Sensex and Nifty 50 started the June month on a volatile note. For the current month, Axis Securities has selected a list of stocks that could be best picks. In the large-cap basket, the brokerage likes Maruti Suzuki, ICICI Bank, Varun Beverages, ITC, and SBI. Last month, the resilience of the Indian market continued with the Nifty 50 outperforming majority of global indices.
Axis Securities May 2023 top picks have outperformed both Sensex and Nifty which gained by 2.07% and 2.13% respectively.
In May, Axis Securities’ top picks basket inched up further by 4.2%. And the brokerage is back with another set of top picks for investors to buy in June.
In its research note, the brokerage said, “Axis Top Picks basket delivered impressive returns of 25% in the last one year, outperforming the benchmark Index NIFTY 50 (12% returns in one year) by a notable margin. In May’23, the basket inched up further by 4.2%. Furthermore, it gives us immense joy to share that our Top Picks basket has delivered an impressive return of 168% since its inception (May’20), which stands significantly higher than the 100% return delivered by NIFTY 50 over the same period.”
Keeping this in view, Axis Securities continue to believe in its thematic approach to Top Picks selection.
Here are the top 5 large-cap stocks of Axis Securities to buy in June month.
1. ICICI Bank: (Target price: ₹1,150)
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.
Brokerage continues 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. On the valuation front, we believe the bank continues to be on a comfortable footing.
Axis Securities maintain a BUY rating on the stock with a target price of ₹1,150/share (SOTP basis core book at 3x Sep’24E and ₹187 subsidiary value).
2. Maruti Suzuki: (Target price: ₹10,500)
The company expects to outpace the industry growth rate led by good order books and new launches (Jimy and Fronx). Strong order book, a higher share of premium SUVs, and CNG vehicles in the sales mix to improve ASP in FY24/25; further, improved chip supplies and stable commodity prices to drive the EBITDA growth(higher than earlier estimates) in FY24/25.
Further, Axis Securities revise its EBITDA upwards by 2%/7% in FY24/25E against its previous estimates. Hence, the brokerage maintains its BUY rating on the stock and values it at 28xP/E (from 27x) of its FY25E EPS.
3. State Bank of India (SBI): (Target price: ₹715)
Among PSU banks, SBI remains the best play on the gradual recovery of the Indian economy on account of its healthy PCR, robust capitalization, strong liability franchise, and improved asset quality outlook.
Axis Securities believe normalization 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.
The brokerage maintains its BUY rating on the stock with a target price of ₹715/share (core book at 1.3x Sep’24E and subsidiaries at ₹164/share).
4. Varun Beverages: (Target price: ₹1,860)
Axis Securities believe VBL is well-placed under the current market situation as a strong summer season is expected to drive overall beverage sales across regions. Furthermore, the initial report on possible El-Nino (deficit rainfall) could delay the rural recovery which would lead the entire FMCG pack (ex-ITC) under wait-and-watch mode.
Hence, in this current volatile market situation, the brokerage believes VBL provides better earning visibility than other FMCG peers in the near term.
5. ITC: (Target price: ₹490)
Axis Securities believe 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 inflexion 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.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.
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Updated: 02 Jun 2023, 09:58 PM IST