ICICI Direct picks ITC, Axis Bank, others post Q2 earnings: Check here

After incorporating revised PAT numbers for index constituents post Q2FY23, brokerage firm ICICI Direct estimates witnessed an upgrade of 1.3%, largely for FY24E.

“Over FY22-24E, Nifty earnings are seen growing at 14.9% CAGR. Keeping the same PE multiple, we now value Nifty at 20,000 i.e. 21x PE on FY24E EPS of ₹950. On forward earnings front, BFSI space witnessed healthy earnings upgrade (led by corporate banks) while marginal upgrades were witnessed in the FMCG, IT & oil & gas space,” said ICICI Direct note stated.

AIA Engineering

AIA Engineering (AIA) is India’s largest manufacturer and supplier of high chrome wear, corrosion and abrasion resistance castings used in cement, mining and thermal power plants reported a strong set of Q2FY23 numbers.

Revenue was at ₹1228.7 crore, up 50% YoY. EBITDA was at ₹311.4 crore, up 92.3% YoY with margins at 23.4% expanding 515 bps YoY. PAT came in at ₹244.3 crore, up 77% YoY.

“We expect revenue, EBITDA at AIA to grow at a CAGR of 14.2%, 20.5%, respectively, in FY22-24E aided by sustained margins in the range of 20-22%,” the note stated.

The brokerage set a target price of ₹3,240 on the stock, which shows an upside potential of 20% from the current market price of ₹2,700 per share.

Axis Bank

Axis Bank posted robust business and operational performance while asset quality continued to improve during the quarter.

“Credit growth remained strong at 17.6% YoY to ₹7.30 lakh crore, driven by a 49% uptick in mid-corporate, 28% in SME and 22% in the retail segments. Healthy traction in advances coupled with a surge of 36 bps QoQ in margins led to strong jump of 31.1% YoY and 10.4% QoQ in NII to ₹10,360 crore,” note stated.

ICICI Direct values the bank at 2.3x FY24E ABV assigning target price at ₹1000 with upside potential of 14% from the current market price of ₹876 per share.

ITC

ITC continued its growth momentum across categories in Q2FY23. The cigarettes category has benefited (20% volume growth) from stable taxation, market share gains with aggressive trade promotions and newly launched premium brands in last one year. FMCG business is witnessing strong growth specifically in underpenetrated foods category & strong traction from education & stationary business (fully functional education institutions have propelled growth after two years).

“We maintain our BUY recommendation on the stock with a target price of ₹405 per share using SoTP valuation methodology which shows an upside potential of 14%,” the note stated.

Maruti Suzuki

Maruti Suzuki (MSIL) posted a robust performance in Q2FY23. Total operating income for the quarter came in at ₹29,931 crore, up 12.9% QoQ amid 10.6% QoQ growth in volumes at 5.2 lakh units. Margins surprised positively this time and were up 204 bps QoQ to 9.3%. Gross margins epanded 150 bps QoQ. Consequent PAT in Q2FY23 came in at ₹2,062 crore 2x QoQ, driven by higher operating margins as well as higher other income.

ICICI Directs maintain buy rating on MSIL with a target price of ₹11,200, which implies an upside potential of 25% from the current market price of ₹8,925 per share.

SBI

SBI reported a strong operational performance with NII growth at 12.8% YoY to ₹35183 crore, led by 30 bps QoQ improvement in NIMs (domestic) and high loan growth. Other income increased 8.1% YoY and jumped meaningfully QoQ as Q1FY23 was impacted by treasury losses. The bank reported gross credit growth at 20.8% YoY to ₹29.5 lakh crore (above estimates), led by corporate loans, which were up 21.18% YoY, 18.8% YoY growth in retail segment. Provisions declined 30.8% QoQ, 60.0% YoY to ₹3039 crore.

The brokerage firm set a target price of ₹700 on the stock, which shows an upside potential of 16% from the current market price of ₹605 per share.

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 taking any investment decisions