Dalmia Bharat, Federal Bank, others are top mid-cap picks of Axis Securities
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)
Know your inner investor
Do you have the nerves of steel or do you get insomniac over your investments? Let’s define your investment approach.
Download The Mint News App to get Daily Market Updates.
Updated: 03 Jun 2023, 08:36 PM IST
