Indian stock market benchmark indices, Sensex and Nifty 50, declined around 1% each on Friday tracking weak global market cues. Traders also opted for profit booking at higher levels after the frontline indices hit a record high in the previous session. On Thursday, the BSE Sensex crossed 82,000 level and NSE Nifty 50 surpassed 25,000-mark.
Axis Securities said it continues to believe in the long-term growth story of the Indian stock market. With increasing Capex enabling banks to improve credit growth, the brokerage firm believes it is well-supported by the favourable structure emerging.
“With current valuations offering a limited scope for further expansion, an increase in corporate earnings will be the primary driver of the market returns moving forward. Hence, bottom-up stock picking with a focus on ‘growth at a reasonable price’ and ‘Quality’ would be keys to generating satisfactory returns in the next one year,” Axis Securities said in a report.
In its base case, Axis Securities maintained its March 2025 Nifty 50 target at 24,600 by valuing it at 20x on March 2026 earnings.
While the medium to long-term outlook for the overall market remains positive, the brokerage firm expects to see volatility in the short run with the market responding in either direction.
“Keeping this in view, the current setup is a ‘Buy on Dips’ market. Hence, any market correction on account of global challenges will be an opportunity to add to the equity investment,” it said.
In its bull case, Axis Securities has Nifty target for March 2025 at 27,000, while in its bear case, the Nifty 50 target is 19,700.
Axis Securities’ top largecap stock picks for August 2024 include ICICI Bank, Nestle India, State Bank of India, Varun Beverages, HDFC Bank, Bharti Airtel, TVS Motor Company, Cholamandalam Investment & Finance Company Ltd and HCL Technologies.
Here’s are Axis Securities’ top largecap stocks to buy in August:
ICICI Bank continues to deliver a strong all-round performance. We expect the bank to continue demonstrating a strong performance over the medium term delivering a consistent RoA/RoE of 2.2%/17-18% supported by strong credit and deposit growth, thereby maintaining steady C-D Ratio, stable asset quality metrics and adequate capitalisation. ICICI Bank remains our most preferred pick amongst banks, Axis Securities said.
Axis Securities remains positive on Nestle India as it has consistently delivered resilient performance. It believes Nestle India has all the right levers for growth in the long run. The brokerage firm has a target price of ₹2,800 apiece on Nestle India shares.
The brokerage firm believes SBI warrants a re-rating on account of the expected sustenance of RoA above the 1%+ levels and therefore it maintains a ‘Buy’ rating on the SBI stock with a revised SOTP-based target price of ₹1,010 per share.
Varun Beverages is expected to continue its strong growth momentum on account of successful strategic acquisition of the Beverage Company, continued focus on expansion in its distribution reach, mainly in rural areas and commissioning of multiple green field and brownfield facilities across geographies. The brokerage firm believes these investments are poised to support the company’s long-term growth objectives and profitability.
Axis Securities has a target price of ₹1,800 apiece on Varun Beverages shares.
HDFC Bank remains confident of growth picking up in the coming quarters. The bank’s focus on deposit-led credit growth would imply a slowdown in credit growth momentum. However, HDFC Bank’s pursuit of eyeing profitable growth bodes well from a RoA improvement perspective over the medium term. Consistent deposit growth and NIM improvement remain key re-rating levers for the bank, Axis Securities said.
It maintained a ‘Buy’ recommendation with HDFC Bank share price target of ₹1,950 apiece.
The broking firm’s ‘Buy’ rating on Bharti Airtel stock is retained due to the company’s superior margins, impressive subscriber growth, and increased 4G conversions. Axis Securities upgraded its target price on Bharti Airtel shares to ₹1,650.
Being well-placed among listed players, Axis Securities expects the company’s Revenue, EBITDA and PAT to grow at ~17%, 21% and 25% CAGR over FY24-26E. The brokerage firm said it likes TVS Motor because of its engineering and R&D capabilities, strong domestic retail network, export recovery, and increasing sales volumes from premium offerings in developed countries.
Based on this strong fundamental outlook, it expects the company to deliver a strong ROE, ranging between 27%-30% over the next few years.
Cholamandalam Investment & Finance Company | Target Price: ₹1,710
Given a strong start to FY25, the company remains well-positioned to sustain its growth momentum over FY25. With contributions from the non-VF businesses, we expect CIFC to deliver a strong ~26% CAGR AUM growth over FY25-27E. Backed by expectations on NIM improvement, moderating cost ratios and stable credit costs, CIFC is likely to deliver a strong earnings growth of ~30% CAGR over FY25-27E. RoA/RoE is expected to range between 2.6- 2.7%/21-22% over the same period, Axis Securities said.
It recommends a ‘Buy’ call on Cholamandalam Investment shares with a target price of ₹1,710 per share.
HCL Technologies is well-placed for encouraging long-term growth, given its multiple long-term contracts with the world’s leading brands. Enhanced revenue visibility instills confidence in its future business growth. However, rising concerns over business uncertainties in large economies and ongoing supply-side constraints present challenges for the company’s growth prospects moving forward, Axis Securities said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
