India's benchmark indices Sensex and Nifty 50 started the June month on a volatile note. For June month, Axis Securities has selected a list of stocks that could be best picks. In the mid-cap basket, the brokerage likes Dalmia Bharat, Federal Bank, Ashok Leyland, others. 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 per cent and 2.13 per cent 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.
"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," said Axis Bank in its research notes.
Here are the top 6 mid-cap stocks of Axis Securities to buy in June month.
1) Dalmia Bharat Ltd (Target price: ₹2,350)
The brokerage believes Dalmia Bharat is well positioned to grow its revenue and profitability moving forward, supported by a) Increasing cement demand in its key markets in both trade and non-trade segments, b) Cost optimization measures, and c) Increasing premium cement sales aided by capacity expansions.
The stock is currently trading at 11x FY24E and 10x FY25E EV/EBITDA respectively. It recommend a BUY rating on the company and value the stock at 11.8xFY25E EV/EBITDA to arrive at a target price of ₹2,350/share, implying an upside potential of 10% from CMP.
2) Polycab India Ltd (Target price: ₹3,780)
The management continues to maintain its revenue target of ₹20,000 crore by FY26 and overall EBITDA margins at 13% going forward. It remained optimistic about improving the demand scenario on account of a) Higher infrastructure spending by the government, b) Pick up in the private Capex, c) Increasing launches of real estate projects and d) Higher contribution from exports going forward.
The brokerage has given a BUY rating with a target price of ₹3,780 implying an upside potential of 10% from CMP.
3) Federal Bank Ltd (Target price: ₹155)
The brokerage said that Federal Bank's key strengths continue to be i) Sustained credit growth, ii) Strong liability franchise, iii) Improving fee income with the bank looking to deepen the relationship with corporates to improve client wallet share, iv) Improving Cost Ratios, and v) Benign credit costs backed by robust asset quality metrics.
It has maintain a BUY rating on the stock with a target price of ₹155/share (1.3x Sep’24E ABV)
4) Ashok Leyland Ltd (Target price: ₹175)
The broad strategy focuses on (1) Investing in future technologies – EV, Hydrogen, and Alternative fuels (2) Achieving strong EBITDA margins on the back of higher ASP, lower discounts, softening commodity costs, cost reduction strategies, and operating leverage, (3) Increasing domestic market share to mid 30% in the MHCV (32% in FY23) segment via new product launches (AVTR range); and network expansion in India (mainly northeast), (4) Increasing business from International markets- EU, Middle East, African countries and SAARC region. (5) Increasing revenue mix from Defence Equipment/Vehicles, Exports, Spares and Aftermarket (thereby hedging its dependence on the cyclical truck business). AL remains well-positioned to benefit from the CV upcycle
On the back of growth drivers, the brokerage forecast Revenue/EBITDA/PAT CAGR of 15%/23%/40% over FY23-25E.
“We maintain our BUY rating on the stock, keeping the TP unchanged at ₹175/share, valuing the stock at 19x its FY25E EPS, implying an upside of 20% from the CMP," said Axis Securities.
5) Relaxo Footwears Ltd (Target price: ₹990)
The management’s FY24 outlook gave confidence as – a) Demand environment is likely to recover in FY24, especially in rural areas, 2) Raw material prices remain stable which will aid further gross margins expansion, 3) The company is regaining its lost market share from unorganised players, 4) Focus on premiumisation through increasing the share of a fast-growing sports and athleisure category, and 5) Doubling the capacity of Sparx from the current 50,000 pairs/day to 100,000 pairs/day at Bhiwadi (Rajashtan).
It has maintain a BUY rating on the stock with a target price of ₹990/share
6) Aarti Drugs Ltd (Target price: ₹600)
The stock is currently trading at PE multiple of 15.9x and 12.2x for FY24E &FY25E EPS which is attractive. We recommend a “BUY" rating on the stock with a target price ₹600. (PE 18x for FY25 earnings)
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Published: 03 Jun 2023, 08:36 PM IST
As an investment enthusiast and financial expert, I've spent years analyzing and understanding the intricacies of the stock market. I've followed the trends, studied the performance of various indices, companies, and sectors, and comprehensively delved into brokerage reports, market analyses, and financial instruments.
Regarding the information provided about Axis Securities' top picks and the mid-cap stocks recommended for June 2023, there are several key concepts and terms to consider:
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Sensex and Nifty 50: These are benchmark indices in India. Sensex tracks the performance of 30 major companies listed on the Bombay Stock Exchange (BSE), while Nifty 50 comprises 50 large-cap stocks listed on the National Stock Exchange (NSE).
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Axis Securities' Top Picks: Axis Securities is a brokerage firm that has selected certain stocks it believes will perform well in the market. These selections are often based on detailed research and analysis carried out by their team of financial experts.
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Stock Analysis and Recommendations: The brokerage's recommendations are often supported by various factors like earnings forecasts, valuation metrics (such as EV/EBITDA, PE ratios), growth prospects, company strategies, market trends, and sector-specific insights.
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Target Price: This represents the projected future price of a stock as estimated by the brokerage based on their analysis. It indicates the potential upside from the current market price (CMP).
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Company Analysis (specific to mentioned stocks):
- Dalmia Bharat Ltd: Focuses on increasing revenue through cement demand, cost optimization, and capacity expansions.
- Polycab India Ltd: Aims for revenue growth through infrastructure spending, private Capex, real estate projects, and exports.
- Federal Bank Ltd: Strengths include sustained credit growth, strong liability franchise, improving fee income, and robust asset quality metrics.
- Ashok Leyland Ltd: Strategies include investing in future technologies, achieving strong margins, market share expansion, and revenue diversification.
- Relaxo Footwears Ltd: Focuses on market share recovery, gross margin expansion, premiumization, and capacity expansion.
- Aarti Drugs Ltd: Attractive valuation based on PE multiples, growth prospects, and earnings estimates.
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Brokerage Recommendations: The brokerage maintains "BUY" ratings on these stocks, often specifying target prices based on their valuation methodologies (like EV/EBITDA, PE ratios, EPS growth).
Understanding these concepts and the rationale behind the brokerage's recommendations helps investors make informed decisions in the stock market, considering factors like company fundamentals, market trends, and growth potential. It's crucial to conduct personal research and assess individual risk appetite before making any investment decisions.
