ICICI Bank, SBI, Bharti Airtel shares among top large-cap stock picks for May, as much as 46% upside projected

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Domestic benchmark indices have started the month of May on a subdued note, falling on the first trading day and today again trading with losses. This comes after Sensex and Nifty both fell more than 2% each. Dalal Street continues to face the heat owing to rising interest rates and inflationary scenarios along with geopolitical conflicts that have impacted supply chains. Analysts at Axis Securities have picked 7 large-cap stocks amid this, consisting of marquee names such as State Bank of India, ICICI Bank, and Bharti Airtel that they believe have the potential to move higher. The brokerage firm has also reiterated its December 2022 target for Nifty at 20,200.

ICICI Bank: BUY
Target price: Rs 1,000 | Upside: 35%

ICICI Bank is one of the largest private-sector lenders in the country with business operations spread across Retail, Corporate, and Insurance, among others. Analysts at Axis Securities see strong traction in the bank’s loan book which has seen overall credit growth with witness positive traction at 17.1/5.5% on-year and on-quarter basis in the January-March quarter. In the previous quarter, ICICI Bank’s credit card book grew 45% on-year. Asset quality remains stable and operational performance has been strengthening. “We maintain a BUY on the stock with a revised target price of Rs1,000/share (SOTP basis core book at 2.8x FY24E and Rs 173 Subsidiary value),” analysts said.

Bajaj Auto: BUY
Target price: Rs 4,350 | Upside: 22%

The company has a 19% market share in domestic motorcycle segment and continues to be the largest exporter of two-wheelers in India. “We expect 2W OEMs to witness strong demand recovery in FY23E on account of improving positive buyer sentiment and a low base of FY22,” analysts said, making them bullish on Bajaj Auto. Axis Securities sees multiple growth drivers ahead for Bajaj Auto. Electrification also remains a focus. “We maintain our BUY rating on the stock and value it at 17x FY24E EPS to arrive at a TP of Rs 4,350,” they said.

Tech Mahindra: BUY
Target price: 1,700 per share | Upside: 38%

The IT major has a strong deal wins and robust pipeline, which reflects demand acceleration. The deal pipeline during the previous quarter was at TCV of $704 million. 5G is seen a potential growth driver for Tech Mahindra over the next few financial years. The management sees initial traction in 5G both on the communications side where traction is visible in modernization IT, network, process and systems, and on the enterprise side where it signed 3 Manufacturing 5G solutions in Europe and 1 in the US. “We recommend a BUY rating on the stock and assign a 21x P/E multiple to the company’s FY24E earnings of Rs 82.6/share to arrive at a TP of Rs 1,700/share,” Axis Securities said.

Maruti Suzuki: BUY
Target price: Rs 9,800 | Upside: 28%

Maruti Suzuki India is the market leader in the domestic passenger car industry commanding a market share of about 45%. Analysts project Maruti Suzuki will benefit from easing chip shortages and new model launches that will eventually improve volumes. “Higher production should automatically drive higher dispatches, as dealer inventory is low and the retail order book remains strong,” Axis Securities said. Further, the increased CNG penetration and strong export outlook will also bide well for Maruti Suzuki India. “We have a BUY rating on the stock with a TP of Rs 9,800 valuing the stock at 27x its FY24E EPS,” they added. 

State Bank of India: BUY
Target price: Rs 720 | Upside: 46%

State Bank of India is believed to be ripe for re-rating by analysts at Axis Securities. “SBI continues to positively surprise on the asset quality front with slippages of 0.4%, restructured book at 1.2%, and lower SMA book (~16bps) during Q3FY22,” they said. Restructured book is ~1.2% of loans, amongst the lowest compared to peers. Subsidiaries of SBI, working in the field of credit cards, insurance, asset management and much more is expected to bode the overall performance of SBI. Restructured book is ~1.2% of loans, amongst the lowest compared to peers. “We believe credit cost normalization and improved operational performance will lead to double-digit ROEs of +15% over FY22-24E. We maintain a BUY on the stock with a target price of Rs720/share (SOTP basis core book at 1.3x and subsidiaries at Rs 211),” analysts said. 

Bharti Airtel: BUY
Target price: Rs 870 | Upside: 19%

The telco is one of the two strong players in the Indian market and even has a presence across 18 countries. Bharti Airtel has strong financials, its performance in Africa is improving, and business momentum improving as well. “Airtel is gaining business momentum backed by strong customer addition and market share gains. The management is confident of gaining further momentum with favourable macroeconomic conditions diving data consumption, increasing penetration in tier 2 and 3 cities, and rising use of DTH and other digital services,” said Axis Securities.

Cipla: BUY
Target price: Rs 1,125 | Upside: 18%

CIPLA continues to focus on the demand levers in the chronic and acute therapies and complex products in its existing as well as pipeline portfolio,” Axis Securities said. CIPLA’s One India Rx business has expanded EBITDA margins by nearly 500 bps over FY17-FY22E, led by its continued efforts on digital platforms, field force productivity, and stringent control over the costs.