Monthly Stock Recommendation – March 2023

Company	Recommendation	Buy (Rs)	Target (Rs)	Upside (%)	Time Horizon
Asian Paints	Buy	2815	3170	13%	1 Month
Apollo Hospital	Buy	4385	4690	7%	1 Month
ICICI  Bank	Buy	860	980	14%	1 Month
Indian Hotels	Buy	320	370	16%	1 Month
Infosys	Buy	1618	1750	8%	1 Month
IRCTC	Buy	650	780	20%	1 Month
ITC	Buy	375	400	7%	1 Month
Mahindra & Mahindra	Buy	1375	1460	6%	1 Month
Reliance	Buy	2355	2600	10%	1 Month
SBI	Buy	550	630	15%	1 Month
Schaeffler India	Buy	2722	3075	13%	1 Month

*Note: We are continuing the whole monthly stock pics from last month i.e. February 2023.

Weightage of Investment (Rs.10 Lakh)
Company	Amount (Rs)	Weightage (%)
Asian Paints	90,000	9%
Apollo Hospital	80,000	8%
ICICI  Bank	1,10,000	11%
Indian Hotels	80,000	8%
Infosys	90,000	9%
IRCTC	80,000	8%
ITC	80,000	8%
Mahindra & Mahindra	1,00,000	10%
Reliance	1,10,000	11%
SBI	1,00,000	10%
Schaeffler India	80,000	8%
Total	10,00,000	100%

 

Asian Paints Ltd.:

Asian Paints Ltd. is the leading company in the paints sector in India with 80 years’ experience with presence in 15 countries across the world. The company manufactures a range of decorative and industrial paints. It also offers wall coverings, water proofing, adhesives and other services under its product portfolio. Company has started new range of hand, Surface and space sanitizers and disinfectants and also recently launched range of Furniture, Furnishings and Lighting Products under ‘Home Décor’ category. It is continuously showing double digit volume growth in Decorative Business in India from Q1FY22 to Q2FY23. Company has shown around 20% growth in the revenue from past 20 yrs. Asian Paints continues to grow because of its purchasing power; in spite of new entrants in the market, it still has over 50% market share in the Domestic Paints industry. Operating profit margin of the company would improve in the further quarters due to the decrease of raw materials price and ease in inflation.

Apollo Hospitals Enterprise Ltd (APHL):

Apollo Hospitals Enterprise is a leading integrated healthcare service provider in India and is engaged in offering healthcare services and operating standalone pharmacies. The company’s segments include healthcare, pharmacy, and others. It has currently 72 hospitals with more than 12,000 beds and over 15 medical education centers and research foundation across country. The company has shown consistently strong financial performance over the years with consolidated revenue CAGR of 16% from FY13-FY22 and Average revenue per occupied bed (ARPOB) per day CAGR of 9% from FY10-FY22. The healthcare industry is hugely under-penetrated market which gives APHL scope to improve ARPOB and we expect the co. to sustain the growth momentum with strong investments plans.

ICICI Bank Ltd:

ICICI Bank is the second largest private bank of India and has a leading position in other financial services businesses through its subsidiaries. The bank offers a wide range of banking and financial services including commercial banking and treasury operations to large set of customers viz. large and mid-corporates, MSME, agriculture and retail businesses. The bank is working with a widespread network of over 5,718 branches and 13,186 ATMs across country. The bank delivered strong performance in December quarter of FY23. On consolidated front, the bank has reported 34.5% YoY growth in the Net Profit to Rs 8,792 crore and 9.8% growth on QoQ basis. Net Interest Income increased 33.7% yearly and 10.6% quarterly to Rs 18,641 crore. Net Interest Margin grew to 4.65% in Q3FY23 from 4.31% in Q2FY23. Asset quality of the bank further improved in the quarter with Gross NPA to 3.07% and Net NPA to 0.55%.

 

Indian Hotels Ltd:

Indian Hotels Company Limited (IHCL) and its subsidiaries, collectively known as Taj Group, is one of Asia’s largest and finest group of hotels. Incorporated by the founder of the Tata group, Jamshedji Tata, the company opened its first property, the Taj Mahal Palace, in Bombay in 1903. The company has a portfolio of has 240 hotels globally in its portfolio, including presence in India, North America, UK, Africa, Middle East, Malaysia, Sri Lanka, Maldives, Bhutan, and Nepal. IHCL has posted strong performance in 9MFY2023 with revenues and PAT growing in strong double digits compared to pre-covid level. EBIDTA margins stood at 30% in 9MFY2023 and will going to improve consistently in coming period. Hotel Industry’s business fundamentals have improved recently with increase in room demand.  Strong recovery in the travel industry would further help IHCL in posting better performance in the medium term.

