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ICICI Securities is bullish on over 40 stocks from across the sectors, citing earnings revision for select companies going ahead. For instance, the brokerage firm is positive on Motherson Sumi, TVS Motor and Tata Motors from the automobile sector. It believes that better farm income, increased economic activity post-monsoon will aid demand growth. It further added that strong recovery in passenger vehicles demand as lockdowns ease and offices move towards reopening and macros improve. However, rising commodity prices are likely to remain a margin headwind in the first half of FY22.
Stocks to buy
The brokerage likes Axis Bank, State Bank of India, HDFC Bank and Federal Bank in the banking space. It also prefers Larsen & Toubro, KEC, Cummins and Kalpataru in the capital goods space.
Commenting on the banking sector, ICICI Securities said, “Q4FY21 was the best quarter in FY21 for most financiers, since the business was seen returning to normalcy except in the last few days of March. Recoveries from large corporates and behaviour of MSME portfolio, which has been sanctioned funds under ECLGS, would be key to watch out for.”
ICICI Securities also said that Q4FY21 order intake in the engineering and capital goods sector has started showing signs of pick-up from Covid-induced slowdown. Demand from the private sector has shown signs of pick-up and short to medium-sized orders have witnessed healthy traction. However, the impact of the second wave is likely to be felt in H1FY22. “Large orders from sectors like steel, cement and fertilisers can be expected in the medium term, given the impetus on capex by the government. Gradual easing out of the tight liquidity scenario will be one of the key enablers for pick-up in overall activity in infrastructure space,” the brokerage added.
In the cement space, it likes players like UltraTech Cement, Shree Cement, JK Cement. The FY22 Union Budget provided an increased thrust of the government on infrastructure, which augurs well for cement demand. “Sector is likely to post strong demand growth over the next 2-3 years. Overall we have raised FY22E-FY23E earnings by building-in higher than consensus volume growth and realisation over the stated period,” the brokerage said.
GCPL, Jyothy Labs, Zydus Wellness, Kalyan Jewellers, Jubilant FoodWorks, Page Industries, Sheela Foam, Titan and GAIL emerged as other top picks of ICICI Securities in the consumer discretionary and oil and gas sector.
In the pharmaceutical, power, technology, metals, logistics, defence, real estate, agriculture and white goods space, it is positive on companies like Dr Reddy’s Lab, Alkem Labs, Abbott India, NTPC, PTC India, Coal India, Infosys, Cyient, Hindalco, Mahindra Logistics, TCI Express, Allcargo, BEL, DLF, Macrotech Developers, Phoenix Mills, Brigade Enterprises, Embassy REIT, Kaveri Seeds, Avani Feeds, UPL, Havells India and Bajaj Electricals.
The brokerage believes that the revival in government and private capex is likely to result in the growth of industrial and infrastructure product portfolios of white goods and the durables sector. “Companies investing in e-commerce and rural markets will be the net beneficiaries of growth. However, rising commodity prices are likely to remain a margin headwind for next 3-4 quarters,” ICICI Securities said.