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Nifty to hit 17,200 by Dec 2021; ICICI Bank, Bharti Airtel, others may rally up to 36% as earnings recover

Axis Securities has raised its earnings estimates for FY21, FY22, FY23 by 9 per cent, 8 per cent and 7 per cent, respectively. Image: Reuters

February 2021 proved to be a roller coaster ride for the Nifty 50 index, where the first trading day of the month saw a 5 per cent rise in the index, while the last day witnessed a correction of 4 per cent. The 2020 pandemic rally was driven by significant FII buying on the back of multiple factors including the low-interest rate regime. Research and brokerage firm Axis Securities said that the upward shift of interest rates will present short term challenges for the market but the structural growth story for India will remain intact. The brokerage firm has upgraded its December target by 7 per cent to 17,200. Corporate earnings for the October to December quarter were quite robust with 38 out of the 50 Nifty companies beating consensus expectations.

Axis Securities has also raised its earnings estimates for FY21, FY22, FY23 by 9 per cent, 8 per cent and 7 per cent, respectively. It sees a consistent earnings recovery as this is the second consecutive quarter of a strong earnings upgrade.

Top stock picks:

ICICI Bank: The brokerage firm has given an ‘overweight’ rating to the stock, with a target price of Rs 666, implying a 9 per cent upside. Higher loan growth, improving operating profits, strong provision buffer coupled with a strong deposit franchise will help ROAE/ROAA expansion over FY22-23E for the bank.

Manappuram Finance: Manappuram Finance is amongst the leading gold loan NBFCs in India. It will take Manappuram Finance stock to jump 19.5 per cent from the current level to touch target price of Rs 207 pegged by Axis Securities.

Can Fin Homes: Can Fin Homes has a buy rating with a target price of Rs 573, a 22 per cent rally in stock price. Axis Securities expects loan growth to pick up gradually as the company embarks to push growth through competitive rates and new geographies.

Federal Bank: Kerala-based private sector bank has an ‘overweight’ rating with a target price of Rs 93 apiece. According to the domestic research firm, strong underwriting standards, changing loan mix and strong retail deposit franchise, will help valuation to improve from current levels.

NOCIL Ltd: A jump of 12 per cent will be needed for NOCIL to hit the target price of Rs 202 apiece. FY22E could see a healthy performance on the back of improving opportunities in the export markets and demand traction in domestic markets.

Varun Beverages: Axis Securities has given a target price of Rs 1,230 to Varun Beverages. Healthy outlook on the upcoming season and tie-ups with leading and fast-growing QSR players in India likely to propel Varun Beverages growth into a new orbit going ahead.

Relaxo Footwears: The target price for Relaxo Footwears is Rs 1,005 apiece. The brokerage firm remains positive on the stock from a long term perspective given immense growth potential.
Amber Enterprises: The brokerage firm sees a rally of over 10 per cent in the Amber Enterprises stock with a target price of Rs 3,614 apiece. The near term order outlook remains strong for RAC as well as mobility solutions.

Endurance Technologies: Endurance Technologies has a revised target price of Rs 1,714, a 21 per cent return. The domestic brokerage firm said that the share of premium bikes in the overall 2W portfolio has been rising.

Steel Strip Wheels: Axis Securities has pegged a target price of Rs 877, implying an upside of 36 per cent from current levels. Being in an oligopoly market, Steel Strip Wheels commands leadership with a market share of around 55 per cent in steel wheel rims and around 20 per cent in alloy wheels.

Lupin Ltd: Lupin has a target price of Rs 1,135 per share. The pharmaceutical company has taken several steps to improve overall EBITDA margins with the launch of value-added products and alternate vendor strategies to bring down the overall procurement costs.

Tech Mahindra: The brokerage firm sees a 17 per cent upside in Tech Mahindra stock. The company’s management is expecting a strong recovery from supply-side constraints and expects recovery because of the ramp-up in new deal wins.

Bharti Airtel: The telecom giant Bharti Airtel will require to jump 27 per cent to hit the target of Rs 676 apiece. The report noted that regulatory challenges are well known and Bharti Airtel is well-capitalized to deal with the payouts as it has raised enough capital.

HCL Technologies: HCL Technologies has a target price of Rs 1,088, a gain of 17 per cent. HCL Tech won 13 transformational deals in the current quarter. Deal wins for the quarter remained strong and showed a growth of 13 per cent sequentially.

JK Lakshmi Cement: The stock is currently trading at 5.5x FY22E and 4.4x FY23E EV/EBITDA. Axis Securities recommends to ‘buy’ with a target price of Rs 400 per share valuing JK Lakshmi Cement at 6.5x of its FY22E EV/EBITDA.

(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)

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