Here Are The Top Stock Picks For March 2024 By Axis Securities

Axis Securities Report

Here are our top picks for March 2024:

SBI - ROA Delivery Of 1% To Continue

Among public sector banks, State Bank of India remains the best play on the gradual recovery of the Indian economy on account of its healthy provision coverage ratio, robust capitalisation, strong liability franchise, and improved asset quality outlook.

We believe despite the margin pressures, SBI remains well poised to deliver return on asset/return on equity of 1%/15-17% over FY24-25E, supported by stable credit costs and steady net interest margins.

We maintain our 'Buy' rating on the stock with a target price of Rs 860/share (core book at 1.4 times September-25E and subsidiaries at Rs 183/share)

Key risks:

Significant slowdown in credit growth.

Bharti Airtel - Highest ARPU In The Industry

Our 'Buy' rating on the stock is retained due to Bharti Airtel Ltd.'s superior margins, impressive subscriber growth, and increased 4G conversions. The stock is valued at Rs 1,400/share through a SOTP valuation, suggesting a substantial upside of 25% from the current market price.

Key risks:

Competitors may eat market share resulting in loss of sustainable revenue.

CreditAccess Grameen - Strong Growth Runway, Premium Valuations Justified

We prefer CreditAccess Grameen Ltd. amongst the microfinanciers, despite its premium valuations. CreditAccess Grameen has continued to outperform its peers across parameters and is eligible to trade at a premium versus its peers.

We believe the company remains well-poised to deliver a strong performance backed by-

1. Adequate capitalisation,

2. Improving operational efficiency,

3. strong margin profile despite offering the lowest rates in the industry, and

4. robust asset quality.

We expect CreditAccess Grameen to deliver a healthy return on asset/return on equity of 5.5%+/24-25% over the medium term. We revise our earnings estimates upwards by 3-5% over FY24-26E.

Key risks:

1. moderation in GLP growth momentum,

2. Inability to scale up new products and business in new geographies

CIE Automotive - Buoyant Indian Operations, Recovery In EU Expected

We like CIE Automotive Ltd.’s growth story driven by-

1. operational performance and focus on building an EV product portfolio,

2. Healthy orderbook position skewed towards EVs in Europe and steady growth in Indian/Mexican operations,

3. Strong free cash flow generations capabilities,

4. Capacity building to meet demand from India OEMs.

The growth trajectory in EU operations is expected to gradually recover from H2 CY24 as per the management. Keeping these factors in view, we forecast the company to post consolidated revenue/Ebitda/profit after tax compound annual growth rate of 8.2%/10.6%/15.8% over CY23-26E.

We like CIE Automotive based on its strong execution capabilities and reiterate our 'Buy' rating on the company at a one-year forward PE multiple of 24 times on Indian operations (aided by overall industry growth and demand-backed capacity expansions) and 10 times on moderate European operational earnings for CY25 earnings per share. Based on this, we arrive at our SOTP-based target price of Rs 565/share.

Key risks:

1. Higher Interest rate,

2. Business skewed towards ICE vehicles.

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