Business Tantra

Domestic markets have had a shaky start to the year with benchmark indices trading in the red on a year-to-date basis. Indices have now also cooled down from the Budget day highs. Sensex was trading in red on Tuesday with marginal gains hovering around 57,300 while the NSE Nifty 50 was holding above the 17,100 mark. With concerns around global inflation, rising crude oil prices, and US Federal Reserve’s tightening equity markets may continue to remain on the edge for a while but investors need to pick the right scrips to benefit from directions Dalal Street will take. Axis Securities February stock picks include 7 stocks from the large-cap category which they believe can offer strong double-digit returns.

ICICI Bank: Buy
Target price: Rs 990

The private sector lender is among the top picks selected by Axis Securities. “The bank has been outperforming its peers and has been ticking most boxes on growth, margins, and asset quality,” Axis said in the note. “On the valuation front, we believe the bank continues to be on a comfortable footing,” they added. ICICI Bank has a strong loan book and comfortable asset quality which makes analysts bullish on the stock. The target price implies 25% upside scope from today’s opening price.

Bajaj Auto: Buy
Target price: Rs 4,250

The second-largest player in the domestic motorcycle market has gained nearly 6% so far this year. The company has a strong export profile that bodes well for growth and multiple drivers that will aid the trajectory. “: Bajaj Auto is well-placed to capitalize on demand normalization and premiumization trends in the 2W industry which should support profitability and operational performance going forward,” said Axis Securities. The target price implies 22% upside.

Tech Mahindra: Buy
Target price: Rs 2,060

IT major Tech Mahindra is a strong player in the space, catering to clients in various geographies from North America to Europe, the Middle East, and Australia. Strong deal pipeline of Tech Mahindra makes analysts believe there is demand acceleration. “We believe Tech Mahindra has a resilient business structure and better revenue growth visibility from a long-term perspective but is trading at discount as compared to its Indian peers,” the note said. Analysts see a 43% upside potential.

Maruti Suzuki India: Buy
Target price: Rs 9,800

For Maruti Suzuki, premiumization and new launches are expected to drive growth. The management has guided that the semi-conductor shortage situation has improved which would aid the growth story. “MSIL could emerge as the biggest beneficiary of demand recovery in the post-COVID period, considering its stronghold in the Entry-Level segment and a favorable product lifecycle,” Axis said. The brokerage firm sees 14% upside.

State Bank of India: Buy
Target price: Rs 645

SBI is the largest state-owned lender in the country. The bank has surprised on the asset quality front which bodes well in the view of analysts. “SBI continues to be the best play among PSU banks on the gradual recovery in the Indian economy given its healthy PCR, robust capitalization, a strong liability franchise, and an improved asset quality outlook. We believe credit costs normalization and improved operational performance will lead to double-digit ROEs of 13-15% by FY22-23E,” they said. The target price hints at 21% upside.

Hindalco Industries: Buy
Target price: Rs 570

Hindalco Industries is the metals flagship company of Aditya Birla Group. It is the largest primary producer of aluminium in Asia. This year aluminium prices are expected to remain strong which would help Hindalco. “Hindalco’s Net Debt/EBITDA is at 1.93x, much below the target of 2.5x. We expect deleveraging to continue, further strengthening the company’s balance sheet,” said Hindalco. 

Bharti Airtel: Buy
Target price: Rs 810

The telco operates in a three-player market where only two players are financially strong to cope with the cheap prices. Robust quarterly performance, Encouraging trends in the Africa business, strong ARPU, and strong business fundamentals are key factors that keep analysts bullish on the stock. The target price set by Axis Securities suggests a 14% upside potential.