Hindalco, ICICI Bank among Prabhudas Lilladher's 6 bluechip Diwali picks
Over the 2023 Diwali season, analysts at Prabhudas Lilladher like Hindalco Industries, ICICI Bank, Maruti Suzuki, and Titan Company among 6 other stocks that may see a boost in their values.
Hindalco Industries Ltd | CMP: Rs475 | TP: Rs 557 | Prabhudas Lilladher rates Hindalco Industries as ‘buy’ owing to various pivotal factors. Novelis, which accounts for a 70 percent part of the consolidated EBITDA, is expected to reach an EBITDA of $525/tonne in the near term. Strategic investments have been made in a fully integrated greenfield capacity in the US to meet the demands of the domestic flat rolled products (FRP) market, resulting in an increased volume growth from FY26. HNDL is also anticipated to benefit from reduced thermal coal prices and the opening of captive coal mines for the India business after FY26. There is a growing focus on high-margin downstream products such as FRP expansion, which is expected to drive domestic volume growth from FY26. The company is valued at an EV multiple of 5.1x/4.6x FY25/FY26 EBITDA. Prabhudas Lilladher has assigned a multiple of 6.5x EV/EBITDA to Novelis FRP and 5x to the India business.
2/6
ICICI Bank Ltd | CMP: Rs 933| TP: Rs 1,280 | Prabhudas Lilladher retained a 'buy' rating for ICICI Bank in view of its robust financial performance. The bank's core pre-provision operating profit (PPoP) has experienced significant growth, with a strong CAGR of 22.5 percent from FY19 to FY23. This growth is attributed to improvements in margins without compromising on credit standards. The bank's balance sheet is characterised by a decreasing share of lower-rated assets, provisions at 1.2 percent, and capital adequacy ratios (CAR/CET-1) of 17.6 percent and 16.8 percent. The core return on assets (RoA) and return on equity (RoE) for FY25/26 are estimated to be 2.0 percent and 17.0 percent, outperforming competitors like HDFC Bank. ICICI Bank trades at attractive valuation multiples with a price-to-core adjusted book value (ABV) ratio of 2.2x/1.9x for FY25/26, presenting an attractive investment opportunity.
3/6
Maruti Suzuki India Ltd | CMP: Rs 10,285| TP: Rs 12,485 | Analysts gave a 'buy' rating for Maruti Suzuki as it is poised to achieve a robust revenue CAGR of 13 percent between FY23 and FY26, driven by steady industry demand, a strong order book, successful product launches, higher average selling prices, and enhancements in the supply chain, ensuring clear visibility of demand in the near to medium term. The company's strategic focus on expanding its SUV lineup and integrating smart hybrid technology into other models strengthens its competitive standing. MSIL's dominant 70 percent market share in the CNG segment aligns with India's objectives for green energy and presents substantial growth opportunities in addition to its plans to introduce their first electric vehicle in FY25. Prabhudas Lilladher anticipates an impressive compound annual growth rate of approximately 25 percent in earnings per share (EPS) from FY23 to FY26 for the MSIL stock, which trades at 21.7x FY25.
4/6
Titan Company Ltd| CMP: Rs 3,275 | TP: Rs 3,312 | Prabhudas Lilladher retains an 'accumulate' rating for The Titan Company, owing to its strategic positioning as a beneficiary of the consumer trend towards organized players in the jewellery, eyecare, watches, and emerging segments. The company's successful consolidation in the jewellery sector and its expansion into eyewear (Titan Eye+), jewellery (Caratlane and Mia), dress material (Taneira), and wearables (Titan and Fastrack) lay the groundwork for robust growth. The second half of 2024 is expected to be notably strong, aided by favorable conditions like soft gold prices and an approaching wedding season. Titan's premium valuations are justified by its promising growth prospects and forays into the lifestyle market, with an estimated 17 percent compound annual growth rate in EPS from FY23 to FY26.
Siemens Ltd | CMP: Rs 3,368| TP: Rs 4,241 | Prabhudas Lilladher has given an 'accumulate' rating for Siemens Ltd as the company plans to capitalise on the rising demand for decarbonisation and energy efficiency solutions, particularly in rapidly growing sectors such as data centres, railways, chemicals, pharmaceuticals, e-mobility, and smart infrastructure. Siemens' focus on localising its products, improving its business mix, and optimising costs is expected to increase its profit margins. With a robust and diversified presence across various industries, a strong balance sheet, a positive outlook for both public and private capital expenditures, and a dedicated commitment to cost efficiency, Siemens continues to be an attractive long-term investment opportunity. Prabhudas Lilladher's 'accumulate' rating is a reflection of Siemens' potential, and the target price is derived from a price-to-earnings ratio of 60x for SY25.
6/6
Max Healthcare Institute Ltd | CMP: Rs 577| TP: Rs 610 | Prabhudas Lilladher assigned a 'buy' rating for Max Healthcare Institute, setting a target price of Rs 610, surpassing the current market value of Rs 577. This comes as the company's strong growth trajectory is anticipated to persist due to robust expansion strategies, encompassing the addition of more than 1,100 extra beds by the conclusion of FY25, a favourable shift in the payor mix, with institutional revenues projected to constitute 15 percent by FY25, and an improvement in laboratory facilities. The company has exhibited remarkable operational efficiency, particularly in competitive regions such as the National Capital Region (NCR). This analysis predicts a 15 percent EBITDA compound annual growth rate from FY23 to FY25 for the company with a valuation of 27x EV/EBITDA, based on FY25 estimates.
