Let us talk about your top bets in the largecap categories. Which are the stocks that you are bullish on?
Despite the uncertain environment we are in at this point of time, the Indian market is showing a lot of resilience and that is getting reflected into the broader markets as well. So our top pick in the largecap space are banks which are showing great strength and we are witnessing Bank Nifty almost inching up towards a 40,000 kind of trajectory and showing a strong relative outperformance versus the broader Nifty.
Keeping this in mind,
is our top pick where we feel that the credit growth momentum is extremely strong and both retail loan as well as the revival in the capex is also getting reflected in the corporate loan growth. We expect ICICI Bank to show almost close to 2% kind of ROA and close to 17% kind of ROE in next two years.
Keeping that in mind, we see strong growth momentum in this bank. In terms of valuations also, we expect the ICICI Bank to sustain its premium valuation considering the kind of growth momentum we are witnessing on the loan side and the NIM expansion which is happening into the stock.
Technically speaking, the stock has been consistently outperforming its peers in the private banking basket whether it is Axis or
on a six month, nine months and 12 month time frame. Keeping this in mind, ICICI Bank is our top pick. We are looking for a Rs 1,100 kind of target in ICICI Bank.
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The second pick is which is sailing on growth in consumer discretionary spending. We are seeing 20% kind of CAGR growth in the jewellery segment and we expect margins in the jewellery segment to hit somewhere close to 13%. The non-jewellery segment where we see watches, wearables and eyewear segment are showing a very strong beat in the revenue growth momentum and margins are also improving.
A lot of store additions are taking place whether it is Tanishq or other businesses. Keeping this in mind, we think Titan is going to continue its upward journey and that trend is getting reflected on the technical side also, where the stock is continuously making a higher top higher bottom formation. We are looking for a Rs 3,100 target in Titan.
In the FMCG space we think ITC is going to outperform. The cigarette business is doing well but we are witnessing volume growth in the non-cigarette segment. Be it FMCG or hotel business, they are showing very strong momentum. If there is a demerger of FMCG or hotel business as well as the IT business, then it would be a key trigger to watch out for. At these prices also, ITC is offering a good 4% dividend yield. We expect the valuation is supporting at current levels and there could be further rerating in terms of valuations.
In a 12-month time frame, ITC has been consistently outperforming the entire FMCG space so that is a clear signal that the strength is there on the technical parameters as well. We expect to stop to see Rs 380-385 kind of targets in the next six month timeframe. So, we have a very positive view on ITC.
In the auto segment, we think
is going to regain its lost market share and with the new launches, we expect Maruti to gain almost 50% market share. The cost of raw materials has come down and the margins are also improving. On a seven-year relative basis performance, 2017-2016 is when Maruti topped out and after six-seven years of consolidation, now it is time to form a strong higher top higher bottom trajectory. We expect the previous all time high of Rs 9,900 to get crossed and stock can eventually hit Rs 10,350 in the next couple of months. That is our top pick in the auto basket.