Nine Axis Securities prices for Samvat 2079 from sectors like utilities to cables and wires.

Axis Securities has highlighted nine stocks for the upcoming Samvat 2079 in various themes.

The coming new year looks brighter and more promising, according to the brokerage. It believes that the Indian market is likely to perform well in Samvat 2079 led by favorable macroeconomic factors and better-than-historic fundamentals of Indian corporates.

The NSE 500 global net and cumulative profit in the last four quarters touched a record high of Rs 10 lakh as loss-making sectors also turned profitable. With improving Return-on-Equity for the broader market and asset quality of the bank, Axis Securities expects the strong performance of Indian equities to continue in the coming new year as well.

Based on these difficult conditions, the brokerage has highlighted six main themes for the coming new year:

  • Houses and Banks: On the improvement of the economic outlook and increased credit growth
  • Usage: Adjusting to pre-covid levels. The QSR is well positioned to generate good returns
  • Home Improvement: Pick-up in real estate and housing needs
  • Commercial Vehicles: The pace of demand may be constant
  • Travel and Tourism: Increased speed after taking in the vaccine vehicle
  • Balance sheet corporate power
  • Based on these themes, the brokerage has highlighted nine stock picks for the upcoming Samvat:

    Axis Securities expects the overall number of ITCs to remain stable. Strengthening distribution in rural and semi-urban areas and expanding its portfolio with new launches can increase ITC’s reach among its peers. The brokerage believes that the stock’s current valuation, 4-5 percent dividend yield, and growth in other businesses make ITC a better play in the FMCG space where valuations are high.

    Sundaram Finance has managed asset quality stress due to its conservative approach to building its loan book in uncertain times. Axis Securities believes that a good mix of corporate and secured credit and strong underwriting practices will support performance in the current CV cycle. The company also believes that the company has all the right levers to grow its profitability in the next two financial years.

    Ashok Leyland is well positioned to benefit from the turnaround in the Commercial Vehicles space, particularly in buses and multi-ton trucks with a large market share. It expects a recovery in demand and gradual price increases to improve the long-term improvement. Subsidy cost pressure will support margin improvement in the next quarter.

    Axis Securities sees a long way to growth for this retail-focused home finance company. It expects growth in Assets Under Management (AUM) of around 30 percent in the medium term. The brokerage also expects the company to deliver the best possible Return on Assets in the medium term, supported by high Interest Margins, a cost-effective structure, and controlling borrowing costs.

    Axis Securities expects India’s Average Hotel Room Rate and Occupancy rates to improve by 400 basis points for the current and next fiscal year. Therefore, it expects a significant improvement in the recognition and severity of the hotel chain. Over the next two financial years, Indian Hotels is likely to post a consolidated revenue growth of 25.7 percent and a consolidated cash flow of Rs 1,000 crore – 1,500 crore per annum.

    Axis Securities expects Nocil to be the main beneficiary of China’s alternative title in the rubber chemical space in India. High demand and reduced pressure on raw materials are other hurricanes. The brokerage expects the company’s profitability to improve and expects consolidated revenue growth of 24 percent over the next two years.

    IDFC First Bank’s retail book is expected to sustain loan growth in the coming quarters, according to Axis Securities, which also believes the stock is poised for a re-rating due to improving asset quality. It expects loan book growth of 20-25 percent in the next two years, focusing on the retail segment. The brokerage also says the bank is well positioned to grow at a 50 percent CASA ratio.

    Westlife Development ranks among Axis Securities’ picks for next Samvat due to multi-year growth opportunity within the QSR space. The company plans to open more than 200 stores in the next 3-4 years, implying a strong need for further expansion in cities and towns. The brokerage also expects the company’s margins to be in the range of 14-15 percent.

    With a market share of 24 percent, Polycab has maintained its leadership in the Cables and Wires segment. It is also poised to gain market share from unorganized players in both cables and FMEG segment due to better financial strength, better distribution and strong brand recall. Axis expects demand revival, new product launches, product premiums and increased exports to support growth.

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