Cigarette maker ITC, engineering & construction giant Larsen & Toubro (L&T), private lender Axis Bank, tractor maker Mahindra & Mahindra and biscuit maker Britannia Industries are five Nifty constituents, whose shares hit all-time high levels in the first three months of 2023.
While ITC and L&T are still flirting with their record highs, M&M shares have plunged 17 per cent over their recent high while shares of Axis Bank and Britannia Industries declined up to 11 per cent.
Data, as publicly available with Trendlyne, suggests ITC has potential upside of 7 per cent, with an average target price of Rs 414.77. M&M with an average price target of Rs 1,530 suggests a 31 per cent potential upside; Axis Bank (30 per cent) and Britannia Industries (8 per cent) and L&T (3 per cent) also hint at upsides, as per Trendlyne.
Ahead of March quarter earnings, Elara Securities in its FMCG preview note finds ITC among its preferred picks. ITC, said Nuvama Institutional Equities, will continue to report robust numbers in cigarettes in the March quarter with 11 per cent YoY volume growth. It sees revenue for ITC rising 15.9 per cent YoY to Rs 4,856 crore on 5.1 per cent YoY rise in revenues at Rs 16,324 crore. Ebitda margin is seen expanding to 38.5 per cent from 33.6 per cent.
"We reiterate 'Buy' on ITC with an unchanged target of Rs 450. Attractive valuations at 23 times/21 times its FY24/FY25E EPS and double-digit earnings growth visibility make it our preferred pick in the large consumer goods space from a medium to long-term perspective," it said.
L&T, M&M and ITC are among Motilal Oswal Securities' large cap picks ahead of the fourth quarter results. The domestic brokerage has added M&M to its model portfolio as it find its risk-reward quite attractive, as core valuations are cheap at 12.5 times FY24 and 11 times FY25 core EPS.
"While the tractor business may see some near-term headwinds, the recent stock price correction is largely factoring in the weak tractor cycle in FY24E," it said.
Kotak Securities has Britannia Industries and M&M among its top investment ideas for April. The stock traded at 40.8 times FY25E EPS. The brokerage expects the biscuit maker to report 17.3 per cent growth in FY24 earnings and 14.9 per cent in FY25E. It has a fair value of Rs 4,775 on the stock
On L&T, Sharekhan said the company would likely exceed its order intake guidance and would easily achieve the upper end of its revenue growth guidance of 12-15 per cent, given its robust order book of Rs 3.9 lakh crore.
"Despite weak guidance for the core business margin in FY2023, we see multiple margin tailwinds in the medium to long term in the form of new orders secured at higher margins, declining commodity prices, increasing cost efficiencies, and easing supply chains," it said.
Axis Bank, meanwhile, is expected to report big losses in March quarter, mainly after earlier-than-expected completion of Rs 11,603 crore worth acquisition of Citi Bank's consumer business. The expensing of acquisition cost (including goodwill) would hit the March quarter's profit and loss account and net worth of Axis Bank, but should provide a boost to the bank's retail assets growth, said analysts.
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