As India prepares to celebrate its Diwali festival this weekend, stock traders see growing signs of an economic recovery from the pandemic as reason to encourage and advise investors to buy cyclical stocks.
Companies in sectors that include cement, housing, software, healthcare, telecommunications and finance are among their top picks as business activity in the country picks up after the world’s largest blockade. Diwali, the Hindu festival of lights, is considered conducive to buying everything from cars to apartments, and even stocks.
India’s industrial production turned positive for the first time in seven months in September, official data showed on Wednesday. And the benchmark S&P BSE Sensex index rose to a record this week as foreign purchases of local stocks surged.
“With economic activity recovering rapidly, further improvements in earnings cannot be ruled out,” Motilal Oswal Financial Services Ltd. said in a note. “Strong global markets can maintain abundant liquidity in the system, providing support to the broader market.”
Below are some of top analyst picks for festival season:
IIFL values
- Reliance Industries Ltd.
- The retail and telecommunications businesses have allowed significant deleveraging and are performing solidly, offsetting the weakness in refinement.
- Entry into postpaid and enterprise segments, collaboration with Google for entry-level smartphones will drive growth for Jio
- Infosys Ltd.
- Should outperform Tata Consultancy Services Ltd. in revenue growth in fiscal year 21 for the first time in 15 years
- With the investment phase completed, margins should start to improve
Anand Rathi Values
- Divi’s Laboratories Ltd.
- Leading manufacturer of active pharmaceutical ingredients, with over 70% of revenues from Europe and the US.
- Good growth prospects thanks to changes in the supply chain and diversification outside of China
- VIP Industries Ltd.
- Baggage demand is gradually picking up as shopping malls reopen and travel resumes
- A strong balance sheet and a leading position in the market make it better positioned to deal with difficult market conditions than its peers.
Motilal Oswal
- Bharti Airtel Ltd.
- There was strong mobile Ebitda growth in India of 16% cumulative over the last two quarters
- Strong subscriber base of 10 million
- State Bank of India
- Earnings normalization has begun
- The best game among public sector banks in gradual economic recovery
- Healthy provision coverage, robust capitalization, strong deposit base, and improved core operating profitability
Axis values
- Can Fin Homes Ltd.
- Strong Balance Sheet, Low Bad Loans, Strong Underwriting, and Well Distributed Loan Portfolio
- Ability to improve net interest margin in a difficult environment
- It should recover more quickly than its peers due to its loan mix and negligible exposure to real estate developers
- Dalmia Bharat Ltd.
- To benefit from the reactivation of the demand for cement
- Capacity expansion, better monitoring of cost drivers and higher realization to drive sales and profit growth
Nirmal Bang Institutional Equities
- HCL Technologies Ltd.
- To benefit from pandemic catalyzed digital infrastructure construction, a 3-5 year opportunity
- It has the highest opportunity among Indian players, with approximately 30% of its revenue coming from helping clients move infrastructure to the cloud.
- Inox Leisure Ltd.
- Wide room for growth with an attractive valuation from a medium-term perspective
- It should benefit from pent-up demand among moviegoers for single-screen closures and smaller theater chains.
- A strong balance sheet is a huge positive for PVR Ltd.
HDFC values
- Bharti Airtel Ltd.
- Average revenue per user has risen for the fourth consecutive quarter, helped by higher data usage and rate increases
- Collaboration with Amazon on cloud solutions is positive
- ICICI Bank Ltd.
- Strong retail book composition and industry-best supply coverage make it better positioned than its peers to deal with virus-related stress
- Will gain market share from the public sector and weaker private sector banks
- It is negotiated with deep discounts against the largest private sector bank
This story was posted from an agency feed with no text changes. Only the title has been changed.
.
