Maruti Suzuki, L&T, ITC, Bharti Airtel, IndusInd Bank: Which large-cap stock is a better pick post Q2 result?
The September quarter earnings season has crossed the halfway mark, with 28 companies from the Nifty pack announcing their quarterly numbers so far. Barring six companies from the metal, cement, auto, IT and power sector, other businesses have managed to report growth in net profit on a year-on-year basis. As many as 18 companies in the benchmark equity index have managed to report over 10 per cent growth in the bottom line on a YoY basis. Here are a few large-cap stocks, which are looking attractive to analysts post Q2 results.
Maruti Suzuki
The country’s largest car maker beat estimates to report four-fold growth in net profit for the second quarter ended September 30 on the back of 48 per cent growth in gross sales during the quarter under review.
Brokerage Sharekhan is positive on Maruti Suzuki with a target price of Rs 10,965, indicating an upside of 15 per cent from the current market price.
“Maruti Suzuki (MSIL) reported a strong set of numbers for Q2FY2023, led by volume growth, operating leverage benefits, and softening of raw-material prices. MSIL’s market share in the SUV segment is set to improve, given the initial success of Brezza and Grand Vitara. The company plans more launches in the SUV segment going forward,” the brokerage said in a report.
Bharti Airtel
The telecom major posted a 89.1 per cent YoY rise in consolidated net profit at Rs 2,145.20 crore compared with Rs 1,134 crore in the corresponding quarter last year.
Global brokerage firms Morgan Stanley, Citi and JP Morgan are positive on Bharti Airtel with a target price of Rs 825, Rs 955 and Rs 860, respectively. “Strong revenue growth in India business across multiple segments, better-than-expected Arpu (Average revenue per user) in India mobile are among key positives,” Morgan Stanley said.
Axis Bank
The private sector lender posted nearly 70 per cent YoY growth in net profit in Q2FY23, thanks to a sharp fall in provisions.
YES Securities last month gave a ‘Buy’ rating to Axis Bank post Q2 result. It set a target price of Rs 1,135 for Axis Bank. The figure shows a potential upside of 29 per cent from the current market price of Rs 877. Emkay Global Financial Services also gave a ‘Buy’ rating to Axis Bank with a target price of Rs 1,110.
“Factoring-in the better and faster than expected delivery on margins, coupled with contained opex, we expect the bank to clock healthy core-profitability CAGR at 25 per cent over FY23-25E,” Emkay Global said.
IndusInd Bank
IndusInd Bank posted a 57 per cent YoY growth in the September quarter net profit to Rs 1,805.22 crore on the back of a rise in loan disbursement and net interest income. Brokerage LKP Securities has fixed a target price of Rs 1,474 for IndusInd Bank. “The bank reported a strong set of numbers led by NIMs expansion (4.24 per cent) and lower provisioning expenses. We believe, the bank has made adequate provisioning against the potential stress and expect further credit cost normalisation. Moreover, a healthy CDR (82 per cent) gives further room for credit growth. Thus we have a positive outlook on the bank with a ‘Buy’ rating,” LKP Securities said.
ITC
The cigarette-to-hotel conglomerate registered a 24 per cent YoY rise in consolidated net profit at Rs 4,619.77 crore for the quarter ended September 30.
Brokerage KR Choksey set a target price of Rs 400 for ITC post-Q2 results. “ITC is seeing broad-based growth across segments, markets, and channels. Expected pick-up in consumption in the coming quarters led by softening inflation, normal monsoons and proactive measures taken by the government and RBI augurs well for ITC,” KR Choksey said.
“We continue to like ITC for its competitive advantage in terms of sourcing, market share gains from illicit trade in the cigarettes business, increasing penetration of the FMCG business, innovative launches in FMCG and packaging businesses, and revival of the hotels business,” it added.
Larsen & Toubro
Larsen & Toubro (L&T) posted a 22.50 per cent YoY growth in consolidated net profit at Rs 2228.97 crore for the quarter ended September 30, 2022. The figure stood at Rs 1819.45 crore in the same quarter last year.
Prabhudas Lilladher retained a ‘Buy’ rating on L&T with a target price of Rs 2384. “We believe that L&T is well-placed to benefit from overall diversified tender prospects with better order conversion in the domestic market, significant traction in capex from oil exporting countries mainly in the hydrocarbon segment and expected uptick in private capex,” the brokerage said.
“We expect L&T to report revenue and PAT CAGR of 10.2 per cent and 18.2 per cent from FY22 to FY25,” Prabhudas Lilladher said.
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