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Slideshow | HDFC Bank, Infosys, Britannia among 15 buying ideas by brokerages

Here are the top 15 buying picks by the brokerages which could give upto 26 percent return. (LTP is closing price of July 20)
Jul 21, 2020 / 11:50 AM IST
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Benchmark indices ended higher for the fourth consecutive day on July 20 with Nifty reclaiming 11,000 mark supported by the banking and IT names. Here are 15 long-term buys as recommended by various brokerages
Larsen & Toubro Infotech | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs | Target: Rs 2,645 | Return: percent. Despite the COVID-19 disruption, company's client addition across buckets (3 in USD10-20m and 3 in USD5-10m) was strong and broad-based in 1QFY21. It has recently added several marquee logos (e.g. Standard Chartered), which should provide good headroom for incremental growth, given its proven account mining capabilities. Deal pipeline (+19% YoY) is healthy and the company is optimistic of announcing a few large deals in 2QFY21.
Larsen & Toubro Infotech | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs 2,252 | Target: Rs 2,645 | Return: 17 percent. Despite the COVID-19 disruption, company's client addition across buckets (3 in USD10-20m and 3 in USD5-10m) was strong and broad-based in 1QFY21. It has recently added several marquee logos (e.g. Standard Chartered), which should provide good headroom for incremental growth, given its proven account mining capabilities. Deal pipeline (+19% YoY) is healthy and the company is optimistic of announcing a few large deals in 2QFY21.
L&T Technology Services | Brokerage: Sharekhan | Rating: Buy | LTP: Rs | Target: Rs 1,600 | Return: percent. Sharekhan fine-tuned its earnings estimates for FY2021E/FY2022E factoring in the lag in operating margins and growth guidance for FY2021E. It believes that company is well-placed to gain market share among global competitors and expect growth to normalise in FY2022E on account of catch-up effects and an anticipated demand recovery in major markets.
L&T Technology Services | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 1,405 | Target: Rs 1,600 | Return: 14 percent. Sharekhan fine-tuned its earnings estimates for FY2021E/FY2022E factoring in the lag in operating margins and growth guidance for FY2021E. It believes that company is well-placed to gain market share among global competitors and expect growth to normalise in FY2022E on account of catch-up effects and an anticipated demand recovery in major markets.
Cyient | Brokerage: ICICI Securities | Rating: Buy | LTP: Rs | Target: Rs 330 | Return: percent. The company is taking significant steps on the cost side to right size the cost structure for lower revenues and expects EBIT margin to recover to Q4FY20 levels of 8.4% by Q2FY21. Margins should further improve to around H1FY20 level of 9.5% in H2FY21.
Cyient | Brokerage: ICICI Securities | Rating: Buy | LTP: Rs 297 | Target: Rs 330 | Return: 11 percent. The company is taking significant steps on the cost side to right size the cost structure for lower revenues and expects EBIT margin to recover to Q4FY20 levels of 8.4% by Q2FY21. Margins should further improve to around H1FY20 level of 9.5% in H2FY21.
Infosys | Brokerage: Emkay | Rating: Buy | LTP: Rs | Target: Rs 1000 | Return: percent. Emkay increase FY21-23E EPS by 6%-9% on positive performance and outlook. In FY21 outlook, the company expects 0-2% yoy growth in cc revenue, with EBIT margin in the range of 21-23%, which suggests that Infosys is likely to defend/improve margins on a YoY basis after multiple years of decline.
Infosys | Brokerage: Emkay | Rating: Buy | LTP: Rs 933 | Target: Rs 1000 | Return: 7 percent. Emkay increase FY21-23E EPS by 6%-9% on positive performance and outlook. In FY21 outlook, the company expects 0-2% yoy growth in cc revenue, with EBIT margin in the range of 21-23%, which suggests that Infosys is likely to defend/improve margins on a YoY basis after multiple years of decline.
Federal Bank | Brokerage: AnandRathi | Rating: Buy | LTP: Rs | Target: Rs 58 | Return: percent. With an expected higher slippage rate in H2 FY21, AnandRathi have built in 2% credit costs for FY21. Higher credit costs combined with weaker operating performance (attributed to slower business growth) would keep the bank’s earnings weak in FY21. It estimate a 0.3% RoA for FY21, and 0.9% for FY22.
Federal Bank | Brokerage: Anand Rathi | Rating: Buy | LTP: Rs 53.65 | Target: Rs 58 | Return: 8 percent. With an expected higher slippage rate in H2 FY21, AnandRathi have built in 2% credit costs for FY21. Higher credit costs combined with weaker operating performance (attributed to slower business growth) would keep the bank’s earnings weak in FY21. It estimate a 0.3% RoA for FY21, and 0.9% for FY22.
