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HDFC Bank, Ashok Leyland, Lemon Tree, Sobha among top Diwali picks of Angel One

Ashok Leyland, Stove Kraft, Shriram City Union, Federal Bank, Suprajit Engineering, Carborundum Universal, Sobha, Lemon Tree Hotels are among the top 16 picks of Angel One for Diwali 2021.

November 02, 2021 / 03:07 PM IST
Broking house Angel Broking expect the economic recovery process to continue led by strong festive demand and continued acceleration in the services sector. Going ahead, it expect banking and consumer-facing sectors to drive the markets given an expected rebound in earnings in H2FY2022 and remain positive on the IT sector given the structural up-shift in the medium-term growth trajectory for the sector.
Angel One expects the economic recovery process to continue, led by strong festive demand and continued acceleration in the services sector. Going ahead, the broking house expects banking and consumer-facing sectors to drive the markets, given an expected rebound in earnings in H2FY2022 and remain positive on the IT sector, given the structural up-shift in the medium-term growth trajectory for the sector.
Federal Bank | Target: Rs 135 | Overall asset quality for the quarter improved in Q2FY2022 which was better than broking house expectations. It expect asset quality to improve further in H2FY2022 given continued opening up of the economy and to post NII/PPOP/PAT CAGR of 22.8%/23.7%/23.2% between FY2020-23 and remain positive on the bank.
Federal Bank | Target: Rs 135 | Overall asset quality for the quarter improved in Q2FY2022 which was better than the broking house expected. It expects asset quality to improve further in H2FY2022, given continued opening up of the economy and to post NII/PPOP/PAT CAGR of 22.8%/23.7%/23.2% between FY2020 and FY2023 and remain positive on the bank.
HDFC Bank | Target: Rs 1859 | The management has indicated that there will be maximum impact of 10-20bps on asset quality from the restructured pool. Given best in class asset quality and expected rebound in growth from H2FY2022 Angel Broking positive on the bank given reasonable valuations at 3.2x FY23 adjusted book which is at a discount to historical averages.
HDFC Bank | Target: Rs 1,859 | The management has indicated that there will be maximum impact of 10-20bps on asset quality from the restructured pool. Given the best-in-class asset quality and expected rebound in growth from H2FY2022, Angel One is positive on the bank with reasonable valuations at 3.2x FY23 adjusted book which is at a discount to historical averages.
AU Small Finance Bank | Target: Rs 1,520 | Angel Broking expect company to post robust NII/PPOP/ PAT CAGR of 21.7%/25.1%/26.4% between FY2020-23 on the back of AUM CAGR of 23.6%. Reducing cost of funds will also help NIM expansion going forward. It believe that the worst is over for the bank in terms of asset quality and expect significant improvement in asset quality in H2FY2022 which should lead to a rerating.
AU Small Finance Bank | Target: Rs 1,520 | Angel One expects the company to post robust NII/PPOP/ PAT CAGR of 21.7%/25.1%/26.4% between FY2020 and FY2023 on the back of AUM CAGR of 23.6%. Reducing cost of funds will also help NIM expansion going forward. It believe that the worst is over for the bank in terms of asset quality and expect significant improvement in asset quality in H2FY2022 which should lead to a rerating.
Shriram City Union | Target: Rs 3,002 | Broking firm believe that asset quality has held up well despite the covid crisis and expect significant improvement in asset quality in H2FY2022. Angel broking is positive on the company as it believe that the worst is over in terms of asset quality which along with positive growth momentum should lead to a rerating for the company.
Shriram City Union | Target: Rs 3,002 | The broking firm believes that the asset quality has held up well despite the COVID crisis and expect significant improvement in asset quality in H2FY2022. Angel One is positive on the company as it believes that the worst is over in terms of asset quality which, along with a positive growth momentum, should lead to a rerating for the company.
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Suprajit Engineering | Target: Rs 425 | Angel One believes the company is a prime beneficiary of a ramp-up in production by OEMs across the globe and is well insulated from the threat of EV (it is developing new products).
Sona BLW Precision Forgings | Target: Rs 775 | Given the traction in the BEV/Hybrid Vehicle space, broking house believe that SonaComstar will continue to command a higher multiple which is justified by ~49% earning CAGR over FY21-24E
Sona BLW Precision Forgings | Target: Rs 775 | Given the traction in the BEV/Hybrid Vehicle space, the broking house believes that SonaComstar will continue to command a higher multiple which is justified by 49% earning CAGR over FY21-24.
Ramkrishna Forgings | Target: Rs 1,545 | With the end to the CAPEX cycle, the favorable outlook in the medium term, and sufficient capacity in place, broking house believe company's volumes would be able to post volume CAGR of 29% over FY21-23E. Better mix along with operating leverage is expected to result in ~550 YoY bps EBITDA margin improvement in FY22E
