Axis Direct Portfolio Update: Shifts in Strategy and Stock Picks

Axis Direct has adjusted its 'Prime Research Services' portfolio, exiting KPR Mill while initiating buy positions in ICICI Bank and Kotak Mahindra Bank.

Reader Takeaway: Sell KPR Mill due to premium valuations; rotate into strong-performing private banks for stable loan growth.

What just happened

Axis Direct has updated its model portfolios for September 2026. The brokerage has issued a 'Sell' recommendation for KPR Mill, citing its current trading multiple of ~44x trailing earnings and a substantial Rs. 1,225 Cr upcoming capex requirement. Simultaneously, the firm has issued 'Buy' ratings for Kotak Mahindra Bank and ICICI Bank, noting their robust liability profiles and expected loan growth outpacing systemic levels.

Why this matters

The updates reflect a shift away from high-multiple textile plays toward large-cap financial stocks. The brokerage notes that while KPR Mill reported Q1FY27 revenue growth of 9.6% YoY, the combination of valuation concerns, cotton price volatility, and high capital expenditure poses risks to short-term returns. In contrast, the banking sector is favored for its steady net interest margins (NIMs) and contained credit costs.

Recent Portfolio Activity

In August and September, the firm executed several rebalancing trades. It bought into CCL Products and Mankind Pharma under its 'Value' strategy, while exiting Avenue Supermarts and Lupin. These moves underscore a preference for stocks currently benefiting from market mispricing or cyclical recovery.

Context Metrics

The 'High Growth & QARP' strategy has delivered 25.8% returns since June 2020, while the 'Value' strategy has achieved 29.0%. Both have outperformed the benchmark's 20.15% return in the same period. Financials remain a cornerstone of this performance, with ICICI Bank and Kotak Bank targeted to maintain NIMs between 4.3% and 4.5%.