VST Tillers Tractors | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs | Target: Rs 1,700 | Return: percent. The company possesses a robust balance sheet, which is debt free and cash rich in nature and clocks healthy positive CFOs. With volume uptick in the offering as well as recovery of margin profile, earnings are expected to witness a smart recovery, going forward.
VST Tillers Tractors | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 1,438 | Target: Rs 1,700 | Return: 18 percent. The company possesses a robust balance sheet, which is debt free and cash rich in nature and clocks healthy positive CFOs. With volume uptick in the offering as well as recovery of margin profile, earnings are expected to witness a smart recovery, going forward.
Oberoi Realty | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs | Target: Rs 444 | Return: percent. Mumbai Metropolitan Region is one of the worst affected regions in the country due to the COVID-19 pandemic and is under strict lockdown since the second half of Mar'20. Company's concentration in the geography poses near-term challenges for the company owing to uncertainty around easing of the lockdown. However, the company's balance sheet strength provides comfort. Motilal Oswal expect both residential and annuity segment's momentum to pick up in FY22E, largely driven by the launch of the Thane project at end-FY21 and operationalization of the Borivali mall in 2HFY22E.
Oberoi Realty | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs 367 | Target: Rs 444 | Return: 21 percent. Mumbai Metropolitan Region is one of the worst affected regions in the country due to the COVID-19 pandemic and is under strict lockdown since the second half of Mar'20. Company's concentration in the geography poses near-term challenges for the company owing to uncertainty around easing of the lockdown. However, the company's balance sheet strength provides comfort. Motilal Oswal expect both residential and annuity segment's momentum to pick up in FY22E, largely driven by the launch of the Thane project at end-FY21 and operationalization of the Borivali mall in 2HFY22E.
HCL Technologies | Brokerage: Sharekhan | Rating: Buy | LTP: Rs | Target: Rs 750 | Return: percent. Broking house revised the earnings estimates upward for FY2021E/FY2022E, to factor in better-than-expected margin performance in Q1FY2021 and commentary on stabilization of demand-side impact owing to COVID-19. Strong order flows and vendor consolidation would help the company return to a sequential positive growth trajectory. Robust demand for managed services on cloud platforms and emergence of new business models for deeply impacted verticals would create opportunities for the company.
HCL Technologies | Brokerage: Sharekhan | Rating: Buy | LTP: Rs 648 | Target: Rs 750 | Return: 15 percent. Broking house revised the earnings estimates upward for FY2021E/FY2022E, to factor in better-than-expected margin performance in Q1FY2021 and commentary on stabilization of demand-side impact owing to COVID-19. Strong order flows and vendor consolidation would help the company return to a sequential positive growth trajectory. Robust demand for managed services on cloud platforms and emergence of new business models for deeply impacted verticals would create opportunities for the company.
Britannia Industries | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs | Target: Rs 4,316 | Return: percent. Prabhudas Lilladher believes that the company will maintain strong momentum led by increased in-house consumption, focus on hygiene resulting in consumers gravitating to strong brands and higher growth in low competition adjacencies like Bread, Cake, Rusk, Cream wafers etc. (~20% of sales). It estimate 25.8% PAT growth in FY1 and 16.9% CAGR over FY2023.
Britannia Industries | Brokerage: Prabhudas Lilladher | Rating: Buy | LTP: Rs 3,983 | Target: Rs 4,316 | Return: 8 percent. Prabhudas Lilladher believes that the company will maintain strong momentum led by increased in-house consumption, focus on hygiene resulting in consumers gravitating to strong brands and higher growth in low competition adjacencies like Bread, Cake, Rusk, Cream wafers etc. (~20% of sales). It estimate 25.8% PAT growth in FY1 and 16.9% CAGR over FY2023.
Minda Corporation | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs | Target: Rs 93 | Return: percent. Company management expects industry to remain subdued for the next 1-2 quarters and expects HCV, 3W and CV to affect most in FY21, However 2W and the Tractor segment are expected to do comparatively well. The company is focusing on the interior plastic business in the domestic and export segment going forward, which is a high margin business, compared to existing product profile.
Minda Corporation | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs 70 | Target: Rs 93 | Return: 32 percent. Company management expects industry to remain subdued for the next 1-2 quarters and expects HCV, 3W and CV to affect most in FY21, However 2W and the Tractor segment are expected to do comparatively well. The company is focusing on the interior plastic business in the domestic and export segment going forward, which is a high margin business, compared to existing product profile.
