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Earnings Play: Confused about where to invest? Axis Securities lists its top 10 stock picks

Updated : April 13, 2021 02:43 PM IST

Axis Securities expects Q4FY21 to be a stellar quarter representing a continuation of a sequential recovery driven by a gradual economic re-opening with robust demand reflecting a strong pick-up in cyclical sectors, the domestic brokerage said in a note. The positive earnings momentum of the last two quarters is likely to sustain in Q4FY21 led by sharp demand revival across segments. This is further supported by the lower base of the last year, amplifying the effect of earnings growth, it added. Margins for the quarter are, however, likely to be impacted due to rising input costs. The brokerage has come up with its top 10 buys for the March quarter earnings play:

 ICICI Bank:  As per the brokerage, overall business growth to be aided by a digital push with loan growth led by housing and auto loans. Credit costs to gradually come down to normalised levels aiding bottom-line, it stated, adding that commentary on credit cost and asset quality outlook key monitorable.
ICICI Bank: As per the brokerage, overall business growth to be aided by a digital push with loan growth led by housing and auto loans. Credit costs to gradually come down to normalised levels aiding bottom-line, it stated, adding that commentary on credit cost and asset quality outlook key monitorable.
 SBI : The brokerage said that stable NIM to support NII growth even as loan growth is muted. However, Lower base, seasonality in fees, and controlled opex to aid bottom-line, it added. Slippages expected from SME and retail portfolio and commentary on asset quality will be keenly eyed, it further noted.
SBI: The brokerage said that stable NIM to support NII growth even as loan growth is muted. However, Lower base, seasonality in fees, and controlled opex to aid bottom-line, it added. Slippages expected from SME and retail portfolio and commentary on asset quality will be keenly eyed, it further noted.
 Dabur : The brokerage expects consolidated revenues to grow by 30 percent on a lower base. It also sees 33 percent volume growth driven by healthy performance in the healthcare segment and oral care with recovery in hair oils. International business is also likely to report gradual improvement and juices are expected to recover led by the summer season, added the brokerage. It also said that EBITDA Margin may see 192 bps expansion led by better mix and cost-saving initiatives. Earnings to be aided by strong operating performance; key monitorable - domestic demand, RM price trends, A&P outlook.
Dabur: The brokerage expects consolidated revenues to grow by 30 percent on a lower base. It also sees 33 percent volume growth driven by healthy performance in the healthcare segment and oral care with recovery in hair oils. International business is also likely to report gradual improvement and juices are expected to recover led by the summer season, added the brokerage. It also said that EBITDA Margin may see 192 bps expansion led by better mix and cost-saving initiatives. Earnings to be aided by strong operating performance; key monitorable - domestic demand, RM price trends, A&P outlook.
 HCL Technologies:  The brokerage is expecting revenue to grow by 2.8 percent QoQ aided by strong deal wins. Margins also likely to improve due to strong volume growth and strong executions, it added. It expects strong deal wins in the quarter while management commentary on the new deal ramp up and visibility going ahead are key things to watch.
HCL Technologies: The brokerage is expecting revenue to grow by 2.8 percent QoQ aided by strong deal wins. Margins also likely to improve due to strong volume growth and strong executions, it added. It expects strong deal wins in the quarter while management commentary on the new deal ramp up and visibility going ahead are key things to watch.
 Dalmia Bharat:  The brokerage sees volume growing on QoQ as well as on a YoY basis as demand from trade and non-trade segments improved in its key regions of operation. Consolidated revenue is also likely to grow on the back of growth in volume and realization both on a QoQ and YoY basis. Meanwhile, gross margins will be impacted due to an increase in cost QoQ basis, said the brokerage, adding that EBITDA margin will also decline on a QoQ basis but will be higher on a YoY basis due to an increase in volume and realization.
