Nifty, Sensex tank 1% amid recession fears; ICICI Bank, SBI among JM Financial’s 2023 stock picks

Nifty, Sensex tank 1% amid recession fears; ICICI Bank, SBI among JM Financial’s 2023 stock picks

The Indian share market tanked over 1% on Tuesday as investors shied away from equities fearing a recession in the wake of the central bank’s liquidity tightening. Markets have been volatile over the past few sessions and analysts see persistent volatility going forward as well. Analysts believe that the recent correction is a result of institutional investors being concerned about the premium valuations despite the robust fundamentals. Amid uncertainty, domestic brokerage firm JM Financial Services has released its top picks for the year 2023. Private Bank stocks such as ICICI Bank, Axis Bank, and PSU Bank stocks SBI are among the top bets.JM Financial 2023 stock picksICICI BankCMP: Rs 908 | Target: Rs 1,100 | Upside: 21% | Time Frame: 12 months

“ICICI Bank firmly remains on a path to deliver 2.0%/17.0% avg RoA/avg RoE over FY23-24E with stable asset quality and industry-leading growth. ICICI Bank has outperformed Bank NIFTY over the last 3/6/12 months and we expect this outperformance to continue,” the brokerage said.

Bajaj FinanceCMP: Rs 6,650 | Target: Rs 8,000 | Upside: 20% | Time Frame: 12 months

“Bajaj Finance is currently reporting strongest ROAs (for 3 quarters now) in over a decade, led by strong revenue profile, low credit costs even as it continues to invest significantly on the digital initiatives. Consequently, even as credit costs may normalize medium-term and liability costs may inch up, we believe the company has levers to protect its RoA profile towards higher end of its target range of 4-4.5%. We expect BAF’s premium valuations to sustain,” JM Financial analysts said.

Axis BankCMP: Rs 940 | Target: Rs 1,100 | Upside: 17% | Time Frame: 12 months

“We believe Axis Bank’s transformation is in the right direction with sequential improvement in NIMs and expansion in return profile. Current core valuations of 1.8x FY24E BVPS are inexpensive and we expect the discount to larger private sector peers as Axis Bank starts reporting strong operating performance on a more sustainable basis.

Maruti SuzukiCMP: Rs 8,500 | Target: Rs 11,000 | Upside: 29% | Time Frame: 12 months

“After two consecutive years of volume decline, we believe that Maruti Suzuki is at the cusp of a new upcycle. New model launches in the coming months, healthy order book and commodity/currency tailwinds will further support strong performance going ahead.”

HindalcoCMP: Rs 460 | Target: Rs 545 | Upside: 18% | Time Frame: 12 months

The company continues to witness stable demand for sustainable aluminium solutions, given positive demand outlook across end-user segments. High levels of pent-up vehicle demand and low dealer inventory to ensure robust demand across the automotive segment, according to analysts.

UPLCMP: Rs 770 | Target: Rs 1,060 | Upside: 38% | Time Frame: 12 months

“The company has maintained its guidance of ~12-15% revenue and ~15-18% EBITDA growth in FY23E. We have kept our estimates unchanged and maintain BUY with Target price of Rs 1,060 per share as we believe UPL stands to benefit from robust crop protection demand.”

PatanjaliCMP: Rs 1,233 | Target: Rs 1,800 | Upside: 46% | Time Frame: 12 months

“We expect Patanjali’s food & nutraceutical business to be major growth driver for next decade. Edible oil business is expected to grow in single digit and Palm oil business will start contributing from 5th year onwards.”

M&M FinancialCMP: Rs 235 | Target: Rs 275 | Upside: 17% | Time Frame: 12 months

“The outlook on credit cost ahead looks positive. On other operating parameters, 2HFY23 appears reasonably on the strong front in terms of NIMs, lower opex and lower credit cost,” said JM Financial. The brokerage has a buy call on the stock with a target price of Rs 275 per share.

Akzo NobelCMP: Rs 2,283 | Target: Rs 3,200 | Upside: 40% | Time Frame: 12 months

“With volumes improving due to measures taken to improve market share & margin headwinds receding, we believe stock is likely to re-rate significantly in FY24,” the brokerage said.

Sapphire FoodsCMP: Rs 1,380 | Target: Rs 1,750 | Upside: 27% | Time Frame: 12 months

“With Pizza Hut on strong footing, likely bounce back in KFC-India business with non-veg consumption normalizing, along with some moderation in inflationary pressures and operating leverage should result in much better performance in going ahead. Sapphire Foods remains our preferred pick in QSR space,” analysts said in the report.

Arvind FashionCMP: Rs 325 | Target: Rs 400 | Upside: 23% | Time Frame: 12 months

“The company is on track to its profitable-growth target, working-capital optimization, de levered B/S and rising cash-flows. With better full-price sales and operating leverage, it expects margins to rise,” JM Financial said.

Ujjivan Financial ServicesCMP: Rs 293 | Target: Rs 400 | Upside: 37% | Time Frame: 12 months

“While the stock has run up by ~60% in the last 6M, on the back of steadily improving asset quality and return metrics, we believe sustained delivery on this performance along with a gradual improvement in liability franchise are critical for further rerating of the stock,” it said.

Gokaldas ExportsCMP: Rs 385 | Target: Rs 500 | Upside: 30% | Time Frame: 12 months

“Gokaldas Exports is well placed to ride the growth in India’s apparel sector after regaining the confidence of global retailers (GAP, Columbia & Banana Republic). The company’s growth capex of Rs 3.7bn over FY22-24 will ensure strong double-digit growth CAGR in revenues. Increasing scale/focus on cost optimization will further improve margins.”

(The stock recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)