Bharti Infratel | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs | Target: Rs 220 | Return: percent. Company management remains hopeful of a positive outcome on SC AGR case. This is critical for BHIN for retention of key customer. Management also indicates merger with Indus Towers is imminent. Potential risk of exit by key customers due to poor operating performance and/or adverse SC ruling. Reduction in rental/tenant is another key risks. However this is unlikely to play-out in short term as company has locked rentals with key customers upto FY22.
Bharti Infratel | Brokerage: Dolat Capital | Rating: Buy | LTP: Rs 201 | Target: Rs 220 | Return: 9 percent. Company management remains hopeful of a positive outcome on SC AGR case. This is critical for BHIN for retention of key customer. Management also indicates merger with Indus Towers is imminent. Potential risk of exit by key customers due to poor operating performance and/or adverse SC ruling. Reduction in rental/tenant is another key risks. However this is unlikely to play-out in short term as company has locked rentals with key customers upto FY22.
GTPL Hathway | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs | Target: Rs 95 | Return: percent. The company's performance was resilient in tough times capitalising on growth opportunities, especially in the broadband segment. It remains preferred pick in the cable space given the superior financial metric vis-a-vis peer amid strong leadership in key markets. Consistent debt reduction is a positive and geographical expansion in newer markets provides visibility for long term growth.
GTPL Hathway | Brokerage: ICICIdirect | Rating: Buy | LTP: Rs 80.50| Target: Rs 95 | Return: 18 percent. The company's performance was resilient in tough times capitalising on growth opportunities, especially in the broadband segment. It remains preferred pick in the cable space given the superior financial metric vis-a-vis peer amid strong leadership in key markets. Consistent debt reduction is a positive and geographical expansion in newer markets provides visibility for long term growth.
HDFC Bank | Brokerage: Sharekhan| Rating: Buy | LTP: Rs | Target: Rs 1,400 | Return: percent. The bank currently trades at a reasonable ~2.7x its FY2022E book value per share (BVPS), which is reasonable. Broking house believes that the bank’s strong consistency is buoyed by its strong underwriting capability and risk measurement standards, which are strong support for its valuations.
HDFC Bank | Brokerage: Sharekhan| Rating: Buy | LTP: Rs 1,132 | Target: Rs 1,400 | Return: 23 percent. The bank currently trades at a reasonable ~2.7x its FY2022E book value per share (BVPS), which is reasonable. Broking house believes that the bank’s strong consistency is buoyed by its strong underwriting capability and risk measurement standards, which are strong support for its valuations.
Petronet LNG | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs | Target: Rs 336 | Return: percent. Broking house expect the dividend payout (70%) to remain strong, presenting an attractive dividend yield of 4-5% over FY21-22E (with ROE of 25-26%). With the concerns related to Tellurian resolved and answers provided on long-term growth, the stock trades at a very appealing valuation of 12.4x FY22E EPS of Rs 21.3 and 7.1x FY22E EV/EBITDA, with an EBITDA CAGR of 15% expected over FY20-22E.
Petronet LNG | Brokerage: Motilal Oswal | Rating: Buy | LTP: Rs 266 | Target: Rs 336 | Return: 26 percent. Broking house expect the dividend payout (70%) to remain strong, presenting an attractive dividend yield of 4-5% over FY21-22E (with ROE of 25-26%). With the concerns related to Tellurian resolved and answers provided on long-term growth, the stock trades at a very appealing valuation of 12.4x FY22E EPS of Rs 21.3 and 7.1x FY22E EV/EBITDA, with an EBITDA CAGR of 15% expected over FY20-22E.
Bandhan Bank | Brokerage: KRChoksey | Rating: Buy | LTP: Rs 349 | Target: Rs 431 | Return: 23 percent. KRChoksey expect earnings to grow at CAGR 27% to Rs 42.5 bn between FY20-FY22E. Bank’s strong capital & operating structure, recovery in collections, and liability franchise would support overall business growth. Broking house expect bank to deliver ROA of 3.8% in FY22E and expect full recovery in business operations by next fiscal year and accordingly roll forward our Adjusted BVPS to FY22E Adjusted BVPS of Rs 119.7.
Bandhan Bank | Brokerage: KRChoksey | Rating: Buy | LTP: Rs 349 | Target: Rs 431 | Return: 23 percent. KRChoksey expect earnings to grow at CAGR 27% to Rs 42.5 bn between FY20-FY22E. Bank’s strong capital & operating structure, recovery in collections, and liability franchise would support overall business growth. Broking house expect bank to deliver ROA of 3.8% in FY22E and expect full recovery in business operations by next fiscal year and accordingly roll forward our Adjusted BVPS to FY22E Adjusted BVPS of Rs 119.7.
Rakesh Patil
first published: Jul 21, 2020 11:50 am

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