Stocks to buy: KRChoksey lists 6 picks for June with up to 22% potential upside

Axis Bank: The brokerage has a ‘buy’ call on the stock with a target price of ₹1,660, indicating an upside of 22%. It is positive on the lender on the back of its new initiatives to drive deposit growth, continued focus on GPS (Growth-Profitability-Sustainability) strategy supporting the return ratios, and the integration of the CITI business strengthens the balance sheet further. It further noted that Axis' deposit growth was due to a) strong customer acquisition; b) initiatives to strengthen the corporate salary segment; and c) premiumization strategy and the recent acquisition of CITI. It has factored in a CAGR of 18.1% in advances, 19.4% in NII, 21.3% in PPOP, and 79.4% in PAT for FY23-25E driven by strong trends in business momentum and improving operating performance.

Balkrishna Industries: The brokerage has an ‘accumulate’ rating on the stock with a target price of ₹2,443, indicating an upside of around 7%. As per the brokerage, a  strong volume improvement outlook and hopes of margin recovery will drive the stock. The margin profile is expected to improve due to favourable raw material costs and hedge rate, and normalization of logistics costs, it said, adding that they are expected to see an improvement of 200 to 300 bps over Q4FY23 levels, spread over FY24E, with the bulk of it coming in H2FY24E. Meanwhile, it expects a sharp improvement in performance for BIL over the next 2 years with revenue/EBITDA/ PAT CAGR of 8.0%/ 33.4%/ 32.3%, respectively, over FY23-FY25E.

Hindustan Unilever: The brokerage has a ‘buy’ call on the stock with a target of ₹3,109, implying an over 15% upside. Robust growth (better than peers), green shoots in rural and discretionary spending and volume and margin improvement on cards are some of the key positives for the FMCG major going ahead, said the brokerage. It further noted that in Q4FY23, HUVR reported its 9th consecutive quarter of double-digit revenue growth. The volume growth for the quarter was 4% YoY vs flat YoY for the market. It also stated that HUVR has continued to report market-beating volume growth, resulting in market share gains in a difficult macro environment while maintaining healthy margin levels. Further, its focus on premiumization and cost-saving initiatives will lead to further margin improvement, added the brokerage. It expects the revenue/EBITDA/Adj. PAT to grow by 9.6%/14.5%/ 15.1% CAGR over FY23-25E.

Kotak Mahindra Bank: The brokerage has a ‘buy’ call on the stock with a target price of ₹2,330, indicating a 21% upside. Healthy credit growth with a decent pipeline in coming quarters, maintaining its superior asset quality despite macro disruptions, and a well-diversified business model will be the key drivers for the lender, said KRChoksey. It has factored in a CAGR of 17.1% in advances and 12.7% in profits over FY23-25E, respectively, and a RoA of 2.3% by FY25E. It also expects the premium valuation for KMB to continue with a strong brand equity, positive outlook and consistent performance from a business perspective. The brokerage also sees the bank's asset quality remaining robust, with minimal risk of slippages and a sufficient cushion on the books.

Sonata Software: The brokerage has a ‘buy’ call on the stock with a target of ₹1,128, implying a potential upside of 15.5% going ahead. As per the brokerage, the company's growth momentum will accelerate going forward. The management has set a target to reach an annual revenue run rate of $1,500 million in the next 3-4 years from the current rate of $920 million, it informed. It also noted that the revenue contribution from the IITS segment will increase going forward, which will drive the margin expansion. Further, the company is also planning to invest in futuristic technologies, which is a positive, said the brokerage. It expects a strong deal momentum across geographies, a higher focus on enterprise clients, and a tailwind in Managed Cloud Services to aid growth over the medium to long term in the future.

UNO Minda: The brokerage has a ‘buy’ call on the stock with a target of ₹680, indicating an upside of over 21%. It believes that easing of supply chain pressure will drive volume growth ahead for the firm. The company has crossed the benchmark of ₹1,000 crore in after markets sales for the first time and the management expects to outperform industry growth owing to strong order book visibility and healthy demand across all the segments. Further, the company has entered into JV with FRIWO and Buehler Motor, which is also a key positive, said the brokerage. It also noted that the company is well set to see sustainability in revenue growth with a couple of CAPEX plans and by catering to the expected demand from different OEMs. The company’s major product portfolio is EV agnostic; UNO Minda is focusing more on upgrading its product line and strengthening its position in technology areas, stated the brokerage.