We entered into Samvat 2077 on November 14 after witnessing double-digit gains in the equity benchmarks in last Samvat 2076. Also, just before the beginning of Diwali, the market hit a fresh record high this week after a gap of almost 10 months from last record high seen in January this year and recouped all its losses seen during March lows due to COVID-19 crisis.
It indicated that Diwali celebration started off much ahead of Diwali. And with the end of uncertainty related to US elections, likely continuity in liquidity flow given the stimulus by global central banks to boost economies, better-than-expected September quarter earnings and positive management commentaries indicating strong earnings growth in FY22, and economic data points pointing towards better economic growth in the second half of FY21 than the first half of FY21 and double-digit growth in FY22, the Samvat 2077 is expected to be a really Happy and Prosperous year for the market, experts feel.
Generally, the muhurat trading brings prosperity and wealth throughout the year. It takes place on the Laxmi Pujan day for an hour in the evening.
"Given the improving macro backdrop as well as the environment of low prevailing interest rates and a weak US Dollar, we expect Indian equity markets to continue to do well in 2021. However, given the steep rally seen in the last few months and the stretched valuations in some sectors, the near term outlook on the market would be 'neutral'," Unmesh Kulkarni, Managing Director Senior Advisor at Julius Baer India told Moneycontrol.
"The next decisive move in the markets could come with the economy and earnings picking up in a consistent manner over the next couple of quarters. At the aggregate Nifty level, a higher single-digit or lower double-digit performance seems to be the likely scenario in the new Samvat 2077," he said.
Here is a list of 15 stocks picks from experts, which could return 14-86 percent by Samvat 2077-end:
Expert: Rusmik Oza, Executive VP, (Head of Fundamental Research-PCG) at Kotak Securities
We believe Bharti remains a solid medium-term bet on the back of improvement in sector fundamentals (regardless of whether the end game is a 2-player structure or a 3-player one) and sustained solid execution. Management has guided for Average Revenue Per User (ARPU) to move to Rs 200 in the short term and Rs 300 in the medium term. Company is looking to develop new streams of revenues and drive efficiencies through its digital platform. Besides this, the company is also seeing good growth in the enterprise solutions and has recently launched Airtel IQ, a cloud-based omni-channel communications platform. Based on the Sum of the parts (SOTP) we arrive at a target price of Rs 710.
KPTL reported better-than-expected performance in Q2FY21 on the faster ramp-up of operations, cost-control measures and higher other income. KPTL management's clarification on the group real estate business and target for reduction in pledges was comforting. Order inflows are gradually recovering. Company has received orders of around Rs 3,200 crore in FY21 to date with L1 position in orders of around Rs 2,400 crore. Consolidated order backlog at the end Q2FY21 was Rs 26,500 crore.
Management has maintained revenue growth guidance of 5-10 percent for FY21. Cash flows from the sale of Jhajhar unit to India Grid Trust have been received and all approvals for the sale of Alipurdar Transmission project to Adani Transmission Ltd have been received and cash proceeds are expected to come by November 2020. Expect the company to be debt-free in FY22E. We arrive at a Sum of The Parts (SoTP) based Fair Value of Rs 475.
Expert: Vineeta Sharma, Head of Research at Narnolia Financial Advisors
Bandhan Bank is focused on serving the unbanked and underbanked population of India. Around 71 percent of the branches/DSCs are in rural and semi-urban areas, thus furthering the objective of financial inclusion. Bandhan is already present in North & East so may easily capitalise on UP opportunity. High-quality low-cost deposit franchisee of PSU in Bihar, Jharkhand, Assam, West Bengal and UP can easily migrate to nimble and efficient private banks like Bandhan. There is also a strong housing opportunity for Bandhan Bank which it will capitalize through GRUH merger. Cost income Ratio is low and Asset quality of the company is maintained.
ICICI Lombard General Insurance
The 0.97 percent penetration of non-life insurance industry in India as a percentage of GDP gives us a clear picture of the kind of growth Insurance as a sector will have going forward. The company offers various insurances covering travel, home, health and motor segments. The company has strong brand equity, extensive distribution reach, strong digital capabilities and a comprehensive product portfolio. About 96.5 percent of the policies issued by the company are in paperless form now. On the health insurance front, the company has introduced an AI-enabled claim settlement engine to authorise some of the health claims.
During the lockdown months of April and May, 31 percent of all the health cashless claims were authorised using this tool. The company is increasing sales infrastructure/manpower to increase penetration in Tier 3 & 4 cities and hence may see an increase in headcount in the medium term. Renewals in the motor insurance during the lockdown were reasonably strong and the trend is encouraging with private cars increasing in the mix for the company. The general insurance space looks attractive with strong growth potential.
Bharti Airtel is a leading global telecommunications company with operations in 16 countries across Asia and Africa. Indian telecom ARPU is at an unsustainable lower level. Low data cost per GB in India 9 cents, lowest in world versus average $5 globally. India’s digital payment space is expected to grow the segment by about five-fold to $1 trillion by 2023. The exponential increase in data usage will lead to higher ARPU. The company has been able to successfully turnaround the Africa Business. We see huge headroom for growth in Africa too. The company currently trades at the lower end of EV/ EBIDTA valuation range of 8-15.
Expert: Jyoti Roy, DVP-Equity Strategist at Angel Broking
Cholamandalam Investment has one of the most diversified AUMs in terms of product mix and geographical presence. The company has posted a very good set of number for Q2FY21 and has given AUM growth guidance of 12-15 percent for FY21 while asset quality has also improved. A diversified product mix will help capture growth in the LCV, tractor, and 2-wheeler segment. Adequate capital adequacy, declining cost of funds and strong parentage provide comfort. The company will benefit significantly from stabilization in the operating environment.
