Diwali 2023 Picks - Here Are Six Large Cap And Eight Mid, Small Cap Stocks For Samvat 2080 By Nirmal Bang

Nirmal Bang Report

ICICI Bank Ltd. (Market cap: $76.7 Billion; Current market price: Rs 915; Target price: Rs 1,298; Upside potential: 42%; Rating: Buy)

A large asset base of Rs 17.2 trillion and a network of 6248 branches has helped generate not only asset growth for ICICI Bank, but also aided it in building a fee income profile. In the past few years, the bank has focused on granulising its asset and liability profile, the benefits of which are visible in its financials now, with its return on asset reaching a historic high of 2.4% in H1 FY24 (from a low of 0.4% in FY19).

The share of retail advances stands higher at 54.3% and share of low cost current account and savings account is also at healthy level of 40.8%. Of the total retail portfolio, nearly half is towards housing loans, which are secured in nature.

The bank’s Q2 FY24 credit growth stood at 18.3% YoY driven by healthy double-digit growth across all domestic loan segments.

We have a ‘Buy’ rating on ICICI Bank with a target price of Rs 1298 (d at 2.75 times September 2025E adjusted book plus subsidiary per share of Rs 180).

Ambuja Cement Ltd. (Market cap: $9.7 billion; Current market price: Rs 407; Target price: Rs 602; Upside potential: 48%; Rating: Buy)

Investment rationale

The management indicated volume growth of 10-15%. FY24.

Ambuja can set industry standards by striking a balance between capacity build-up and cost management by capitalising on the ongoing strong demand potential, premium product portfolio, operational excellence, supply chain management and sales and marketing expertise via the parent company.

Cost efficiencies and group synergies to capitalise reduce dependence on external sources and increase reliance on captive coal mines and long-term supply agreements to meet its fuel needs more efficiently.

Mold-Tek Packaging Ltd. (Market cap: $0.3 billion; Current market price: Rs 891; Target price: Rs 1,200; Upside potential: 35%; Rating: Buy)

Mold-Tek Packaging has demonstrated its strength by consistently improving Ebitda/kg through innovation and expansion of the product basket and backward integration.

While the existing segments like paints and food and fmcg are expected to continue their strong growth trajectory on the back of capacity additions and order visibility from clients, we see multiple growth levers like the IBM projects and Pharma Packaging business for Mold-Tek Packaging from a medium-term perspective.

All future projects are margin and return ratio accretive, with the possibility of improvement in the working capital cycle over the medium to long term.

Over FY23-FY26E, we are building in volume CAGR of ~16% and Ebitda CAGR of ~20%.

We maintain 'Buy' on Mold-Tek Packaging with a target price of Rs 1,200; d at 30 times price-to-earning on September-25E earnings.

PNC Infratech Ltd. (Market cap: $1.0 billion; Current market price: Rs 324; Target price: Rs 469; Upside potential: 45%; Rating: Buy)

During FY18-FY23, PNC Infra's revenue/Ebitda/adjusted profit after tax expanded at a CAGR of 30.5%/23.5%/18%, resulting in consistent accretion and strengthening of the company's reserves and net worth (which grew at a CAGR of 17% during this time).

In the highly competitive construction industry, the company's low debt, lean balance sheet, improved operating ratio, and strong return ratios are indicative of its good long-term success.

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