Post-Budget picks: ICICI, Kotak among top bank bets, ITC in play, too

The current environment in the Indian stock market is that of uncertainty. The Sensex has fallen 2 per cent since the Union budget on July 5. With liquidity issues in the NBFC (non-banking finance companies) space remaining unresolved and no immediate booster in the budget for growth, ET asked some market experts for stocks one should buy in this environment.

INVESTEC PICKS

ICICI Bank | Target Price: Rs 470

ICICI Bank is one of the cheapest banks for the kind of franchise it has, said Mukul Kochhar, head of equities at Investec Capital Services. The bank will see strong re-rating as fundamentals are improving, their book is becoming retail-focused and liabilities are one of the best, because of which return on equity is likely to expand, said Kochhar. New management under CEO Sandeep Bakshi is credible, he said.

Kotak Mahindra Bank | Target Price: Rs 1,650
KOCHHAR SAID the stock is cheap in the context of the growth the bank can achieve. “It can give 25 per cent- plus EPS (earnings per share) growth very easily. It is a compounding story. All the subsidiaries and the bank itself are high-quality businesses,” said Kochhar. All businesses of Kotak Mahindra Bank are subscale, even as they are best in class, which will drive faster than peer rate of growth, he said.

ICICIDIRECT

Sanofi India | Target Price: Rs 6,535
THE BROKERAGE is positive on Indian formulation players, especially MNCs, in the backdrop of resilience shown by Indianfocused cos despite disturbances because of demonetisation and GST. The brokerage expects Sanofi’s revenues to grow at 19 per cent on a compounded basis in calendar years 2018-2020 due to lower base and strong growth in domestic power brands. stock is available at an attractive valuation, said ICICIdirect.

Syngene International | Target Price: Rs 358
THE COMPANY is well poised to capture opportunities in the global contract research organisation space on account of strategic outsourcing by global innovators, said ICICIdirect. Revenues grew at around 21 per cent on a compounded basis in FY15-19 due to new client addition and scaled up revenues from existing clients led by integrated service offerings, high data integrity ethos and continuous endeavour to move up the value chain, said ICICIdirect.

IIFL

ITC | Target Price: Rs 350
DESPITE THE street’s view on significant increase in taxation, the budget proposals are for a marginal increase, said IIFL’s head of research Abhimanu Sofat. ITC is likely to be one of the few companies in the sector which will see a rise in rate of growth, said Sofat.

SBI Life Insurance | Target Price: Rs 850
SOFAT IS bullish on the insurer as he expects the company to continue delivering above industry premium growth. “SBI Life has grown at 25 per cent year on year on APE (annualised premium equivalent) basis. Following up on FY19, it continues to deliver above industry premium growth. We expect the trend to continue over the medium term as it benefits from its strong distribution and mass customer base,” said Sofat.

EDELWEISS

Voltas | Target Price: Rs 709
THE AIR CONDITIONER maker is likely to maintain leadership position over the medium term because of its aggressive retail network expansion plan and commencement of a proposed plant, according to Edelweiss. The brokerage said Voltas is trading at 21 times on FY21 estimated Ebitda (earnings before interest, taxes, depreciation and amortisation). The stock will continue to trade at premium valuation because of rising share of product revenue, said Edelweiss.

Aditya Birla Fashion & Retail | Target Price: Rs 301
BRANDS SUCH as Louis Philippe, Van Heusen, Allen Solly, Peter England, which have shown stable and profitable track record, are clients of the company, said Edelweiss. The brokerage is positive on the branded apparel and the retail company and believes that the management expertise and track record will help it scale up many other of its brands.