Ramkrishna Forgings | Target: Rs 1,545 | With the end to the CAPEX cycle, the favourable outlook in the medium term, and sufficient capacity in place, the broking house believes the company's volumes would be able to post a CAGR of 29% over FY21-23. Better mix, along with operating leverage, is expected to result in 550 bps YoY  EBITDA margin improvement in FY22.
Ashok Leyland | Target: Rs 175 | FY21 MHCV industry production volumes have been at the lowest levels seen in ~12 years and Angel broking believe that the company is ideally placed to capture the growth revival in the CV segment. Broking firm believe that company will be the biggest beneficiary of the Government's voluntary scrappage policy and hence rate the stock a buy.
Ashok Leyland | Target: Rs 175 | FY21 MHCV industry production volumes have been at the lowest levels seen in 12 years and Angel One believes that the company is ideally placed to capture the growth revival in the CV segment. The broking firm believes that the company will be the biggest beneficiary of the government's voluntary scrappage policy and hence rate the stock a buy.
PI Industries | Target: Rs 3,950 | PI Industries has announced that they will be acquiring the API business of Indswift labs for a consideration of Rs 1,500 crore. Indswift labs had clocked revenues of Rs 850 crore in FY21 and provides PI with an entry into the API business which will help provide the company with an additional lever to drive growth.
PI Industries | Target: Rs 3,950 | PI Industries has announced that they will be acquiring the API business of Indswift labs for a consideration of Rs 1,500 crore. Indswift labs had clocked revenues of Rs 850 crore in FY21 and provides PI with an entry into the API business which will help provide the company with an additional lever to drive growth.
Carborundum Universal | Target: Rs 1,010 | The company has shown good execution in recent quarters with a strong performance in Abrasives and EMD segments. Within Abrasive, the company is gaining market share (supply chain issues/preference for Indian suppliers) and should benefit from a good end-user industry demand.
Carborundum Universal | Target: Rs 1,010 | The company has shown good execution in recent quarters with a strong performance in Abrasives and EMD segments. Within Abrasive, the company is gaining market share (supply chain issues/preference for Indian suppliers) and should benefit from a good end-user industry demand.
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Whirlpool India | Target: Rs 2,760 | Going forward, broking firm expect healthy profitability on back of strong brand, wide distribution network, capacity expansion and strengthen product portfolio.
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Lemon Tree Hotels | Target: Rs 84 | Occupancy levels which had dropped to 20% in May due to the lockdowns have now been stable at over 50% in Q2FY2022. The broking firm expects the occupancy levels to improve further from here on due to the ongoing festive season and improve further in FY2023, driving revenue and profitability back to pre-COVID levels in FY2023.
Safari Industries India | Target: Rs 979 | The company has a wide distribution network which would support growth going ahead. Focused product strategy and diversified product portfolio to boost growth. Going forward, Angel Broking expect company to report strong top-line & Bottom-line growth on the back of strong growth in the organized sector, wide distribution network, strong brand & promoter initiatives.
Safari Industries India | Target: Rs 979 | The company has a wide distribution network which would support growth going ahead. Focused product strategy and diversified product portfolio to boost growth. Going forward, Angel One expects the company to report strong topline and bottomline growth on the back of strong growth in the organised sector, wide distribution network, strong brand and promoter initiatives.
appliances
Stove Kraft | Target: Rs 1,288 | Going forward, Angel One expects the company to report healthy topline and bottomline growth on the back of new product launches, strong brand name and wide distribution network.
Amber Enterprises India | The company has invested $1,00,000 in Amber Enterprises USA Inc. and has been allotted 1,00,000 common stock at par value of $1 per share. Post the allotment of shares, Amber Enterprises USA Inc has now become wholly owned subsidiary of Amber Enterprises India.
Amber Enterprises | Target: Rs 4,150 | Going forward, Angel One expects healthy profitability on the back of foray into the Commercial AC segment, entry into export markets and, participation in the PLI scheme.
Sobha | Target: Rs 950 | Ready to move inventory and under construction inventory levels have moved down to its lowest levels. Customers are now having preference towards the branded players like Sobha Developers. Company expected to launch 17 new projects/phase spread over 12.56mn sqft across various geographies.
Sobha | Target: Rs 950 | Ready to move inventory and under construction inventory levels have moved down to its lowest levels. Customers are now having preference towards the branded players like Sobha Developers. Company expected to launch 17 new projects/phase spread over 12.56 million sq ft across various geographies.
Rakesh Patil
first published: Nov 1, 2021 12:12 pm

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