ICICI Direct handpicks ITC, SBI and 3 other stocks after Q2 results

Incorporating revised PAT numbers for index constituents after Q2FY23 earnings, brokerage firm ICICI Direct’s forward estimates witnessed an upgrade of 1.3%, largely for FY24E.

“Over FY22-24E, Nifty earnings are seen growing at 14.9% CAGR. Keeping the same PE multiple, we now value Nifty at 20,000 i.e. 21x PE on FY24E EPS of Rs 950. On the forward earnings front, the BFSI space witnessed healthy earnings upgrades (led by corporate banks) while marginal upgrades were witnessed in the FMCG, IT & oil & gas space,” ICICI Direct said.

5 stocks calls by ICICI Direct:

AIA Engineering
Manufacturer and supplier of high chrome wear, corrosion and abrasion resistance castings, AIA Engineering reported a strong set of Q2FY23 numbers. Revenue was at Rs 1,228.7 crore, up 50% YoY. EBITDA was at Rs 311.4 crore, up 92.3% YoY with margins at 23.4% expanding 515 bps YoY. PAT was at Rs 244.3 crore, up 77% YoY.


The brokerage set a target price of Rs 3,240 on the stock, which shows an upside potential of 20% from the current market price of Rs 2,700 per share.

Axis Bank
“Axis Bank posted robust business and operational performance while asset quality continued to improve during the quarter. Credit growth remained strong at 17.6% YoY to Rs 7.30 lakh crore, driven by a 49% uptick in mid-corporate, 28% in SME and 22% in the retail segments. Healthy traction in advances coupled with a surge of 36 bps QoQ in margins led to strong jump of 31.1% YoY and 10.4% QoQ in NII to Rs 10,360 crore,” the brokerage said.

The brokerage values the bank at 2.3x FY24E ABV, assigning the target price at Rs 1,000, which shows an upside potential of 14% from the current market price of Rs 876 per share.

ITC
“ITC continued its growth momentum across categories in Q2FY23. The cigarettes category has benefited (20% volume growth) from stable taxation, market share gains with aggressive trade promotions and newly launched premium brands in the last one year. FMCG business is witnessing strong growth specifically in the underpenetrated foods category & strong traction from education & stationery business,” said ICICI Direct.

ICICI Direct maintained its ‘buy’ rating on the stock with a target price of Rs 405, which shows an upside potential of 19% from the current market price of Rs 340 per share.

Maruti Suzuki
“Maruti Suzuki (MSIL) posted a robust performance in Q2FY23. Total operating income for the quarter came in at Rs 29,931 crore, up 12.9% QoQ amid 10.6% QoQ growth in volumes at 5.2 lakh units. Margins surprised positively this time and were up 204 bps QoQ to 9.3%. Gross margins expanded 150 bps QoQ. Consequent PAT in Q2FY23 came in at Rs 2,062 crore 2x QoQ, driven by higher operating margins as well as higher other income,” ICICI Direct said.

The brokerage retained its buy rating on MSIL with a target price of Rs 11,200, which implies an upside potential of 25% from the current market price of Rs 8,925 per share.

State Bank of India
SBI reported a strong operational performance with NII growth at 12.8% YoY to Rs 35,183 crore, led by 30 bps QoQ improvement in NIMs and high loan growth. Other income increased 8.1% YoY and jumped meaningfully QoQ as Q1FY23 was impacted by treasury losses.

The bank reported gross credit growth at 20.8% YoY to Rs 29.5 lakh crore (above estimates), led by corporate loans, which were up 21.18% YoY, with 18.8% YoY growth in the retail segment.
The brokerage firm set a target price of Rs 700 on the stock, which shows an upside potential of 16% from the current market price of Rs 605 per share.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)