3 Stocks To Buy For Good Long-Term Returns For Shareholders

Broking firm Prabhudas Lilladher has recommended buying the stocks of Colgate, ITC and Axis Bank in its latest reports. The firm believes that the stock of these companies have a decent upside from the current levels.

Colgate Palmolive

The broking firm has set a price target of Rs 1639 on the stock of Colgate Palmolive. "Colgate is focusing on accelerating growth led by 1) Ramping up innovations (Max Fresh Charcoal, Palmolive facewash and Electric Toothbrushes 2) Increasing promotion intensity 3) sustained investments to increase presence in personal care segment (foams, scrubs and masques under Palmolive brand). We estimate 8.1% Sales and 10.3% PAT CAGR over FY23-25 assuming 4.3% decline in FY23 EPS. Revival in rural demand and success in personal care hold key to improving valuations. Although Colgate's growth is unexciting, favorable financial parameters (36x Sep'24 EPS, 2.2% Dividend yield, 90%+ payout and ~80% ROCE) limit downside. We value CLGT at 37xSep'24 EPS and assign a price target of Rs 1639 (earlier Rs 1701 on 37xFY24 EPS). Retain Accumulate," the brokerage has said.

ITC

Prabhudas Lilladher has recommended buying the stock of ITC for a price target of Rs 365.

"We increase our FY23/FY24/FY25 EPS by 3.2%/4.5%/4.5% and target price to Rs365 (Rs340 earlier) and maintain our Accumulate rating. ITC posted encouraging performance with ~20.5% cigarette volume growth and margin expansion across cigarettes, paperboard and hotels business. Near term outlook remains positive given 1) positive cigarette volume traction in a stable tax regime 2) strong pricing and benefits of back ward integration in Paper and paper board in near term 3) structural recovery with robust outlook in ARR and occupancy levels in Hotels and 4) sustained growth across segments in FMCG with margin expansion likely from 3Q/4Q23," the brokerage has said.

Buy Axis Bank for a price target of Rs 1080

The brokerage firm has also recommended buying the stock of Axis Bank for a price target of Rs 1080. "Axis Bank saw its strongest quarter with core earnings beating estimates by 14% led by beat on NIM, fees and asset quality. NIM boost was driven by better loan yields that was a function of higher repo linked pool, increased retail share, focus on rupee loans and shedding of RIDF bonds. Loan growth too was better at 4.2% QoQ mainly led by corporate/SME although deposit growth was slower. Asset quality improved again with lower slippages driving GNPA decline of 26bps QoQ while OTR reduced by 11bps to 0.65%. As per the bank, Citi acquisition may materialize in Q4FY23. We upgrade FY23/24E earnings by 30%/10% due to higher NII and lower provisions. However, our multiple is maintained at 2.3x as RoE in FY24/25E does not surpass 15%. Levers for RoE expansion are fall in opex/assets and higher loan/deposit accretion. Re-rating beyond 2.3x would hinge on RoA/RoE gap to ICICI Bank reducing. Rolling forward to Sep'24 ABV we raise target price from Rs 940 to Rs 1080. Reiterate BUY," the brokerage has said.