Banking, housing cycle shares to buy: Jefferies says these stocks may gain from massive 6-way economic upcycle

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Updated: October 19, 2021 3:38 PM

ICICI Bank, State Bank of India, and Housing Development Finance Corporation (HDFC) are some of the stocks that may benefit from the expected economic growth cycle in India.

Stocks from the banking sector and sectors related to housing could see an upward trend. (Image: REUTERS)

ICICI Bank, State Bank of India, and Housing Development Finance Corporation (HDFC) are some of the stocks that may benefit from the expected economic growth cycle in India, said analysts at global brokerage and research firm Jefferies. Analysts have studied six components of the economic cycle, which suggest conditions are ripe for a repeat of a 2003-10 style upturn. “Housing, NPL and corporate profitability cycles have convincingly turned positive. Corporate leverage is at a cyclical low,” they highlighted. Stocks from the banking sector and sectors related to housing could see an upward trend, according to Jefferies.

Banking sector stocks that may surge

ICICI Bank: The private sector lender is among the selected plays for India’s banking sector. Jefferies has ICICI Bank in its model portfolio with a 10.6% weightage and Buy rating. The stock has rallied 40% so far this year. 

IndusInd Bank: Analysts at Jefferies have also added IndusInd Bank as their plays on India’s economic upcycle. The stock has rallied 35% so far this year to currently trade at Rs 1,214 per share. Jefferies has a Buy rating in the scrip. 

State Bank of India: India’s largest public-sector lender SBI has seen a robust performance this year. SBI’s share price has zoomed nearly 80% as the banking sector marches higher. Currently, the stock is trading at Rs 500 per share. 

Source: S&P Capital IQ

Housing and related stocks on the watchlist

Godrej Properties: The stock has a buy rating from analysts at Jefferies and is part of the brokerage firm’s India portfolio with a 6.4% weightage. Since the end of August, the stock has rallied 70% to now trade at Rs 2,452 per share.

Macrotech Developers: The recently listed Lodha Developers stock has rallied a massive 142% since its debut on the bourses in April this year. The stock is currently trading at Rs 1,127 per share. The stock had listed at a discount to the IPO price but has garnered significant interest from investors since.

DLF: The stock gained momentum in the middle of September this year and has since then zoomed 32% to now trade at Rs 424 per share. 

HDFC: The country’s biggest mortgage lender has seen a decent run since the end of July, gaining 17% to now trade at 2,823 per share. The stock has a 10.1% weightage in Jefferies’ model portfolio for India. 

ACC: Cement manufacturer ACC has a Buy rating from Jefferies. The stock price has jumped 40% so far this year to now trade at Rs 2,275 per share.

Kajaria Ceramics: Jefferies is bullish on Kajaria Ceramics, expecting the stock to extend its 85% year-to-date rally on the back of the housing sector boom. Currently, the share price is trading at Rs 1,308 per share. 

Supreme Industries: After having gained more than 50% so far in 2021, Jefferies is still bullish on the stock. The stock is trading at Rs 2,582 per share on Tuesday. 

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