The market has given more than 50 percent return in last one year and has climbed several milestones. Recently, the BSE Sensex scaled above 61,000 and Nifty50 above 18,300 mark for the first time on expectations of robust corporate earnings & economic growth, low interest rate environment, and easing Covid risk with increasing pace of vaccination.
The broader market has continued to outshine benchmarks.
In the last one year, the market run has created many multibaggers. Investors who had bought stocks in March 2020 crash have been real wealth creators. "Such opportunities come once (or rarely twice) in a decade. Going ahead, with the expectations of strong economic and corporate earnings growth, the opportunities in market are likely to be huge in several sectors, experts feel.
On the occasion of Dussehra, experts list out 10 fundamental picks that can be considered for buying:
Dussehra stock picks by Hem Securities
1) Tata Motors
Tata Motors (TML) is India's largest commercial vehicle (CV) company and one of the leading passenger vehicle (PV) player. The company has aggressive plans for expansion of electric vehicle portfolio by investing $2 billion towards product development, technology, charging infra, network expansion and localisation. Recently, TPG Group said it will invest Rs 7,500 crore in Tata Motors' new wholly-owned electric vehicle subsidiary (EVco). The management expects EV industry to grow 2.5-2.7x in FY22. Tata Motors aggressively targets zero net debt for FY24.
2) Deepak Fertilizers and Petrochemicals Corporation
Deepak Fertilizers is amongst India's leading producers of fertilisers and industrial chemicals. Its FY21 revenue growth was more than 24 percent and EBITDA doubled, whereas net profit grew 4.6 times.
Also, the company has obtained REACH registration that opens up possibility of exports into European Union in near future. In addition, it forayed into the manufacture of IPA based hand sanitizers, wipes and rubbing alcohol. Promoter stake was also increased continuously over the previous 4-6 quarters.
3) GR Infraprojects
It's in-house integrated model reduces dependence on third party suppliers for key raw materials, construction equipment and other products and services required in the development and construction of its projects. The company also has very low debt with net debt to equity of 0.2x. The company has experience in design and construction of various road/highway projects across 15 states.
Recently, it diversified into projects in the railway sector. The company reported a return on equity of 24 percent in FY21, amongst the best in the industry. Strong order book (FY2021 order book/sales ratio stands at 2.4x). The company has good completion track record and has received bonus of Rs 280 crore till date for completing projects before the stipulated time.
4) Borosil Renewables
It is the sole manufacturer of solar glass in India and with Make in India focus led by anti-dumping duties and PLI (production linked incentive) scheme for domestic solar module manufacturing, it is set to multifold its operations in coming years.
The company has already announced capacity expansion plans for up to 4 times its current levels. Moreover, Government of India revised renewable energy target to 450 GW by 2030 from earlier target of 300 GW. Government is also welcoming foreign investments in this sector.
5) Shakti Pumps
Shakti Pumps is one of the leading brand in solar pump space and also a major beneficiary of PM-Kusum Scheme which targets to install 37.5 lakh solar pumps in India in coming years.
Last financial year, it grew its business nearly 3 times with the help of Kusum Scheme and increase in exports. Management has guided to double its revenue to Rs 2,000 crore in FY22 with a healthy margin profile.
Dussehra stock picks by Samco Securities
6) Hindustan Unilever
Hindustan Unilever is India's largest fast-moving consumer goods company as a result of its vast distribution reach and a tremendous portfolio of large brands. It is the market leader in 80 percent of its portfolio and in FY21 gained market share in 84 percent of its entire portfolio. It continues to display agility over the last decade and has gained superiority amongst its peers.
With increased focus on premium products, host of initiatives in the e-commerce market, recovery in the discretionary category, premiumization, synergies from GSK Consumer Healthcare and leverage in its digitalization capabilities, HUL is ensuring that it remains competitive in the current dynamic environment. It is confident of consistent double-digit EPS growth over the coming decade. Given its leadership position, HUL is slated to capitalize on long-term growth in the FMCG industry in India and we maintain a positive outlook on it.
7) Dr. Lal PathLabs
Dr. Lal Path Labs is engaged in providing diagnostic and related healthcare tests and services nationally and internationally. The company has been compounding its sales by almost 21 percent over the last decade and has also a maintained a healthy return on equity of 26 percent over the same period. Along with the pandemic induced increased test volumes, the companies' persistent focus of service parameters and timely turnarounds have aided in achieving resilient growth.
In order to increase its geographical penetration, the company is also expanding its network of laboratories and collection centers in West & South India. In addition, the company is consistently working to strengthen its tech-enabled processes in order to be future growth ready. With the diagnostic industry poised for growth, we believe premium and organised players like Dr. Lal Path Labs are set to gain market share and thus is an attractive investment bet.
8) Computer Age Management Services
Computer Age Management Services is the market leader with a share of over 70 percent of total Mutual Fund AUM in a duopoly RTA market. It has outperformed the MF Industry's AUM growth by 3 percent from March 2014 to March 2020 and maintained its leadership position since 2005-06. The company also has a strong and consistent financial track record of compounding sales and profit growth by 8 percent and 13 percent respectively over the last 10 years.
It also rewards its handsomely rewards its stakeholders through a robust average ROE and ROCE of around 36 and 52 percent respectively in the last 5 years. Additionally, India has one of the lowest MF penetrations globally with an AUM-GDP ratio of 12 percent versus world average of 65 percent, this itself offers long-term growth potential for the overall MF and in-turn for the RTA industry. CAMS has been an attractive opportunity for investors since its listing and continues to be one.
9) Affle (India)
Affle is a leading adtech company with proprietary consumer intelligence platform helping its customers to drive user acquisitions and improve user engagements through relevant mobile advertising. Affle has achieved over 40 percent revenue CAGR over FY19 to FY21 with focus on top industry verticals in the internet segment and on faster growing emerging markets.
With a leadership position in both in-app and on-device ecosystems, end-to-end offerings in the CPCU business model, first-mover advantage in the connected device segment and an improving share of mobile ad spends, Affle is well positioned to capitalise on opportunities created in the underpenetrated industry. The management of the company expects the operating margin to be sustainable in the forthcoming quarters and aims to deliver at least 25-30 percent revenue CAGR over the medium term. We remain positive on Affle given its strong balance sheet, positive cash flow conversions, increased platform usage and a long growth runway.
10) Housing Development Finance Corporation
HDFC is India's largest mortgage lender in the current environment and remains one of the best real estate proxy play in India. With its nearly stable asset quality performance during a period when other rivals in the housing and asset financing sectors reported a large spike in stressed loans, the company has surprised the market. It has secured its position with access to low-cost funds, a solid ALM position and comfortable leverage.
Sufficient balance-sheet provisioning also provides cushion from any asset quality surprises. HDFC is well-positioned to acquire a profitable market share as demand for home loans continue to remain buoyant. Disbursements have also picked up pace with the nation-wide unlocking. In addition to this, the industry is in a sweet spot with interest rates at historical lows, robust housing demand and improving collection efficiency. The stock thus remains one of the best picks in this space.Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.