scorecardresearchFrom Varun Beverages to Federal Bank: Axis Securities lists top midcap and small

From Varun Beverages to Federal Bank: Axis Securities lists top midcap and small

Updated: 07 Mar 2022, 12:28 PM IST
TL;DR.

February was a very volatile month for the markets with the Nifty declining 3% for the month. Broader markets were also under pressure with both midcap and smallcap indices down over 5% each in Feb. In the backdrop of the Russia-Ukraine crisis, volatility in the markets will continue and commodities would be the biggest gainers and as long as the geopolitical heat continues, Axis Securities said. Let's look at its top midcap and smallcap picks for March.

Federal Bank: The brokerage has a target price of  <span class='webrupee'>₹</span>125 per share for the stock, implying an upside of 29 percent this year. Key positives are increasing retail focus, strong fee income, adequate capitalization, and prudent provisioning. Axis expects steady provision requirements along with healthy growth in the balance sheet.

Federal Bank: The brokerage has a target price of 125 per share for the stock, implying an upside of 29 percent this year. Key positives are increasing retail focus, strong fee income, adequate capitalization, and prudent provisioning. Axis expects steady provision requirements along with healthy growth in the balance sheet.

Varun Beverages: The brokerage has a target price of  <span class='webrupee'>₹</span>1,080 for the stock, impluying an upside of 14 percent in 2022. Although near term margin pressure remains owing to volatile raw material costs, greenfield expansion in Bihar and penetration led gains would would aid the firm in growing volumes over CY22/23E, noted Axis. Other Key growth drivers are strong execution in under-serviced territories South, West and East markets, market share gains, debt reduction and healthy cash flow generation, and expansion in new international geographies, it added.

Varun Beverages: The brokerage has a target price of 1,080 for the stock, impluying an upside of 14 percent in 2022. Although near term margin pressure remains owing to volatile raw material costs, greenfield expansion in Bihar and penetration led gains would would aid the firm in growing volumes over CY22/23E, noted Axis. Other Key growth drivers are strong execution in under-serviced territories South, West and East markets, market share gains, debt reduction and healthy cash flow generation, and expansion in new international geographies, it added.

Ashok Leyland: The broekrage has a target price of  <span class='webrupee'>₹</span>160 per share for the stock, indicating an upside of 35 percent. The firm continues to focus on reducing its dependence on the cyclical truck business by increasing the revenue share of Exports, Defence, Power Solutions, LCV, and after-sales spare parts business. It remains well-positioned to benefit from a strong recovery in the CV cycle on the back of new product launches and a well-diversified product portfolio, siad Axis.

Ashok Leyland: The broekrage has a target price of 160 per share for the stock, indicating an upside of 35 percent. The firm continues to focus on reducing its dependence on the cyclical truck business by increasing the revenue share of Exports, Defence, Power Solutions, LCV, and after-sales spare parts business. It remains well-positioned to benefit from a strong recovery in the CV cycle on the back of new product launches and a well-diversified product portfolio, siad Axis.

NALCO: The brokerage has a target price of  <span class='webrupee'>₹</span>150 per share for the stock, indicating an upside of 24 percent. Nalco is the only pure equity play on Aluminium and Alumina commodities in India. Aluminium is expected to remain in a deficit a second consecutive time in CY22 supporting higher prices. The recent geopolitical tension in Europe has pushed prices to a 13 year high level above $3,300/t and Nalco is well placed to benefit from the higher prices, said Axis.

NALCO: The brokerage has a target price of 150 per share for the stock, indicating an upside of 24 percent. Nalco is the only pure equity play on Aluminium and Alumina commodities in India. Aluminium is expected to remain in a deficit a second consecutive time in CY22 supporting higher prices. The recent geopolitical tension in Europe has pushed prices to a 13 year high level above $3,300/t and Nalco is well placed to benefit from the higher prices, said Axis.

