Indian markets created history in Samvat 2080 by hitting milestone after milestone. The Nifty surpassed 26250 and the Sensex surpassed 85900 in September 2024, with both indices gaining around 25% during Samvat 2080. The BSE Midcap and Smallcap index outperformed and gained 45% and 50% respectively. The upmove in markets was exceptional considering the spread of Covid19 and subsequent lockdowns. The upmove in markets was exceptional considering geopolitical tensions, global weakness, and elevated interest rates. All classes of investors drove the upmove.
Here are top picks for Samvat 2081:
Aadhar Housing Finance
Aadhar Housing Finance is a large affordable HFC. (Rs 21,100 crore of AUM in FY24). The company has a 7% market share in the affordable segment. It has a long track record, a well-diversified geographical presence, and a customer profile. Its multipronged expansion and appraisal strategy will drive 21% AUM CAGR (FY24-27E). Stable margins and improving leverage will accelerate RoEs back to the high teens. The company stands out versus most peers due to a larger balance sheet, and longer vintage and seasoning. It has a geographically diversified AUM mix with no state contributing more than 15%. Also, the company has reported strong asset quality performance over the years. We maintain a Buy rating and RGM-based target price of Rs 550; at our target price, the stock will trade 3.1X book and 20X earnings in June 2026E.
Axis Bank
Business execution is on expected lines, with a focus on the GPS strategy to build a solid franchise. On deposits, the management held its view that the initiatives taken were granular and focused, but they would deliver the desired outcomes to grow faster than the industry average over time. On loan mix, the bank would continue to build a profitable portfolio and was comfortable delivering better risk-adjusted growth. Axis Bank reported an 18% yoy earnings growth due to a 25% operating profit growth in Q2 FY25. The asset quality ratio was stable, with slippages stable at 2%. The bank is trading at valuations, which largely address most key concerns. The private sector bank has one of the best upsides, among large private banks at these levels. We maintain Buy with a target price of Rs 1,500 (unchanged), valuing the bank at 2.2X book and 15X FY26 EPS for RoEs of 15%.
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