Dalmia Bharat: The brokerage sees volume growing on QoQ as well as on a YoY basis as demand from trade and non-trade segments improved in its key regions of operation. Consolidated revenue is also likely to grow on the back of growth in volume and realization both on a QoQ and YoY basis. Meanwhile, gross margins will be impacted due to an increase in cost QoQ basis, said the brokerage, adding that EBITDA margin will also decline on a QoQ basis but will be higher on a YoY basis due to an increase in volume and realization.
 Gland Pharma:  The brokerage sees a 20 percent rise in its revenues at Rs 762 crore and a 7 percent increase in profit to Rs 198 crore. It added that injectable business could outpace industry growth while a change in product mix can improve the margins.
Gland Pharma: The brokerage sees a 20 percent rise in its revenues at Rs 762 crore and a 7 percent increase in profit to Rs 198 crore. It added that injectable business could outpace industry growth while a change in product mix can improve the margins.
 Amber Enterprises:  The brokerage expects healthy growth led by seasonal demand in ACs & components. Gross margins will improve marginally as the company re-negotiates price contracts with OEMs/ brands, it added. Meanwhile, EBITDA margins will increase on a YoY basis aided by control over other expenses. PAT is also seen rising due to healthy top-line growth and improved margins, noted the brokerage.
Amber Enterprises: The brokerage expects healthy growth led by seasonal demand in ACs & components. Gross margins will improve marginally as the company re-negotiates price contracts with OEMs/ brands, it added. Meanwhile, EBITDA margins will increase on a YoY basis aided by control over other expenses. PAT is also seen rising due to healthy top-line growth and improved margins, noted the brokerage.
 Relaxo : The brokerage sees revenues growing 32 percent YoY on a lower base and strong demand for open/casual footwear led by a continued trend of work from home. Gross Margins may decline given the rise in prices of raw material, it added. Meanwhile, EBITDA margins will improve given rationalisation of cost YoY basis and weaker base as of last year. Earnings are also likely to witness growth given healthy topline and operating profit performance.
Relaxo: The brokerage sees revenues growing 32 percent YoY on a lower base and strong demand for open/casual footwear led by a continued trend of work from home. Gross Margins may decline given the rise in prices of raw material, it added. Meanwhile, EBITDA margins will improve given rationalisation of cost YoY basis and weaker base as of last year. Earnings are also likely to witness growth given healthy topline and operating profit performance.
 Camlin Fine Sciences:  As per the brokerage, revenues will grow around 5 percent on the back of strong demand in the blends segment. Gross margin will also improve on account of the benefit of low raw material cost post commercialisation of Dahej Facility. Meanwhile, it added that EBITDA margins will improve to 17 percent on account of improvement in gross margins, improving contribution from margin accretive segment and cost rationalisation measures.
Camlin Fine Sciences: As per the brokerage, revenues will grow around 5 percent on the back of strong demand in the blends segment. Gross margin will also improve on account of the benefit of low raw material cost post commercialisation of Dahej Facility. Meanwhile, it added that EBITDA margins will improve to 17 percent on account of improvement in gross margins, improving contribution from margin accretive segment and cost rationalisation measures.
 V-Mart:  The brokerage sees revenues growing around 17 percent YoY on a favorable base with a lesser impact of COVID given the higher number of stores in lower-tier cities. Gross margin is likely to be under pressure on account of lower apparels sales in Q4, it added. Meanwhile, EBITDA margins will sustain at previous year levels due to cost rationalisation measures and earnings will remain negative due to weak consumer sentiments towards discretionary spending.
V-Mart: The brokerage sees revenues growing around 17 percent YoY on a favorable base with a lesser impact of COVID given the higher number of stores in lower-tier cities. Gross margin is likely to be under pressure on account of lower apparels sales in Q4, it added. Meanwhile, EBITDA margins will sustain at previous year levels due to cost rationalisation measures and earnings will remain negative due to weak consumer sentiments towards discretionary spending.
Published : April 13, 2021 02:43 PM IST
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