On a year-to-date (YTD) basis, as many as six out of 10 stocks failed to even match the Sensex’s return of 1.09 percent.
Consensus might not be able to spot a multibagger but they could spot safe investments. Not all stocks which carry a maximum buy rating have managed to beat the benchmark index by a wide margin, according to a study conducted by Motilal Oswal.
The constituents of the BSE 100 index can be referred to as quality names. Stocks with the highest buy rating in the index include MRF, Vedanta, Mahindra & Mahindra (M&M), ICICI Bank, Aurobindo Pharma, HDFC Bank, Crompton Greaves, Federal Bank, UPL and Tata Chemicals.
Among these companies, MRF has been trending higher since its Q3 FY18 earnings, aided by strong revenue growth and stable rubber prices.
M&M is the best play on a rural recovery, as the recovery in the hinterland improves visibility of volumes in the tractor and utility vehicle businesses. “The tractor business is launching its third brand – Trakstar – which will focus on undercutting lower-priced competitors by 5-10 percent. The intent is to gain 3-5 percent market share,” the report stated.
HDFC Bank has consistently grown its loans and deposits market share across credit cycles. It has also emerged as the best-managed bank in India with robust profitability and growth metrics. The brokerage said increasing granularity of HDFC Bank’s balance sheet, focus on fee income growth, improvement in operating leverage aided by digital initiatives and controlled credit costs backed by strong underwriting has enabled it to outperform most peers.
Aurobindo Pharma, which has delivered negative returns so far in 2018 and the last one year, is a good buy on dips stock for Motilal Oswal. The pharma major has transformed from being a pure active pharmaceutical ingredient (API) player to a formulations manufacturing company.
“The company has an extensive diversified product portfolio with vast global reach. Over the last decade, it has further entrenched its position in the US with swift Abbreviated New Drug Application (ANDA) approvals. We expect the company to continue to flourish over the next decade aided by the following drivers,” Way2Wealth Brokers said in a research note.
The management has set an optimistic target of 50 percent YoY growth for the next few years. Its subsidiary AuroMedics Pharma will start filing ANDAs for complex injectable including microsphere, liposomal, hormones, oncology and depot injections, the note stated.
On a year-to-date (YTD) basis, as many as six out of 10 stocks failed to even match the Sensex’s return of 1.09 percent. However, on a year-on-year (YoY) basis, as many as five out of 10 stocks failed to deliver benchmark index returns, which rose 17 percent in the last one year.