Stocks to Buy: ICICI Bank, SBI, L&T, Bharti, ONGC among top 26 bottom up picks by Jefferies for June

Stocks to Buy:  ICICI Bank, Axis Bank, State Bank of India, Shriram Finance, Aavas Financiers, Eicher motors, TVS Motor, Mahindra and Mahindra, Hindalco Industries, Larsen & Toubro, NTPC, JSW Energy, Hindustan Aeronautics Ltd, Oil and Natural Gas Corporation (ONGC), Godrej Properties, Macrotech Developers (Lodha), Bharti Airtel, Honasa Consumer, Godrej Consumer Products Ltd , Nykaa ( FSN E-Commerce Ventures Ltd, Mankind Pharma , Apollo Hospitals Enterprises Ltd, Ambuja Cements, Amber Enterprises Ltd, V-Guard Industries and PI Industries. 

Top 6 Underperform ideas of Jefferies connected the different manus see Tech Mahindra, Asian Paints, Gujarat Gas, Hindustan Petroleum Corporation Ltd, Dr Reddy's Laboratories that has replaced Laurus labs and Biocon

New additions -The caller additions successful the database of apical 26 picks see stocks arsenic  Aavas Financiers, Mahindra & Mahindra, Godrej Consumer Products Ltd.  Hindustan Aeronautics Ltd has replaced Thermax , Nykaa oregon FSN E-Commerce Ventures Ltd that has replaced Zomato,, Mankind Pharma that has replaced Piramal Pharma, portion V-Guard Industries has replaced Kajaria Ceramics Ltd & Supreme industries

Also Read- Stock successful focus: Rajesh Palviya of Axis Securities recommends Manappuram Finance, Century Plyboards, and RIL today

Banks and Financials-Among Bank portion Jefferies analysts consciousness that Axis Bank Valuation astatine 1.7x adjusted Price to Book Value based connected FY26 estimates is charismatic and they are 20% discount to ICICI Bank, hence Axis offers a bully introduction point. 

However for ICICI Bank they accidental that slope sustaining ROE (Return connected Equity) of 18% and mid-teen CAGR (Compound yearly maturation rate) successful nett implicit FY24-27 aided by steadfast indebtedness growth, operating efficiencies and manageable recognition costs, volition enactment premium valuations. 

For SBI Jefferies support Buy with a terms people of Rs980. 

Among different Financials Shriram Finance is pegged to present 17% Earnings CAGR and 16% Return connected Equity implicit FY24-27. For Aavas Financials a pick-up successful maturation and autumn successful operating expenses strength are imaginable catalysts arsenic Jefferies has fixed people terms of Rs2,000

Automobiles: TVS Motors, Eicher Motors and Mahindra & Mahindra are apical picks successful the space

 For TVS Motors portion Jefferies says that premium multiples volition prolong connected beardown maturation outlook and improving franchise, for Eicher Motors they expect a beardown 17% EPS CAGR implicit FY24-27 (Jefferies FY25-26 EPS are 6-9% supra Street estimates for Eicher).  

For Mahindra & Mahindra, Jefferies analysts accidental that M&M halfway FY25 estimated terms to net astatine 28 times is higher than its humanities mean of 14 times, but inactive 10% beneath blended adjacent mean of Maruti Suzuki (autos) and Escorts (tractors) contempt its ascendant tractor franchise and rising marketplace stock successful Passenger Vehicles.

Also Read- BHEL banal soars 4% aft institution secures ₹13,300 crore thermal powerfulness project

Metals- Hindalco Industries remains among apical picks of Jefferies

For Hindalco Jefferies analysts consciousness that it is trading astatine a 5% discount to the blended mean Enterprise Value by Ebitda of its peers versus semipermanent mean of 8% premium, which Jefferies judge should reverse. Ebitda stands for Earnings earlier involvement Tax depreciation and amortisation

Capital Goods & Logistics- L&T , HAL, NTPC are among their picks

For L&T, Jefferies analysts judge that the highest of noncore investments is down the institution and that L&T has imaginable to astonishment connected execution and bid travel expectations. 

For HAL, Jefferies says that it has exertion entree and should spot 3 times emergence successful implicit profits implicit 6 years connected a indebtedness escaped equilibrium expanse with 23% positive ROE.

Jefferies people terms for NTPC of Rs445 values the institution astatine 2.3 times consolidated Price to Book Value (September 26 estimates), successful enactment with the mean of the past upcycle.

Energy & Chemicals- 

ONGC successful lipid and Gas is among Jefferies apical picks. ONGC Valuation are favorable connected aggregate parameters- comparative to its ain trading average, comparative valuation compared to planetary upstream peers and steeper discount to Nifty compared to the Long Term mean arsenic per Jefferies.

For PI Industries successful the chemicals space, Jefferies feels that valuation is 10% beneath Long word mean guardant Price to Earnings offering charismatic risk-reward.

Real Estate

Godrej Properties remains a cardinal prime of Jefferies. Jefferies believes that consistently beardown pre-sales show and betterment successful profitability and currency flows volition thrust a re-rating successful the stock. At 20x embedded nett net (FY25 pre-sale), Godrej Properties banal is not excessively expensive.

Macrotech Developers (LODHA) is different cardinal prime and Jefferies says that the completion of respective ample infrastructure projects adjacent its onshore bank, alongside planned launches of premium priced products, could thrust a re-rating of its onshore values.

Consumer- 

Honasa Consumer remains cardinal prime of Jefferies expects Honasa to scope double-digit Ebitda margins by FY26 estimates versus 7% successful FY24.

Godrej Consumer connected the different manus is is apt to present 19% EPS CAGR implicit FY24-27, , which should beryllium 1 of the champion successful Jefferies coverage. It is apical prime of Jefferies successful staples.

Nyka (FSN E-commerce Ventures) is apt to present ~19% EPS CAGR implicit FY24-27, which should beryllium 1 of the champion successful our coverage, says Jefferies. It is our apical prime successful staples.

Pharma & Healthcare

Apollo Hospitals - Jefferies expects Apollo to timepiece 25% Ebitda CAGR during FY24-26, highest successful its infirmary sum universe.

Mankind Pharma- Jefferies expect Mankind to timepiece gross and Ebitda CAGR of 12.5% and 17.5% during FY24-26 and worth the institution astatine 35 times FY26 EPS with people terms of ₹2,430

Cement

Jefferies expects Ambuja Cements profitability for FY24 to FY26 to improve, driven by: 1) industry-wide outgo easing; 2) debased basal payment arsenic FY23 profitability was negatively impacted by absorption modulation signifier and  3) bid of ratio initiatives and adding of caller capacities.

Disclaimer: The views and recommendations made supra are those of idiosyncratic analysts oregon broking companies, and not of Mint. We counsel investors to cheque with certified experts earlier taking immoderate concern decisions

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Published: 28 Jun 2024, 10:49 AM IST