SBI, Tech Mahindra, Dalmia Bharat, PNC Infra And More - Top Stock Picks For January: Axis Securities

Axis Securities Report

Here are our top picks for January 2023:

State Bank of India - Among PSU banks, SBI with a healthy provision coverage ratio, robust capitalisation, a strong liability franchise, and an improved asset quality outlook, remains the best play on the gradual recovery of the Indian economy. We believe normalisation in credit costs and improved growth outlook should lead to double-digit return on equities of ~16.5% over FY23-25E.

Tech Mahindra Ltd. - We believe Tech Mahindra has a superior services mix and multiple long-term contracts that are well-spread across the verticals, reducing its dependency on any one vertical. Furthermore, we foresee healthy tractions in communications and enterprise verticals which will greatly accelerate the company’s revenue growth moving forward.

Dalmia Bharat Ltd. - The company reported encouraging revenue/volume growth of 14%/15% YoY in Q2 FY23. It reported Ebitda margins of 13% and Ebitda/tonne of Rs 655/ during the quarter. We believe Dalmia Bharat is well positioned to grow its revenue and profitability moving forward.

PNC Infratech Ltd. - The road sector is witnessing good development owing to increased government thrust on infrastructure investment. Furthermore, the tightening of norms in bidding on road projects by the National Highway Authority of India augurs well for an organised player such as PNC Infra. Considering strong and diversified order book position, healthy bidding pipeline, new order inflows, emerging opportunities in the construction space, the company’s efficient and timely execution and strong financial credence, we expect PNC Infra to report revenue/Ebitda/adjusted profit after tax CAGR of 17%/16%/23% respectively over FY21- FY24E.

Click on the attachment for the full list of Axis Securities' top stock picks for January 2023:

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