3 Small & Largecap Stocks To Buy For Strong Short-Term Returns, Positive Quarterly Results: ICICI Securities

Indian equity markets are a bit down today, Nifty 50 is bearish, stood at 17,502.15 points, falling by 0.13%, till last traded. Top brokerage firm ICICI Securities has given buy rating to these 3 small and large-cap stocks, check details here.

Stocks To Buy: Automotive Axles

The current market price of Automotive Axles is Rs. 1950/ share, and ICICI Securities has estimated a target price for the stock at Rs. 2375/share, and given a buy rating, with 22% potential return. It is a small cap stock with a market capitalization of Rs. 2,944.5 crore. The company's total operating income for Q1FY23 came in at Rs. 500 crore, down 10% QoQ, EBITDA came in at Rs. 52 crore with margins at 10.3%, down 90 bps QoQ. PAT for the quarter stood at Rs. 30 crore, down 22% QoQ, The management expects M&HCV volumes to grow ~25% in FY23E. Established in 1981, Automotive Axles is the largest independent manufacturer of rear axle drive assemblies in India.

Being optimistic about the stock, ICICI Securities stated, "Automotive Axles's share price has increased at ~21% CAGR from ~Rs. 734 in August 2017, thereby outperforming Nifty Auto index in that time. Retain buy given cyclical recovery in CV space (M&HCV domain) with AAL a key beneficiary and the company making tangible efforts on diversification of its client base (targeting construction equipment, defence space). Upgrading our estimates, we now value the company at a revised target price of Rs. 2,375, which is 20x P/E on FY24E EPS. With cyclical recovery in the domestic CV space, we expect sales to grow at a CAGR of ~27.3% in FY22-24E to ~Rs. 2,415 crore in FY24E."

Stocks To Buy: Gabriel India

The current market price of Gabriel India is Rs. 142/ share, and ICICI Securities has estimated a target price for the stock at Rs. 170/share, and given a buy rating, with 20% potential return. It is a small cap stock with a market capitalization of Rs. 2,040.1 crore. Net sales for the quarter came in at Rs. 721 crore, up 5.4% QoQ, Margins jumped 160 bps sequentially to 7.1% with EBITDA at Rs. 51 crore, and PAT rose 22% QoQ to Rs. 33 crore, supported by operating margins gains. Gabriel India (GIL) is a global top-10 shock absorber manufacturer serving 2-W, 3-W, PV, CV, railway and aftermarket segments.

Giving a buy rating the brokerage firm said, "Gabriel's stock price has de-grown at ~3% CAGR from ~Rs. 166 levels (August 2017), underperforming the broader Nifty Auto index. We retain buy rating on the stock amid EV immune product profile, prominent EV OEMs on-board and presence in SUV segment (Grand Vitara, New Brezza at Maruti; XUV700, New Thar at M&M among others). We build ~17% net sales CAGR in FY22-24E on new client addition and expected pickup in volumes across all segment. Upgrading our estimates, we now value GIL at 15x P/E on FY24E for a revised target price of Rs. 170/share."

Stocks To Buy: Uno Minda

The current market price of Uno Minda is Rs. 550/ share, and ICICI Securities has estimated a target price for the stock at Rs. 650/share, and given a buy rating, with 18% potential return. It is a large cap stock with a market capitalization of Rs. 31,446 crore. Consolidated revenues were at Rs. 2,555 crore, up 5.8% QoQ, EBITDA margins for the quarter came in at 10.4%, down 100 bps QoQ amid higher than anticipated raw material as well as other expenses, while Consolidated PAT in Q1FY23 was at Rs. 139 crore, down 4% QoQ. Uno Minda is India's largest maker of automotive switches, horns, seats & PV alloy wheels and third largest automotive lighting player.

ICICI Securities commented, "Uno Minda has been one of our early finds with stock price nearly 4x since our initiation in April 2020, vastly outperforming the Nifty Auto index. We retain our positive stance and BUY rating on the stock amid robust demand outlook in the PV domain, consistent work on increase in content/vehicle and new product launches by the company in EV space. We build 20.8% FY22-24E net sales CAGR riding on OEM ramp up, focus on premiumisation, expanded capacity, penchant to grow ahead of industry. The company's largely EV immune product profile with EV order book at a peak annual revenue run-rate of ~Rs. 1,000 crore with ~50% EV specific products."

High return comparisons of stocks

Here, the potential returns have been mentioned, as expected by ICICI Securities, with the stocks' current market prices and target prices.

Stock	Current market price	Target price	1 Yr Potential Return
Automotive Axles	Rs. 1950	Rs. 2375	22.00%
Gabriel India	Rs. 142	Rs. 170	20.00%
Uno Minda	Rs. 550	Rs. 650	18.00%

Disclaimer

The above stocks were picked from the brokerage report of ICICI Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.