The Indian markets created history in Samvat 2077 by hitting milestone after milestone. The broadly tracked indices, BSE Sensex, surpassed the magical 60,000 mark on September 24, 2021, while Nifty surpassed the 18,000 mark on October 11, 2021.
The upmove in the markets was exceptional, considering the spread of Covid and subsequent lockdowns. The upmove was driven by all class of investors. While foreign portfolio investors (FPIs) set forth their conviction in the Indian capital market by infusing Rs 66,000 crore in equities year-to-date (YTD), the retail category wasn’t behind. Equity remained the blue-eyed boy of all sets of investors this Samvat.
Here is a list of stocks that some of the top brokerage firms recommend to investors to help them grow their wealth this Diwali. Do your own research before buying into the stocks.
ACC is ahead of its capacity expansion in Central India and new WHRS (waste heat recovery systems) capacity commissioning in CY22E. ACC is a free cashflow generating company. The company is net debt-free.
Recovery in refining margins is expected driven by sustained improvement in global demand, and robust marketing margins despite elevated oil prices. There is potential value unlocking expected from privatization.
UBC scrap spreads in August 2021 hit new record highs led by improved collection rates and rising aluminium prices. Strong aluminium prices and record margins at Novelis may drive earnings upgrades.
HUVR reiterates its strategy of growing the core, premiumization and market development. The company is a market leader in the home care segment.
Infosys is well-equipped for industry-leading growth in the medium term. Infosys will be at the forefront of core transformation deals and managing the digital journey of clients.
State Bank of India
SBI is well positioned to emerge stronger. We can see more aggression on growth. SBI reported over 45 per cent year-on-year earnings growth on the back of about 15 per cent decline in provisions. NPL (non-performing loan) ratios were largely unchanged; restructured book is at 0.8 per cent. It has built additional provision buffers and the road to RoE (return on equity) normalization is shorter.
Bata has devised new strategies that would aid in providing thrust to revenue growth. It is tweaking the product portfolio in favour of casual footwear that is experiencing higher demand. It is providing more visibility at stores for younger brands like Hush Puppies, Power and North Star.
Bank of Baroda
We believe credit growth will pick up with unlocking and speedy economic recovery. The transfer of NPAs (non-performing assets) to bad bank would lower broad NPA numbers and aid recovery. Q2FY22 could see recovery from DHFL that can boost earnings while the recent outlook upgrade by Moody’s on the Indian banking system would impact BoB positively as well.
It has 27.4 million square feet (msf) of completed, ongoing and forthcoming residential projects across seven cities and over 5,000 acres of ongoing and forthcoming projects under development at its integrated developments and industrial clusters across four locations
Going ahead, triggers such as PLI schemes, the softening of interest rates and credit availability, the lower tax rates for new manufacturing facilities, coupled with the global realignment of manufacturing, supply chains will drive IC & IC business.
Vardhman Special Steel
Vardhman Special Steel is among India’s leading steel bar producers for automotive applications. It has specialised product offerings, which include steel bars and rods and bright bars of various categories of special and alloy steel. The company is focusing on improving capital efficiency and is targeting an EBITDA/capital employed of 25 per cent by FY25
Action Construction Equipment
The company commands a strong market share over 60 per cent in the crane market and drives 70 per cent of the business. This segment will continue to grow in the 15 per cent range in the medium term given pick up in infrastructure and industrial cycle.
IDBI Capital Brokerage
Max Healthcare Institute
A dominant player in north India, MHI’s network consists of 10 owned/leased hospitals, four partnered healthcare facilities and two Radiant hospitals. It has a dominant presence in the northern region, which accounts for over 92 per cent of its revenues.
With residential demand staying strong, DLF is ramping up its launch pipeline buoyed by its improving sales trajectory. With the plan on track, the company is expected to launch 6.6msf in 2HFY22.
Considering the last five quarters, DLF has been reducing its net debt and the trend is expected to continue.
Sona BLW Precision Forgings
So far, SONACOMS has been cumulatively awarded 58 programs from 27 customers across its product portfolio from international and Indian customers. Out of this, 36 per cent of programs (21 programs) have commenced production, while the remaining 64 per cent of programs are likely to commence production over the next 18 months. We believe the company is set for rapid growth as more programs start commencing production and supply to its customers.
Maruti Suzuki India
The Indian passenger vehicles (PV) market is on the verge of a turnaround as the Indian economy and the manufacturing industry is in expansion mode, followed by increasing trend towards having one’s own vehicle among the masses. We believe both the urban and rural markets will drive the PV market.
The company has incurred capex of about Rs 4.4 billion during FY19-21 and the enhanced capacities should steer revenue growth for the next couple of years. The company increased capacities of Chlorophenols products by 3.75-times in FY20, which at full utilization could contribute about Rs 3-4 billion to revenues.
CCL Products (India)
The company has a strong order backlog for its coffee exports business currently and is now accepting orders for FY23. Its retail business revenue grew by 74 per cent y-o-y to Rs 1,340 million during FY21, of which nearly two-thirds was from the branded business.
Over FY16-FY21, Surya has gradually improved its product mix in favour of high-margin GI pipes and API pipes. Its entry into consumer durables and home appliances leveraging its distribution network bodes well.
Rising adoption of smartphones, high internet speed and Covid has led to the digitization of the business model. The company has made strategic acquisition which helps it to have a competitive edge. Route operates via virtualised data centres and has proprietary software which requires minimal capex.
Federal Bank has access to low-cost NRI deposits due to its structural advantage of branch concentration in Kerala.
HDFC Life’s market share in Individual APE (annual premium equivalent) is set to increase to 16.8 per cent as per FY21: The acquisition of Exide Life would enable HDFC Life to increase its market share to 16.5 per cent (15.1 per cent for FY21), as per the total new business APE.
SBI Cards enjoys SBI’s strong parentage, with an extensive network of 22,000 branches and a vast customer base of 450 million. India’s credit card industry has been growing at a rapid pace for the past few years, led by an increased focus on digitalization and growing e-commerce.