB’s growth momentum to be sustained and expects it to deliver a healthy advances growth of 17%-18% CAGR over FY23-25E.

Maruti Suzuki: The brokerage has a target price of ₹11,000 for the automaker, which implies a 10% upside. MSIL has completely refreshed its portfolio with the recent addition of Invicto (the only vehicle with ₹20 lakh plus price point) to Jimny and Fronx launched earlier in Q4FY23. The higher share of premium MPV/SUVs in the sales mix will drive the Revenue/EBITDA/PAT growth in FY23-26E, it said. Softening commodities (metals), new launches in the SUV space, and upgradation of the existing portfolio will drive higher margins going forward, added Axis. 

ITC: Axis Securities has a positive outlook on the stock with a target price of ₹540, implying a 23% upside. The brokerage believes the narrative around the ITC is getting stronger as all its businesses are on the right track – 1) Stable cigarette volume growth led by market share gains and new product launches; 2) FMCG business reaching the inflection point as its EBIT margins expected to inch up further and would be driven by – the ramp up in the outlet coverage, effective implementation of localisation strategy, driving premiumisation, leveraging technology on demand and supply side; and moderation of raw material input cost; 3) Strong and stable growth in hotels as travel, wedding, and corporate activities pick up; 4) Steady and decent performance in paperboard and agribusiness witnessed in the last few quarters. Moreover, reasonable valuation among the entire FMCG pack provides a huge margin of safety, it added.

Varun Beverages: The brokerage has a target price of ₹1,000 for the FMCG major, indicating an upside of 11%. Axis believes VBL is expected to continue its strong growth momentum on account of 1) Normalcy of operation and market share gains of newly acquired territories post-COVID-19 disruptions, 2) The management’s continued focus on the efficient go-to-market execution in acquired and underpenetrated territories as reflected in its recently commissioned Bihar plant operations, 3) Expansion in its distribution reach to 3.5 Mn outlets in CY23 from 3 Mn currently, 4) Focus on expanding high-margin Sting energy drink across outlets coupled with increased focus on expansion of value added dairy, sports drink (Gatorade) and juice segment and 5) Robust growth in the international geographies. 

State Bank of India: The brokerage is positive on India's largest public sector lender with a target price of ₹715, implying an upside of 27%. Among PSU banks, SBI remains the best play on the gradual recovery of the Indian economy on account of its healthy PCR, robust capitalisation, strong liability franchise, and improved asset quality outlook, noted Axis Securities. It believes normalisation in the credit costs and the ability to deliver healthy growth should enable the bank to deliver RoA/RoE of 1%/15-17% over FY24-25E. It also expects the bank to report margins at 3.3% for FY24/25E.