Infosys Ltd:

Infosys Ltd. is engaged to provide consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation. Its key services include application development, product co-development and system implementation/system engineering. The company shown growth across verticals; Sequential currency growth stood at 4% and large deals remain strong at $2.7 billion in the September quarter, growth of 28% YoY. Net Profit of Infosys grew 12.3% QoQ and EBIT margin grew by 150 bps QoQ at 21.5% for the same quarter. The company has increased revenue guidance to 15-16% from 14-16% for FY23.

IRCTC Ltd.:

Indian Railway Catering & Tourism Corporation is an Indian Railway subsidiary established by the Ministry of Railways to manage Indian railway catering, online ticketing and tourism operations. The core activities of the company include Catering & Hospitality, Internet ticketing, Travel & Tourism and Packaged Drinking Water (Rail Neer). The company’s Q3FY23 results were strong on the back of strong contribution from catering, Tourism and Packaged drinking water segments. Its revenue rose hugely by 70% to Rs.918 cr. in the quarter vs 540 cr. in previous year and net profits rose by 22.4% to Rs.255.5 cr. compared to Rs.208 cr. in Q3FY22.

 

ITC Ltd:

ITC Ltd. is one of India’s foremost multi-business enterprise with diversified portfolio of businesses spanning in FMCG, Paperboards & Packaging, Agri Business, Hotels and Information Technology. It has been the top player in the cigarettes market and one of the leading FMCG brand in India. The company delivered strong performance across all segments in the December 2022 quarter despite significant rise in the inflation. Revenue of the company increased ~4% YoY to Rs 17,586 crore in the Q3FY23 and Net profit rose to 23.4% YoY to Rs 5,007 crore. Operating profit margin of the company is at highest level of previous four quarters at 41.5%. ITC reported a strong growth in its core business, urban and rural markets also clocked strong growth. The stable tax environment for cigarettes in recent years has allowed the company to regulate price increases to avoid a disruption in demand. This trend will continue, aiding volumes and earnings visibility in the mid-term.

Mahindra & Mahindra Ltd:

Mahindra & Mahindra is the flagship Company of the Mahindra Group and the core business of the group is mobility products and farm solutions. The company offers a wide range of products and solutions ranging from SUVs, pickups, commercial vehicles and tractors, to electric vehicles, two-wheelers, gensets and construction equipment. It has shown strong performance in the December quarter of FY22 due to the higher sales in automotive business. Total Revenue of the company increased by 30% to Rs.30,620 crore compared to Q3FY22 while Net Profits grew hugely by 25% YoY to Rs 2,676 crore. All segments of the company has shown strong revenue growth in the Q3FY23. M&M retains its top position in terms of Revenue wise market share at 20.6% by consecutive 4 quarters. Also it has strong UV pipelines in the coming periods and ~266k open bookings for the new launches, which shows its market grasp in the industry.

Reliance Industries Ltd.:

Reliance Industries Limited (RIL) is India’s largest private sector conglomerate with diversified businesses including energy, petrochemicals, natural gas, telecommunication and retail. The company has evolved from the textile and polyester company to an integrated player across energy, metals, petrochemical, retail, telecommunication and entertainment. It majorly operates through following segments: Oil to Chemicals (O2C), Oil & Gas, Retail, Digital Services, Financial Services, and Others. The company has shown robust O2C performance and healthy consumer business in the December 2022 quarter. Its Jio business will further drive growth with rapid 5G rollout plans across country. The retail segment is strengthening; acquisition of several FMCG players by the company will help to gain the market share. Re-opening of China would further support Reliance’s Energy business going forward.

Schaeffler India Ltd:

Schaeffler India Limited is one of India’s leading ball and rolling bearing manufacturer for the automotive and industrial segments. It is engaged in the development, manufacturing and distribution of high-precision roller and ball bearings, engine systems and transmission components, chassis applications, clutch systems and related machine building manufacturing activities. The company is showing continuous strong performance despite a challenging market environment. The company has won significant orders in industrial and automotive segment. Capex of the company remains intact at 4.8% of sales in Q2FY22. Improving rural demand with decrease in inflation is giving positive support to the company’s growth.

State Bank of India Ltd:

State Bank of India Ltd. is India’s largest public sector bank operating from the last 40+ years with an extensive network of more than 21,000 branches, 55,000 ATMs in India and 232 international offices across 32 countries. It is a banking and financial services statutory body engaged in providing a wide range of products and services to individuals, commercial enterprises, large corporates, public bodies, and institutional customers. SBI has shown robust performance in the December 2022 quarter results. Net Interest Income of the bank rose by 24% YoY to Rs.84,463 Cr. while Net Profits of the bank increased hugely by 69% YoY at  Rs.14,205 Cr. Asset quality of the bank has also improved in Q3FY23 with GNPA ratio of 3.14% down by 38 bps QoQ and Net NPA of 0.77 compared to 0.80% in September quarter. Healthy loan growth momentum of the bank is expected to sustain led by retail and corporate loan growth.

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