Domestic stock markets have entered the month of March on heightened volatility amid rising inflation, soaring crude oil prices and geopolitical conflicts that could hamper global supply chains. Analysts at Axis Securities believe large cap stocks such as ICICI Bank, SBI, Maruti Suzuki, among others could outperform in the month of March. The month is expected to be an eventful one with US Fed rate hike, state elections, and possibly LIC IPO on the cards. Volatility has, however, been sharply rising. The India VIX has neared 30 levels, suggesting panic among investors.
ICICI Bank
Target price: Rs 990 per share
The private sector lender has seen its share price tumble 7% so far in 2022. “The bank has been outperforming its peers and has been ticking most boxes on growth, margins and asset quality,” said Axis Securities. “On the valuation front, we believe the bank continues to be on a comfortable footing. We maintain a BUY on the stock with a revised target price of Rs 990/share (SOTP basis core book at 2.8x FY24E and Rs 182 Subsidiary value),” they added. The target price pimples 39% upside.
Bajaj Auto
Target price: Rs 4,250
The second-largest player in the motorcycle segment is also among the top picks for the month. In 2022 so far the stock has gained 2% to now sit at Rs 3,349 per share. Analysts believe Bajaj Auto’s strong positioning and pricing power in the export markets, leadership in the domestic 3W segment, its partnership with Triumph Motorcycles UK, and re-entry in the scooter segment through Chetak e-scooter bode well for the firm. “We maintain our BUY rating on the stock and value it at 17x FY24E EPS to arrive at a TP of Rs 4,250,” the note said. Implying 27% upside.
Tech Mahindra
Target price: Rs 2,060
IT major Tech Mahindra has seen strong deal wins and a robust pipeline, which reflects demand acceleration. Axis Securities believe the stock could benefit with a pick-up in 5G technology. “We see 5G for Enterprise as a long-term opportunity and expect it to pick up in FY23 and beyond,” they said. Tech Mahindra has tanked 19% so far in 2022, but the target price suggests 43% upside.
Maruti Suzuki India
Target price: Rs 9,800
Maruti is the market leader in the domestic passenger vehicle market. Analysts believe easing chip shortage and new model launches will improve volumes for Maruti Suzuki India going ahead. “We expect gross margin to improve going forward, driven by calibrated price hikes and fall in price of some commodities,” they added. The stock is valued at 27x its FY24E EPS. In 2022, Maruti’s share price has gained 3.6% to trade at Rs 7,799 apiece, hinting 25% upside.
State Bank of India
Target price: Rs 720
The largest public sector lender in the country is a Domestic Systemically Important Bank as designated by the RBI. The bank continues to positively surprise on the asset quality front with slippages of 0.4%, restructured book at 1.2%, and lower SMA book during the third quarter of the fiscal year. “SBI continues to be the best play among PSU banks on the gradual recovery in the Indian economy given its healthy PCR, robust capitalization, a strong liability franchise, and an improved asset quality outlook,” said Axis Securities. The target price suggests 52% upside.
Hindalco Industries
Target price: Rs 630
Hindalco Industries is the metals flagship company of Aditya Birla Group. Analysts believe that in 2022, the Aluminum market is likely to be in deficit of ~1.4Mnt a second consecutive time (2021 deficit of ~0.9Mnt), mainly due to positive global demand growth expectation. High demand is expected to keep prices strong. Axis Securities said that they expect deleveraging to continue, further strengthening the company’s balance sheet.
Bharti Airtel
Target price: Rs 810
Bharti Airtel is one of the largest telecom companies in the world with operations spanning 18 countries and a subscriber base of more than 420 million. With the Average Revenue Per User (ARPU) improving for telecom companies in India, Bharti Airtel is only expected to strengthen its position. “Airtel is gaining business momentum backed by strong customer addition and market share gains. The management is confident of gaining further momentum with favourable macroeconomic conditions diving data consumption, increasing penetration in tier 2 and 3 cities, rising use of DTH and other digital services,” Axis Securities said. So far in 2022, the stock is down 3%. The target price hints at 20% upside potential.
