L&T, Axis Bank, Tata Motors among ‘top picks’ ahead of Budget: ICICI Direct
New Delhi: Brokerage house ICICI Direct has picked Larsen & Toubro shares as its number one pick in a list of 10 stocks ahead of the Union Budget FY23, to be tabled in the Parliament on February 1.
It picked the engineering and construction entity as its top pick on the back of the company’s strong order book and good revenue outlook.
Larsen & Toubro (L&T) deals in EPC (engineering, procurement and construction) projects, hi-tech manufacturing and services. It primarily operates in infrastructure, heavy engineering, defence engineering, power, hydrocarbon, and services business segments.
“We expect the stock to regain upward momentum, challenge all-time high and gradually head towards Rs 2,168 as it is the upper band of rising channel,” the brokerage said in its report titled ‘Techno Funda: Budget Top Picks’.
On Thursday, the company’s shares settled 0.6 per cent down at Rs 1,913, data showed.
The second in the list is Axis Bank, followed by Tata Motors and United Spirits.
“Axis Bank has a well-diversified loan book having strengths in both retail and corporate segments. The bank’s liability profile has improved significantly, which would be helpful in sustaining the margins at a healthy level. Its recent quarterly performance was healthy and the bank has multiple levers to improve return ratios going ahead,” it said.
The brokerage expects Axis Bank shares to move towards Rs 870 level — its all-time high — against its current price of Rs 777.
For Tata Motors, it expects the shares to head towards Rs 555 against the current Rs 496.
“It stays committed to its long-term vision of healthy profitability at JLR, positive free cash flow generation and consequent de-leveraging of the balance sheet starting FY23E. This we believe should substantially improve the return ratios matrix and drive re-rating at Tata Motors,” it said about the automaker.
“Recent price appreciation post securing equity investment in its domestic passenger vehicle EV business is a testimony to our positive stance,” it added.
For alcoholic beverage firm United Spirits, the stock is expected to move towards Rs 970, against Rs 843 presently.
“With its broad portfolio and focus on placing existing brands in the upper prestige segment, along with introduction of its several iconic brands from Diageo stable, USL is well placed to capitalise on the rapidly growing premiumisation trend in the sector,” the brokerage said.
Other top picks in the list are Bank of Baroda, Container Corporation of India, KPR Mills, National Aluminium, Bharat Dynamics, and KNR Constructions.