Stocks To Buy in August: Markets ended higher again in July with recovery continuing across all sectors. Macros will continue to drive the market direction, believes Axis Securities. The current setup is a ‘Buy on Dips’ market and it recommends investors maintain good liquidity.
“We recommend investors maintain good liquidity (10 per cent) to use any dips in a phased manner and build a position in high quality companies (where the earnings visibility is quite high) with an investment horizon of 12-18 months,” it said.
It continues to believe in the long-term growth story of the Indian equity market, supported by the emerging favourable structure as increasing Capex enables banks to improve credit growth. “Strong earnings trajectory continues in the NIFTY 50 universe. We foresee NIFTY EPS to post growth of 16%/13% in FY24/25. After Q4FY23, we have seen a marginal drop of 1 per cent in our Dec’25 Nifty EPS expectations,” the brokerage firm added.
Axis Securities Top picks:
ICICI Bank, Maruti Suzuki India, State Bank of India, Lupin ltd, Federal Bank, Varun Beverages, Ashok Leyland, PNC infra, ITC, Relaxo, CIE Automotive India, Praj Industries, CCL Products (India), CreditAccess Grameen, JTL Industries and Kirloskar Brothers ltd
Axis Securities has come up with 5 large-cap stock ideas with up to 25 per cent upside potential. Do you own any?
Varun Beverages – CMP Rs 804|Target Price Rs 930|Upside 16%
The brokerage believes VBL is expected to continue its strong growth momentum on account of 1) the Normalcy of operation and market share gains of newly acquired territories post-COVID-19 disruptions, 2) The management’s continued focus on the efficient go-to-market execution in acquired and underpenetrated territories as reflected in its recently commissioned Bihar plant operations (it has started gaining market share), 3) Expansion in its distribution reach to 3.5 Mn outlets in CY23from 3 Mn currently, 4) Focus on expanding high-margin Sting energy drink across outlets coupled with increased focus on expansion of Value Added Dairy, sports drink (Gatorade) and Juice segment and 5) Robust growth in the International geographies.
ICICI Bank Ltd- CMP Rs 998|Target Price Rs 1,250|Upside 25%
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. We continue 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. We maintain a BUY rating on the stock with a target price of Rs 1,250/share (SOTP basis core book at 3x FY25E and Rs 165 Subsidiary value).
Maruti Suzuki India Ltd- CMP Rs 9,821|Target Price Rs 10,800|Upside 10%
MSIL’s has completely refreshed its portfolio with the recent addition of Invicto (only vehicle with Rs 20 Lc plus price point) to Jimny and Fronx launched earlier in Q4FY23. The higher share of premium MPV/SUVs in the sales mix will drive the Revenue/EBITDA/PAT growth in FY23-26E. Strong order book, higher share of premium SUVs, CNG vehicles in the sales mix to improve ASP in FY24/25; further improved chip supplies and stable commodity prices to drive Revenue/EBITDA/PAT CAGR of 14%/16%/16% from FY23-26E. We maintain our BUY rating on the stock and value it at 27xP/E of its Jun’25E EPS (roll forward from FY25 EPS).
State Bank of India- CMP Rs 620|Target Price Rs 715|Upside 15%
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. We 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. We maintain our BUY rating on the stock with a target price of Rs 715/share (core book at 1.3x Sep’24E and subsidiaries at Rs 164/share)
ITC Ltd- CMP Rs 466| Target Price 540|Upside 16%
We 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) Stedy 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.
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