Bata India: The brokerage has a target price of  <span class='webrupee'>₹</span>2,200 per share on the stock, indicating an upside of 21 percent. BATA’s efforts on ensuring customer safety, consumer-relevant communication, product availability and driving channel expansion have resulted in a consistent rise in footfalls across its retail outlets, said Axis. It added that Bata has consistently worked on building a cash-efficient business driven by healthy operating cash flows, asset turns (8x), strong cash on the balance sheet and superior EBITDA Margins than its peers.

Bata India: The brokerage has a target price of 2,200 per share on the stock, indicating an upside of 21 percent. BATA’s efforts on ensuring customer safety, consumer-relevant communication, product availability and driving channel expansion have resulted in a consistent rise in footfalls across its retail outlets, said Axis. It added that Bata has consistently worked on building a cash-efficient business driven by healthy operating cash flows, asset turns (8x), strong cash on the balance sheet and superior EBITDA Margins than its peers.

KIMS: The brokerage has a target price of  <span class='webrupee'>₹</span>1,600 for teh stock, implying an upside of 26 percent in 2022. "High RoIC (32%) led to generate a strong cash flow of  <span class='webrupee'>₹</span>300 crore every year enabling the company to achieve net debt-free status. We expect KIMS cashflow generation of  <span class='webrupee'>₹</span>300 Cr every year plus minimum debt required to fund incremental bed capacity in the next 36-40 months," said Axis.

KIMS: The brokerage has a target price of 1,600 for teh stock, implying an upside of 26 percent in 2022. "High RoIC (32%) led to generate a strong cash flow of 300 crore every year enabling the company to achieve net debt-free status. We expect KIMS cashflow generation of 300 Cr every year plus minimum debt required to fund incremental bed capacity in the next 36-40 months," said Axis.

Equitas Small Finance Bank: The brokerage has a target price of  <span class='webrupee'>₹</span>80 per share for teh stock, indicating an upside of 54 percent. The lender has been proactively reducing the share of MFI loans to build a strong, diversified, and secured product-dominated book. The bank continues to witness good traction in deposits, especially in retail deposits and expects it to improve further moving ahead, said Axis. It believes the firm is eligible for re-rating given its improving profitability, asset quality, and return ratios.

Equitas Small Finance Bank: The brokerage has a target price of 80 per share for teh stock, indicating an upside of 54 percent. The lender has been proactively reducing the share of MFI loans to build a strong, diversified, and secured product-dominated book. The bank continues to witness good traction in deposits, especially in retail deposits and expects it to improve further moving ahead, said Axis. It believes the firm is eligible for re-rating given its improving profitability, asset quality, and return ratios.

Praj Industries: The brokerage has a target price of  <span class='webrupee'>₹</span>477 per share, indicating an upside of 41 percent for 2022. "Praj is witnessing strong growth in its key segment Bio Energy in Domestic business, the overall demand-supply gap of Ethanol, increased interest in grain-based distilleries and decarbonization impetus is auguring well for Praj," said Axis.

Praj Industries: The brokerage has a target price of 477 per share, indicating an upside of 41 percent for 2022. "Praj is witnessing strong growth in its key segment Bio Energy in Domestic business, the overall demand-supply gap of Ethanol, increased interest in grain-based distilleries and decarbonization impetus is auguring well for Praj," said Axis.

CCL Products: The brokerage has a target price of  <span class='webrupee'>₹</span>585 per share, indicting an upside of 31 percent. Axis remains positive on CCL Products given its expertise in customized blends, cost efficient business model, largest manufacturer and exporter of instant coffee, capacity additions in value added products and foray into high margin branded retail business.

CCL Products: The brokerage has a target price of 585 per share, indicting an upside of 31 percent. Axis remains positive on CCL Products given its expertise in customized blends, cost efficient business model, largest manufacturer and exporter of instant coffee, capacity additions in value added products and foray into high margin branded retail business.

First Published: 07 Mar 2022, 12:28 PM IST