The company has been increasing its share of high margin specialty care products in its portfolio which now accounts for around 40 percent of its revenues while the balance is accounted for by the performance surfactant business. The company has a very strong relationship with MNC clients and supplies raw materials to them not only in India but also in US, EU and MENA region. Though the company's operations had been impacted due to the COVID-19 outbreak in Q1FY21, we expect revenues to bounce back strongly in Q2FY21 given the company's exposure to the personal and home care segment and recovery in the specialty segment.
Company has an asset light model with a strong Balance sheet having cash and cash equivalents to the tune of Rs 235 crore as on June 30, 2020. From 62.6 percent revenue de-growth (including covid testing) YoY in April 2020, the company has registered 40 percent revenue growth in September 2020 as COVID revenue is an additional source of revenue for the company. Non-COVID business is almost back to the normal. We are positive on the long term prospects of the company given expected long term growth rates of around 15 percent CAGR, stable margins profile and moderating competitive intensity.
Expert: Ajit Mishra, VP Research at Religare Broking
The COVID-19 pandemic has impacted the banking sector as a whole however measures lend by RBI and government help it to pass through this difficult time. At present in Q2FY21, we witnessed many banking players (both private and public banks) posted better numbers on the back of improving asset quality, better collections and lower provision.
In the coming quarters, with improving demand and the economy getting back on track, the banking sector would see good growth recovery. We would prefer investing in large private banking space with ICICI bank as our preferred pick. The bank has a strong brand name, high focus on the retail portfolio, healthy capital and liquidity position, stable asset quality, a large customer base and improved corporate governance under new management. We remain optimistic about its long-term growth.
Bharti Airtel is well placed to benefit from increased traction received in digital services which we believe is likely to continue going forward. After a steady addition of customers, Bharti can continue to gain market share in the mobile services business. The uncertainty over AGR dues is also behind us as Supreme Court has allowed 10 years payment window for telecom operators. In our view, the tariff hike would continue from here on, to reduce the financial stress on telecom companies which would benefit Bharti Airtel due to its strong customer base and a healthy addition of 4G customers. Further, strong cash flow generation would also help in deleveraging the balance sheet.
Indian paint sector is expected to grow in double-digit driven by government initiatives for housing, rising disposable income, increase in rural spending, and reduction in repainting cycle and pickup in auto demand. In the near term, due to COVID as well as the slowdown in Auto, KNPL performance is expected to be muted in FY21 as it is a market leader in industrial paint segment. Nonetheless, going forward, the company has plans to grow in both decorative as well as industrial space and gain market share driven by innovative products, focus on non-auto segments, increase distribution network and expand in newer areas that are technology-intensive. Further, support from parent as well as technical collaboration with other global players augurs well for the growth. Moreover, its recent foray into adhesives and construction chemicals segment would aid benefits in the coming quarters. Besides, benign raw material prices would as well help for the expansion of margin for the company.
Expert: S Ranganathan, Heaf of Research at LKP Securities
Action Construction Equipment is a classic smallcap to play the opening up theme of the economy across sectors including the agriculture sector. Given its strong balance sheet and promoter holding we believe that ACE is a proxy play across construction, material handling & tractors.
Raymond with a solid brand equity in apparels is also a major player in textiles & garmenting. The stock being a victim of the pandemic offers value across its various verticals since the cost optimisation and operating efficiencies are now visible in their first half numbers. De-Merger should in our view enhance shareholder value by next Samvat.
Polycab is undergoing a transformation from being a B2B entity to a B2C entity with its fast moving electrical branded products growing at a scorching pace. We believe that given its brand equity, Polycab is in a sweet spot and can emerge much stronger next fiscal.
Expert: Prashanth Tapse, AVP Research at Mehta Equities
We have seen remarkable comeback in the auto stocks of late in last 2 months and we believe Tata Motors has a lot of potential to perform. It has remained a high beta stock because of lot of news flow from JLR Europe, China market and Brexit uncertainty, but now, tables have turned and improvement is being witnessed in both JLR and Tata Motors domestic business. If investors are looking for a multibagger, Tata Motors could be a strong candidate from current levels. Hence we recommend investors to accumulate in range Rs 130-140 levels.
Investor looking for a high quality business with consistent earnings growth, this stock offers the best in class investment opportunity to accumulate at the current levels in the range of Rs 570-600. We believe insurance space is the next rising sector, driven by structural factors such pick-up in the economy, increasing share of insurance products within financial assets, increasing working population and growing urbanisation will be key to the growth of insurance sector. Considering optimal scale of operations, efficient use of distribution channels (bank support), healthy persistency ratios and higher new business mix from protection business drives future growth.
We see opportunity for insurance industry amid COVID-19. We believe people would start realizing the importance of insurance and the backing it provides in the trying times like the current ones. Even though there has been a slowdown in the last 2 months in terms of adding new policies, we still believe HDFC Life is optimistic on protection growth and as soon as things get normalised in near future people will look for brand and take up policy for life. HDFC Life continued to be the market leaders in terms of total new business received premium with a leading market share in the private sector compared to others. Hence we believe the stock to deliver steady returns over the medium term. On valuation per se, it is trading in premium valuations to its listed peers while we expect this to sustain and the stock to deliver steady returns over the medium term to long term.
Expert: Gaurav Garg, Head of Research at CapitalVia Global Research
The stock is leading private life insurance company with robust operating margin margins, stock has potential to show good numbers in coming quarters too.
Adani Ports and Special Economic Zone
Adani Ports received good addition of orders in its order book. Company has potential to surprise with its results in next few quarters which might boost its earnings.
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.
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