Here Are The Top Stock Picks For June 2023 By Axis Securities

Axis Securities Report

Here are our top picks for June 2023:

Aarti Drugs – Improved Demand And Stable Realisations (Potential Upside: 37%)

Most of active pharma ingredient players reported increase in volume uptick backed by improved demand and stable realisations. We expect demand for API could continue in upcoming quarters with the ease of supply chain bottlenecks. Increase in volume and fall in solvent prices also led to improve in Ebitda margins led by operating leverage. Aarti Drugs Ltd., being leader in the domestic industry is well placed to grab this opportunity in future.

Praj Industries – Well-Placed To Grow, Less Impact Of Global Geo-Political Volatility On Business (Potential Upside: 27%)

Domestic business augurs well as Ethnaol blending continues with strong traction in FY23 and mostly like pre poning its target, the overall demand-supply gap of Ethanol, increased interest in grain-based distilleries and decarbonization impetus is auguring well for Praj Industries Ltd. along with development in other key verticals such as CPS, zero liquid discharge and high purity gaining traction.

Praj is a key beneficiary of multiple tailwinds provided by the bio-economic revolution, giving strong growth and revenue visibility for the next three-five years.

PNC Infratech – Robust Order book To Drive Growth (Potential Upside: 35%)

The road sector is witnessing good development owing to increased government thrust on infrastructure investment. Furthermore, the tightening of norms in bidding on road projects by the National Highway Authority of India augurs well for an organised player such as PNC Infratech Ltd.

Considering strong and diversified order book position, healthy bidding pipeline, new order inflows, emerging opportunities in the construction space, the company’s efficient and timely execution and strong financial credence, we expect PNC Infra to report revenue/Ebitda/adjusted profit after tax compound annual growth rate of 12%/15%/20% respectively over FY22- FY25E.

SBI - Return On Asset Delivery Of 1% To Continue (Potential Upside: 23%)

The management is confident in maintaining margins at current levels. State Bank of India’s asset quality performance has been consistently better than expectations, which resulted in a sharp reduction in credit costs. The bank is also witnessing improved traction on income from cross-selling and forex income.

The management expects loan processing fees, crosssell and forex income growth to sustain and will remain key drivers for healthy non-interest income growth. Healthy advances growth supported by demand sustenance, steady margins, improving fee income profile, improving asset quality (which is keeping credit costs muted), strong deposit franchise with healthy current account and savings account ratio, and adequate capital is key positives for the bank. We expect SBI to report healthy advances/net interest income/profit after tax growth of 13/13/12% CAGR over FY23-25E.

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