This week, we take a look at five analyst stock picks with over 10% revenue and profit growth in Q2FY23

1. Sun Pharmaceutical Industries: KRChoksey maintains its ‘Buy’ rating on this pharmaceutical giant with a target price of Rs 1,229– an upside of 19.9%. In Q2FY23, the company’s net profit grew 10.5% YoY to Rs 2,262.2 crore and revenue rose 13.8% YoY to Rs 10,952.3 crore. 

Analyst Kushal Shah believes that the company’s growth in Q2 was primarily driven by the global specialty business segment. In terms of geography, growth was led by the US, India, and Emerging market segments, he added. The analyst expects the company to continue to perform well in the US market on the back of new launches, better supply chain management, and market share gains. The firm’s product pipeline in the US remains healthy with 92 abbreviated new drug applications and 13 new drug applications awaiting approval from the US Food & Drug Administration, he added. 

In India, Shah considers Sun Pharma’s market share growth of 0.5% YoY to 8.6% in Q2 a key positive. He said, “In Indian formulations, the company continues to outperform average industry growth, which has increased the overall market share.” The analyst expects the firm’s revenue to grow at a CAGR of 13.8% over FY22-24. 

2. Bharti Airtel: Prabhudas Lilladher maintains its ‘Buy’ rating on this telecom services company with a target price of Rs 1,058. This indicates an upside of 29.2%. In Q2FY23, the company’s net profit rose by 89.2% YoY to Rs 2,145.2 crore and revenue grew 21.9% YoY to Rs 34,526.8 crore.

Analyst Avishek Dutta attributes the firm’s robust profit growth to a strong performance by India Mobile, Africa Mobile, and enterprise business segments. The analyst said the India Mobile segment was led by healthy additions to its 4G customer base and net subscriptions. He added that the Africa Mobile segment’s growth was driven by a rise in average revenue per user (ARPU) and net customer additions. 

The management is focused on continued ARPU growth by improving customer stickiness across services. Dutta said he “remains structurally positive on the Indian telecom sector due to consolidation and likely regular tariff hikes”. The analyst expects the company’s net profit to grow at a CAGR of 86.5% over FY22-25. 

3. Adani Ports & Special Economic Zone: ICICI Direct maintains a ‘Buy’ call on this transportation company with a target price of Rs 110. This indicates an upside of 17.3%. In Q2FY23, The company’s revenue grew by 38.9% YoY to Rs 5,648.9 crore and profit grew by 76.3% YoY to Rs 1,677.5 crore. 

Analysts Bharat Chhoda and Harshal Mehta say, “As Adani Ports & Special Economic Zone embarks on becoming India's largest integrated transport utility company by 2030, it is strengthening its capabilities in all logistics segments. It will offer end-to-end services to its customers, thereby capturing higher wallet share and also making the cargo sticky in nature.” They believe that the strong organic growth coupled with efficient assimilation of inorganic acquisition and integrating logistics operations, both vertically and horizontally, has built a strong moat around the business.

4. Larsen & Toubro: HDFC Securities maintains a ‘Buy’ call on this construction and engineering company with a target price of Rs 2,345, indicating an upside of 17.1%. During Q2FY23, the company reported a profit growth of 22.5% YoY to Rs 2,229 crore and 23.2% YoY revenue growth to Rs 43,501.1 crore. Profit and revenue beat the brokerage's estimates by 21% and 7% respectively.

Analysts Parikshit D Kandpal, Manoj Rawat and Nikhil Kanodia say, “Tendering during the quarter was strong. However, awarding was muted with award to tender ratio at 34%.” The analysts remain optimistic about the company on the back of the record high order book of Rs 3.7 lakh crore, with a prospect pipeline of Rs 6.3 lakh crore for H2FY23, improving health and self-sustainability of the Hyderabad metro project, and revival in private capex.

5. Equitas Small Finance Bank: Axis Direct maintains a ‘Buy’ call on this bank with a target price of Rs 60. This indicates an upside of 17.4%. In Q2FY23, the bank's profit grew by 182.6% YoY to Rs 116.4 crore and revenue grew by 15.7% YoY to Rs 1,147.4 crore. Net interest income grew by 26% YoY to Rs 610 crore (vs brokerage’s expectation of Rs 595 crore). 

The management has revised its growth guidance to 25% for FY23 (vs earlier guidance of 30%). Analysts Dnyanada Vaidya, Sumit Rathi and Bhavya Shah say, “This revision is primarily owing to the shift in the bank’s focus to scale up its business in the non-home (ex-Tamil Nadu) states.” The analysts believe that the bank’s cautious approach to MFI lending will lead to margin pressure. However, they added that the gradually improving opex ratios and normalising credit costs should partially offset the impact of margin compression. 

Note: These recommendations are from various analysts and are not recommendations by Trendlyne.

(You can find all analyst picks here)