Axis Bank: Edelweiss gives this bank a ‘Buy’ rating with a target price of Rs 985, indicating an upside of 27.1%. Analyst Raj Jha says, “Axis Bank reported robust Q3FY22 results beating our estimates on the credit, deposits, net revenue, and PAT fronts.” The bank reported 21% YoY and 7% QoQ growth to Rs 12,493 crore in net revenue, led by healthy net interest income and non-interest income growth, with its net profits growing 224% YoY, and 15% QoQ, to Rs 3,614 crore. The asset quality also improved on lower slippages, higher recoveries, and moderate write offs with stable restructuring. Return on assets improved 82 basis points YoY to 1.3% and Return on Equity increased 872 basis points YoY to 13.3%. With acceleration in credit growth and improvement in asset quality, the brokerage expects return ratios to improve here on.  

Vardhman Textiles: ICICI Securities gives this textile company a ‘Buy’ call with a target price of Rs 3,125, indicating an upside of 30.1%. According to analysts Cheragh Sidhwa and Bharat Chhoda, Vardhman Textiles is among the few textile companies that have been able to maintain low debt levels despite continuous capacity addition. Healthy cash flows have enabled the company to reduce its debt to Rs 1,848.2 crore (reduced by Rs 152 crore, 7.6%) in FY21. The company reported strong operational performance for Q3FY22 with all-time high revenue of Rs 2,603 crore, up 49% YoY. EBITDA was higher by 124% YoY at Rs 619 crore and consequently, net profits grew 145% YoY to Rs 429 crore. Owing to strong demand, the company is expanding its yarn spindle capacity by installing 1,65,000 spindles with a capex of Rs 1,400 crore. ICICI Securities models revenue and profit CAGR of 22% and 57%, respectively, during FY 21-24.

Craftsman Automation: LKP Securities has a ‘Buy’ rating on this auto parts maker with a 12-month target price of Rs 2,991. This indicates a potential upside of 45.3%. The company’s Q3FY22 numbers were good despite the challenging environment - revenues grew 49% YoY to Rs 550 crore. The power train business’ revenue expanded 9.6% YoY as the commercial vehicle (CV) industry grew at a strong pace. The automotive aluminum business’ revenue grew 7% YoY. Analyst Ashwin Patil believes the power train business will be driven by an expected pick up in the replacement cycle for heavy commercial vehicles in the coming quarters, and expects 35% growth in FY22 from this business. With increasing electrification efforts and the company being in talks with a North American company for a partnership, the brokerage expects the automotive aluminum business to grow at 25% and 20% in FY 22 and FY23. 

Cera Sanitaryware: BOB Capital gives a ‘Buy’ rating to this sanitaryware company with a target price of Rs 5,590 with an upside of 14.5%. The company has a healthy revenue growth led by strong demand traction. consolidated revenues grew 28% YoY to Rs 400 crore in Q3FY22 due to revival in real estate demand and increasing retail consumption led by home upgrades and improvement.  A higher revenue contribution of sanitaryware and faucet ware at 88% in Q3FY22 had a positive bearing on the EBITDA margin of 16.5%. Demand was robust in Q3 and the company expects to see strong demand traction in the coming quarters. Analyst Ruchitaa Maheshwari believes strong demand trends, price hikes, and healthy revenue will lead to strong growth prospects and improved return ratios.

Federal Bank: Axis Securities maintains a ‘Buy’ call with a target price of Rs 125, indicating an upside of 24.2%. Federal Bank’s Q3FY22 performance was marked by lower provisions, improved recoveries, pick-up in NIMs, healthy fee income, and loan growth which led to profit growth of 29% YoY to Rs 520 crore. The bank’s estimated return on assets at 1.2% over 4-6 quarters. Secondly, credit costs are likely to decline as the bank was very conservative with provisions. Lastly, a cost-benefit arising out of digital strategy is expected to drive improvements in the cost to income ratio. “The bank has managed Covid-19 related stress quite well, similar to frontline banks. It is on track to improve its ROE profile through higher-yielding Retail/CV/Credit cards in its portfolio mix,” says analyst Siji Philip. Axis Securities believes the asset quality is likely to stay stable and expects steady provision requirements along with healthy growth in the balance sheet and NIMs to deliver RoA of 1.1% and RoE of 14.9% by FY23.