The brokerage firm sees reasonable opportunities across the market spectrum with quality being the key filter. It advises investors to utilise equities as a key asset class for long-term wealth generation by investing in quality companies with strong earnings growth and visibility, stable cash flows, RoE and RoCE.
Here are 10 Diwali
muhurat picks from ICICI Direct:
ICICI Direct has a ‘buy’ call on Axis Bank with a target price of Rs 970, implying an upside of 20% from the current market price.
“Robust business growth, improving operational efficiency and synergy benefits from the Citi acquisition would reflect positively on the earnings trajectory and price performance. We believe Axis Bank will deliver an RoA, RoE of 1.5%, 15%, respectively, over FY22-24E,” it said.
The brokerage has a ‘buy’ rating on City Union Bank with a target price of Rs 215 – an upside potential of 16% from the current market price.
“The bank is aiming to strengthen its digital platform and branch expansion, which will keep opex elevated in the near term. Steady margins at ~4% and healthy business growth will aid operational performance and return ratios. We believe City Union Bank will deliver RoA, and RoE of 1.5%, and 13%, respectively, in FY22-24E,” the brokerage said.
The brokerage has a ‘buy’ rating on Apollo Tyres (ATL) with a target price of Rs 335. It sees an upside potential of 23% in the stock.
Apollo Tyres is currently focusing on capital efficiency, sweating of assets, controlled capex spending, healthy FCF generation & deleveraging of b/s. With a reduction in debt, RoCE at ATL is seen at 13% by FY24E. It is currently trading at an inexpensive valuation of ~5x EV/EBITDA on FY24E.
ICICI Direct has a ‘buy’ rating on Eicher Motors with a target price of Rs 4,170 – a potential upside of 21% from the current market price.
With operating leverage gains and a decline in key raw material prices, margins at the company are seen improving to 26.1%, with consequent RoCE at ~21% by FY24E. It is currently trading at inexpensive valuations of ~28x P/E on FY24E amid high double-digit growth prospects. Eicher Motors also stands to gain from the cyclical upswing in the CV space through its JV with Volvo.
The brokerage has a ‘buy’ call on IT service provider Coforge with a target price of Rs 4,170, implying an upside of 21% from the current market price.
“Coforge guided for at least 20% CC revenue growth in FY23, backed by continued strong deal wins. It won 11 large deals in FY22, including one large $100-million plus deal and three US$50-million deals. It provides visibility for near to medium-term growth momentum. We bake in 19.1% revenue CAGR over FY22-24E while 220 bps margin expansion, continued offshoring focus will drive margin expansion,” it said.
ICICI Direct has a ‘buy’ call on Lemon Tree Hotels with a target price of Rs 110, implying an upside potential of 26% from the current market price.
“The company is well positioned to capture the unorganised market share due to the slowdown in the upcoming room supply in the wake of ongoing distress. Further, with the adoption of more technology in day-to-day operations, we expect the company’s operating margin to scale up to 50% over the next one year,” it said.
Healthcare Global Enterprises
The brokerage firm has a ‘buy’ call on Healthcare Global Enterprises with a target price of Rs 345. The brokerage sees an upside potential of 18% in the stock.
“It is focused on consolidating existing networks through cost optimisation measures to improve margins and ramping up patient footfall by engaging in direct-to-patient promotion strategies. De-leveraging of the balance sheet (debt reduction from ~| Rs 900 crore to ~| Rs 650 crore by FY24E), and reduction of losses across new centres have substantially eased legacy overhangs,” it said.
The brokerage firm has a ‘buy’ call on pharmaceutical and biotechnology company Laurus Labs with a target price of Rs 345, implying an upside of 35% from the current market price.
“Formulations are expected to do well on account of product launches in anti-diabetic (FY23) & CV portfolios (FY24) in the US and Europe. Calibrated focus on CRAMs (half of the planned Rs 2,000 crore Capex earmarked for the same), stable API order book, increasing reactor volume, expansion of the biologic CDMO, product launches and capacity expansion are some key levers,” the brokerage said.
The brokerage firm has a ‘buy’ call on Container Corp with a target price of Rs 890, implying an upside of 26% from the current market price.
“Driven by higher volume growth and incremental revenues from new initiatives, we expect the company to register a revenue, PAT CAGR of 22%, and 46%, respectively, in FY22-24E. We expect it to be a major beneficiary of the modal shift of freight volume share from the road in favour of rail as envisaged in the new National Logistics Policy,” the brokerage said.
The brokerage firm has a ‘buy’ call on Havells India with a target price of Rs 1,650, implying an upside of 30% from the current market price.
“We believe Havells will report a strong revenue CAGR of 16% over FY22- 24E led by product launches and dealer expansion. We believe softening of raw material prices and the launch of premium products will result in a strong EBITDA margin recovery for the company from H2FY23 onwards. Strong brand, robust balance sheet position & focus on improving the profitability of its
business make Havells an attractive stock in the FMEG space,” ICICI Direct said.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)