OPEN IN APP
Active Stocks
Fri Apr 12 2024 15:57:45
  1. Tata Steel share price
  2. 163.50 -1.00%
  1. NTPC share price
  2. 362.00 -0.32%
  1. ITC share price
  2. 430.10 -1.56%
  1. HDFC Bank share price
  2. 1,518.90 -1.10%
  1. State Bank Of India share price
  2. 766.75 -1.57%
Business News/ Photos / From Lupin to Federal Bank: Axis Securities lists 7 mid and smallcap picks for April

From Lupin to Federal Bank: Axis Securities lists 7 mid and smallcap picks for April

Mid and smallcap stocks consolidated in March after an exceptionally strong run in the last 1 year. Axis Securities expects some correction in mid/smallcaps in the near term and flows will likely shift to Largecaps. It has come out with a list of 7 mid/smallcap picks for April. Let's take a look.

Lupin: The brokerage has a target price of  <span class='webrupee'>₹</span>1,785 for the healthcare stock, indicating an upside potential of 10%. Lupin is poised for growth in the US market with unique products and a first-mover advantage, potentially boosting gross margins by 150bps over two years. Additionally, upcoming launches like Xyrem, gTolvaptan, and others, along with double-digit growth in India and a resurgence in the API business, indicate further value. Despite margins currently at 13%, below the industry norm of 22%, there's ample opportunity for improvement in the near future. Favorable macro conditions, including lower raw material prices and reduced logistics and fuel costs, are expected to benefit the industry, Axis said.

1/7Lupin: The brokerage has a target price of 1,785 for the healthcare stock, indicating an upside potential of 10%. Lupin is poised for growth in the US market with unique products and a first-mover advantage, potentially boosting gross margins by 150bps over two years. Additionally, upcoming launches like Xyrem, gTolvaptan, and others, along with double-digit growth in India and a resurgence in the API business, indicate further value. Despite margins currently at 13%, below the industry norm of 22%, there's ample opportunity for improvement in the near future. Favorable macro conditions, including lower raw material prices and reduced logistics and fuel costs, are expected to benefit the industry, Axis said.

Federal Bank: The brokerage has a target price of  <span class='webrupee'>₹</span>180 for the banking stock, indicating an upside potential of 20%. FB’s key strengths continue to be i) Sustained credit growth, ii) Strong liability franchise, iii) Improving fee income, iv) Gradually improving Cost Ratios and v) Stable credit costs backed by healthy asset quality metrics. The bank is working closely with the recruitment agency to identify the successor for the current CEO Shyam Srinivasan who is slated to retire in Sep’24, rationaled Axis. It expects FB to maintain its ROA/RoE at 1.3-1.4%/14-15% over FY24-26E.

2/7Federal Bank: The brokerage has a target price of 180 for the banking stock, indicating an upside potential of 20%. FB’s key strengths continue to be i) Sustained credit growth, ii) Strong liability franchise, iii) Improving fee income, iv) Gradually improving Cost Ratios and v) Stable credit costs backed by healthy asset quality metrics. The bank is working closely with the recruitment agency to identify the successor for the current CEO Shyam Srinivasan who is slated to retire in Sep’24, rationaled Axis. It expects FB to maintain its ROA/RoE at 1.3-1.4%/14-15% over FY24-26E.

CreditAccess Grameen: The brokerage has a target price of  <span class='webrupee'>₹</span>1,970 for the financial stock, indicating an upside potential of 37%. Axis prefers CAGrameen amongst the microfinanciers, despite its premium valuations. CAGrameen has continued to outperform its peers across parameters and is eligible to trade at a premium vs. its peers. It believes the company remains well-poised to deliver a strong performance backed by (a) Adequate capitalisation, (b) Improving operational efficiency, (c) a Strong margin profile despite offering the lowest rates in the industry, and (d) Robust asset quality, explained Axis. It expects CAGrameen to deliver a healthy ROA/RoE of 5.5%+/24-25% over the medium term and revise earnings estimates upwards by 3-5% over FY24-26E.

3/7CreditAccess Grameen: The brokerage has a target price of 1,970 for the financial stock, indicating an upside potential of 37%. Axis prefers CAGrameen amongst the microfinanciers, despite its premium valuations. CAGrameen has continued to outperform its peers across parameters and is eligible to trade at a premium vs. its peers. It believes the company remains well-poised to deliver a strong performance backed by (a) Adequate capitalisation, (b) Improving operational efficiency, (c) a Strong margin profile despite offering the lowest rates in the industry, and (d) Robust asset quality, explained Axis. It expects CAGrameen to deliver a healthy ROA/RoE of 5.5%+/24-25% over the medium term and revise earnings estimates upwards by 3-5% over FY24-26E.

