This week in analyst picks we take a look at companies with revenue and profit growth above 10% YoY in their Q4 results.

1. Maruti Suzuki India: ICICI Securities maintains its 'Buy' rating on this automobile company with a target price of Rs 10,091, implying a 15% upside. In Q4FY23, the company reported a 20.5% YoY growth in revenue to Rs 32,791 crore and a 42.7% YoY increase in net profit to Rs 2,624 crore. According to Trendlyne’s Forecaster estimates, the company has fallen 0.8% short of revenue expectations, but marginally surpassed profit estimates by 0.1% during the quarter.

Analysts Basudeb Banerjee and Vishakha Maliwal note that Maruti Suzuki's Q4FY23 EBITDA margin of 10.5% is in line with their estimate of 10.6%. The analysts add that even though the volumes have increased by 11% QoQ, a higher revenue-sharing mix with Toyota and SMG impacted the gross margin by 60 bps QoQ. The analysts believe that the car manufacturer had to balance market share and profitability by prioritizing the allocation of available semiconductor supply for vehicle production, leading to a lower focus on the average selling price.

2. ICICI Bank: Axis Securities maintains its ‘Buy’ rating on this bank with a target price of Rs 1,150, implying an upside of 24.7%. In Q4FY23, the bank’s standalone net profit rose 30% YoY to Rs 9,121.9 crore and revenue was up by 36.8% YoY. It has beaten Trendlyne’s Forecaster profit estimates by 1.2%. 

Analysts Dnyanada Vaidya, Prathamesh Sawant and CA Bhavya Shah believe that the company has delivered a stellar performance in Q4, driven by robust credit growth across segments and improving asset quality. They remain optimistic about the stock’s prospects given its strong retail-focused liability franchise, stable asset quality, healthy provision coverage and capitalization. 

The analysts believe that the firm’s margins have peaked and will witness moderation as the cost of funds catches up. “However”, they write, “backed by pristine asset quality, thereby keeping credit costs benign, we remain confident in ICICI Bank’s ability to deliver RoA of 2%+ over the medium term”. They expect the company’s net profit to grow at a CAGR of 14.2% over FY23-25.  

3. Persistent Systems: HDFC Securities maintains its ‘Buy’ rating on this IT consulting & software company and raises its target price to Rs 5,880 from Rs 5,820. This implies an upside of 23.8%. In Q4FY23, its net profit rose 25.1% YoY to Rs 251.5 crore and revenue grew by 37.7% YoY. According to Trendlyne’s Forecaster, it has beaten revenue estimates by 0.1% but missed net profit estimates by 6.2%. 

Analysts Apurva Prasad, Amit Chandra and Vinesh Vala state that Persistent Systems is their top pick among mid-tier IT companies. They are bullish about its growth prospects due to its strong order book, consistency in large deal wins, improved client-mining and operational efficiencies. They add, “Attrition continued to trend lower and the company’s headcount increased by 291 in Q4, with plans of adding 850-1,000 freshers in FY24 and wage hike plans in Q2FY24.”

The analysts believe that the firm bagging its highest number of new deals in Q4 is a key positive, as a higher volume of large deals provides revenue growth visibility. They expect the IT firm’s revenue to grow at a CAGR of 16.1% over FY23-25. 

4. Tata Consumer Products: ICICI Direct maintains its ‘Buy’ call on this packaged food  company with a target price of Rs 980, indicating an upside of 25.7%. In Q4FY23, the company’s net profit grew by 23.5% YoY to Rs 268.6 crore while its revenue increased by 14% YoY. Its revenue has surpassed Trendlyne’s forecaster estimates by 3.3% but profit missed estimates by 12.7%. 

Analyst Sanjay Manyal remains optimistic about the company due to its new product portfolio, which he believes has a large opportunity size that will drive volumes. He says, “A strong innovation and premiumisation strategy in salt and tea are expected to drive margins in established brands.” He also believes that margins will be aided by the softening of commodity prices along with price hikes. Manyal is positive about the company's long-term growth prospects, as Tata Starbucks crossed sales of Rs 1,000 crore, and with aggressive store addition, profits should grow at a faster pace. 

5. Bajaj Auto: Sharekhan maintains its ‘Buy’ call on this automobile manufacturer with a target price of Rs 4,782. This indicates an upside of 6.3%. In Q4FY23, the company reported a profit of Rs 1,704.7 crore (up 11.7% YoY), while its revenue grew by 11.2% YoY. The auto company has surpassed Trendlyne’s Forecaster estimates of revenue and profit by 5.3% and 2.3%, respectively. The analysts say, “Despite pressure on volumes, Bajaj Auto reported better-than-expected results on account of a richer product mix.” Revenue exceeded their estimates by  7.1%. 

The analysts add that the company has been recovering faster in the three-wheeler and premium two-wheeler segments. They expect it to continue to increase its market share in both domestic and export markets on the back of a strong portfolio of premium brands and cost-effective entry-level products. They remain optimistic due to the auto manufacturer's diverse geography mix and strong presence in the domestic premium motorcycle segment, which they believe will drive operating performance even in a weak business scenario.

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

(You can find all analyst picks here)