Stories
Elara Securities Backs ICICI Bank, Warns Auto Sector of Margin Risks from Raw Material Costs
- •Elara Securities names ICICI Bank as its top stock pick due to strong growth visibility and minimal risks.
- •The brokerage maintains a cautious but positive outlook on the automobile sector, citing concerns over rising raw material costs.
- •Bino Pathiparampil, Head of Research at Elara Securities, expects robust auto and general consumption demand for the next one to two quarters.
- •He warns that escalating raw material prices will impact company margins and could lead to automakers passing costs to consumers, potentially dampening demand.
- •Elara Securities adopts a wait-and-watch approach for the auto sector, dependent on oil prices, geopolitical risks, and logistical issues, while highlighting banking as a high-conviction investment idea.
Key Questions Answered
Elara Securities selected ICICI Bank as its top stock pick because of strong growth visibility, minimal risks, and a history of very good execution. The brokerage noted that large-cap stocks, particularly in the banking sector, have become highly attractive following recent time and price corrections.
Elara Securities warned that escalating raw material costs and prices will impact company margins in the automobile sector. Additionally, the dynamic situation is influenced by oil prices, geopolitical risks, and related logistical issues.
Automakers might pass the increased raw material costs on to end consumers within the next one to two quarters. However, doing so could pose a risk to overall demand and potentially dampen volume growth beyond that timeframe.
