Diwali is considered an auspicious day to invest in the stock market. The broader Nifty 50 index has delivered over 60 per cent returns in just a span of eight months, from the March low of 7,511. On March 24, BSE Sensex hit a 52-week low of 25,639 after the government announced nationwide lockdown to contain the fast-spreading COVID-19. Since March, it rallied to make a new lifetime high of 43708.47, earlier this week. Research firm, Samco Securities has prepared a portfolio of 10 stocks, which it believes will tide through the uncertainties of the pandemic and deliver 15% returns in one year’s time. “Markets have seen an ever-increasing base of investors and show resilience despite global challenges and we believe that it continues to offer plentiful investment opportunities,” it said.
HDFC Life Insurance: The brokerage firm noted that favourable product mix and repricing of protection products have also aided in HDFC Life Insurance’s margin expansion. Amidst a pandemic, a 25-26 per cent margin guidance for FY21 by the management seems achievable, hence Samco Securities expects HDFC Life could be a strong compounding story.
Pidilite Industries: Samco Securities in its report said that the recent acquisition of the maker of Araldite is further expected to strengthen its leadership in the adhesive space. It added that the huge scope of growth from the construction chemicals industry builds confidence on Pidilite’s future outlook.
Bharat Rasayan: According to the brokerage firm, as farming-related activities continued, demand for pesticides continued to remain strong which allowed the company to maintain robust operating margins in the 18-23 per cent range. It has also delivered an exemplary revenue CAGR of 23 per cent over the past 5 years with strong cash flow generation.
Larsen & Toubro: “What guides L&T’s future is its magnificent order book including a Rs 24,985 crore deal for developing a 237km-line for Mumbai-Ahmedabad bullet train with long term revenue prospects,” Samco Securities said. The stock has taken quite the battering which makes it attractive from a valuation perspective and very limited scope for further downside.
Bharti Airtel: The brokerage firm highlighted that with a sound business model of a partnership approach rather than an ownership approach, Bharti Airtel can leverage its growing partner ecosystem to build digital assets and compete against the mighty Reliance Jio.
Kotak Mahindra Bank: Samco Securities said that RBI’s ruling on the restructuring of loans and deferment in reporting NPLs post-August will surely delay the true asset deterioration but even then Kotak seems to have an upper hand in managing its assets well with prudent risk management.
Housing Development Finance Corporation: Samco Securities is upbeat on the HDFC stock. According to the brokerage firm, the environment down the road seems conducive for the housing finance sector given the low-interest rates, softer property prices, reduction in stamp duty in certain states and inherent strong demand for home loans. HDFC seems to be in a comfortable liquidity position to benefit from these macros.
Dixon Technologies: Dixon is currently in the growth phase and undergoing an aggressive scale-up across product segments. This along with a backward integration model, fungible capacities and a focused approach will drive its growth going ahead.
Marico: Samco Securities noted that in the medium-term, Marico aims to deliver a mix of healthy top and boom-line growth with 19-20% operating margins. It said that considering all the tailwinds, Marico seems like a good fit from an investment perspective.
Ambuja Cements: With the infra boost by the government, Ambuja Cements seems to be well placed to ramp up a few orders and boost sales. Samco Securities said that Ambuja Cements is a cheaply valued stock trading at a one year forward EV/EBITDA of 7x with strong potential to benefit from the upcoming infra boom in India.
(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)