Zee Entertainment Enterprises, State Bank of India, Max Financial Services, Aditya Birla Capital, Hindustan Zinc, are among the top ten picks of HDFC Securities for 2022
We are in the final week of 2021 and the market has given around 20 percent return in this year amid mixed cues, including favourable central bank policies across the world, continued FIIs selling amid Omicron-related developments, while vaccination speed and less worries over coronavirus has boosted the investors sentiments. Here are the top 10 picks by HDFC Securities for 2022. Take a look:
2/11
Aditya Birla Capital | Aditya Birla Capital (ABCL) is the holding company of all the financial services businesses of the Aditya Birla group and aims to be an end-to-end financial services provider. The company is implementing a common branch infrastructure, which will allow many of its businesses to enter new locations with a lean and low-cost model and cross-sell products, which could lead to a saving of about Rs 40 crore. Stiff competition from peers and new entrants and worsening of asset quality in the lending book due to the third wave of COVID pandemic and/or slowdown in the economy are key concerns for the stock.
3/11
Gail India | Gail India is planning to expand in petrochemicals, speciality chemicals and renewables to supplement growth in its core business of natural gas marketing and transportation. It plans to bid for new pipelines put on offer by the regulator. Volatility in oil and gas prices, higher tariff reduction in existing pipelines and regulatory changes could impact its growth story in the near future. A general economic slowdown can have an impact on the growth plan of the company.
4/11
Hindustan Zinc | Hindustan Zinc is one of the world’s largest and India’s only integrated manufacturers of zinc-lead and silver. The steel industry depends on the growth of end-user industries such as automotive, consumer durables, batteries, home appliances, construction and infrastructure. Any downturn in any of these industries will impact the demand for galvanised steel. The company also faces regulatory and environmental risks as all mines are clustered in Rajasthan.
Ipca Laboratories | HDFC Securities is positive on the stock on the back of (i) strong volume growth in domestic formulation across therapeutic areas, (ii) cost competitive and consistent quality driving better business prospects in API segment, (iii) robust debt free B/S and strong return ratios, and (iv) better traction in the international markets such as Europe and Asia. Change in the regulatory landscape; and negative outcome of key facility inspections by the US FDA may affect earnings prospects.
6/11
Mahindra and Mahindra | The company is planning to launch 13 products across LCVs, SUVs, and 3Ws to drive growth in the medium term. Around 20 percent of this will be EVs. The company plans to launch 16 electric vehicles by 2027, out of which eight will be electric SUVs and eight light commercial vehicles. Chip shortages, commodity price inflation and the possibility of a third wave of COVID are key risks going forward.
7/11
Max Financial Services | A diversified product portfolio and strong distribution reach have made Max Financial fourth largest private life insurance player in India. Over a long-term period, India’s highly under-penetrated life insurance space is attractively positioned to capture the huge growth opportunity. Rising competition, especially via digital disruptors, poses pricing and volume risk for traditional players.
8/11
Max Healthcare Institute | The company enjoys higher ARPOB compared to peers largely due to a higher share of operational beds in metros/ northern urban areas (Delhi NCR and Mumbai) and a superior case mix. The company enjoys higher occupancy levels across network hospitals. Delay in capacity addition, delay in improvement in payor mix and an unfavourable change in agreement with partnered healthcare facilities (trusts) would impact its operations and profitability.
State Bank of India | The company is better placed to curtail asset quality worries than many other large banks because of its quality of loan books. Moreover, ample provision coverage will curtail incremental loan loss provisions. Given its size and exposure, increasing geographic penetration by newer private sector banks, macro-economic risk can lead to a faster than expected decline in market share.
10/11
Tech Mahindra | The company is well positioned to expand a fair share of 5G network services and the company is experiencing a large deal strategy and customer-led approach. Indian rupee appreciation against the USD, pricing pressure, higher attrition rate and retention of the skilled head-counts, strict immigration norms, and rise in visa costs are key concerns.
11/11
Zee Entertainment Enterprises | Zee Entertainment’s pan-India viewership and focus on digital are likely to anchor growth over the long term. ZEEL and Sony Pictures Networks India (SPNI) have entered into an exclusive, non-binding term sheet for the merger of the two companies. The parent company of SPNI will invest growth capital of $1.6 billion. The merged entity will become the market leader with 25 percent of market share led by wide offerings, robust financials, and strong digital businesses and sports rights.