JTL Industries: The brokerage has a target price of  <span class='webrupee'>₹</span>275 for the materials stock, indicating an upside potential of 50%. Post strong Q3FY24 sales volumes, FY24 sales volume to reach 3.5 lk tonnes, up 45% YoY, ahead of earlier growth guidance of 30% YoY. In Q4FY23, the VAP (value added products) share could bounce back to 40% (35% for FY24) from 20% in Q3FY24, as the maintenance of the galvanising pot is over, said Axis. 0.56 MT to 1 MT expansion is on track and will be complete before FY25. DFT facilities of 2 lk tonnes out of the total incremental capacity of 4 lk tonnes will start from Q1FY25, it added

4/7JTL Industries: The brokerage has a target price of 275 for the materials stock, indicating an upside potential of 50%. Post strong Q3FY24 sales volumes, FY24 sales volume to reach 3.5 lk tonnes, up 45% YoY, ahead of earlier growth guidance of 30% YoY. In Q4FY23, the VAP (value added products) share could bounce back to 40% (35% for FY24) from 20% in Q3FY24, as the maintenance of the galvanising pot is over, said Axis. 0.56 MT to 1 MT expansion is on track and will be complete before FY25. DFT facilities of 2 lk tonnes out of the total incremental capacity of 4 lk tonnes will start from Q1FY25, it added

CIE Automotive India:The brokerage has a target price of  <span class='webrupee'>₹</span>565 for the automotive stock, indicating an upside potential of 22%. Axis is bullish on the company's growth prospects, driven by (a) Operational Performance and EV product portfolio expansion, (b) Strong orderbook, particularly in the European EV market, and steady growth in Indian/Mexican operations, (c) Robust Free Cash Flow generation, and (d) Capacity expansion to meet demand from Indian OEMs. European operations' growth is expected to recover gradually from H2CY24. We anticipate a consolidated Revenue/EBITDA/PAT CAGR of 8.2%/10.6%/15.8% over CY23-26E. 

5/7CIE Automotive India:The brokerage has a target price of 565 for the automotive stock, indicating an upside potential of 22%. Axis is bullish on the company's growth prospects, driven by (a) Operational Performance and EV product portfolio expansion, (b) Strong orderbook, particularly in the European EV market, and steady growth in Indian/Mexican operations, (c) Robust Free Cash Flow generation, and (d) Capacity expansion to meet demand from Indian OEMs. European operations' growth is expected to recover gradually from H2CY24. We anticipate a consolidated Revenue/EBITDA/PAT CAGR of 8.2%/10.6%/15.8% over CY23-26E. 

Westlife Foodworld: The brokerage has a target price of  <span class='webrupee'>₹</span>930 for the QSR stock, indicating an upside potential of 16%. Axis maintains a positive outlook on WLDL, citing its strong history of delivering impressive Revenue/EBITDA growth, averaging 17%/51% over FY16-20. This growth was fueled by new product launches and cost optimization efforts, leading to annual cost reductions of 100-200 basis points. Looking forward, Axis expects WLDL to sustain this momentum, projecting a robust Revenue/EBITDA CAGR of 28%/43% over FY22-25E (Post Ind. AS), driven by the same growth drivers. (Hemant Mishra/Mint<br />)

6/7Westlife Foodworld: The brokerage has a target price of 930 for the QSR stock, indicating an upside potential of 16%. Axis maintains a positive outlook on WLDL, citing its strong history of delivering impressive Revenue/EBITDA growth, averaging 17%/51% over FY16-20. This growth was fueled by new product launches and cost optimization efforts, leading to annual cost reductions of 100-200 basis points. Looking forward, Axis expects WLDL to sustain this momentum, projecting a robust Revenue/EBITDA CAGR of 28%/43% over FY22-25E (Post Ind. AS), driven by the same growth drivers. (Hemant Mishra/Mint
)

PNC Infratech: The brokerage has a target price of  <span class='webrupee'>₹</span>436 for the industrial stock, indicating an upside potential of 17%. The Road sector is witnessing encouraging development owing to increased government thrust on infrastructure investment. Furthermore, diversification into Railways augurs well for the company implying lower dependence on road projects, noted Axis. Q3FY24 saw the company achieve solid Revenue/EBITDA/PAT growth of 11%/15%/17%, in line with expectations. With a strong order book, healthy bidding pipeline, new project inflows, and opportunities in construction, coupled with efficient execution and strong financials, PNCIL is poised for a Revenue/EBITDA/APAT CAGR of 11%/11%/12% respectively over FY23-FY26E, it forecasts.

7/7PNC Infratech: The brokerage has a target price of 436 for the industrial stock, indicating an upside potential of 17%. The Road sector is witnessing encouraging development owing to increased government thrust on infrastructure investment. Furthermore, diversification into Railways augurs well for the company implying lower dependence on road projects, noted Axis. Q3FY24 saw the company achieve solid Revenue/EBITDA/PAT growth of 11%/15%/17%, in line with expectations. With a strong order book, healthy bidding pipeline, new project inflows, and opportunities in construction, coupled with efficient execution and strong financials, PNCIL is poised for a Revenue/EBITDA/APAT CAGR of 11%/11%/12% respectively over FY23-FY26E, it forecasts.

OTHER GALLERIES
Recommended For You
Switch to the Mint app for fast and personalized news - Get App