Five large-cap high conviction stock picks with strong fundamentals and positive outlook

By: |
August 4, 2020 3:17 PM

After the sharp recovery in July, stock specific actions are what many analysts have warned, will be moving the equity markets forward.

These stocks are also a part of Emkay Global’s Alpha Portfolio and range from industry leaders in the FMCG and banking space to information technology majors and pharma companies.

After the sharp recovery in July, stock specific actions are what many analysts have warned, will be moving the equity markets forward. In such times, brokerage and research firm Emkay Global has made a list of large-cap stocks that they believe have the potential to rise further. These stocks are also a part of Emkay Global’s Alpha Portfolio and range from industry leaders in the FMCG and banking space to information technology majors and pharma companies. In the current risk averse environment where bigger has been safer, these stocks could offer some comfort to investors with their strong leadership position.

Aurobindo Pharma – BUY

With the US business of the pharmaceutical major growing rapidly from $250 million a few quarters ago to $400 million, analysts at Emkay Global believe the company has shown exemplary execution. “The company is a key beneficiary of product shortage opportunities in the US, given its robust supply chain management and wide product portfolio,” Emkay said. Aurobindo Pahrma has also been aiming to go debt free which would benefit the company going forward. Pharma stocks have been enjoying a strong run in stock markets and with a diverse set of products offered by Aurobindo Pharma, it is unlikely to face concentration risks.

Bharti Airtel – BUY

The telecom major is likely to benefit from the growing number of 4G subscribers and might see some benefit coming from the growing problems for Vodafone-Idea. “The balance sheet provides some comfort, with net debt-to-EBITDA expected to decline to 2.3x in FY22E vs 3.2x in FY20. Additionally, moderation in capex spends, as guided by the management, shall aid cash generation as well,” Emkay Global said. India’s three telecom operators could be exploring the possibility of a tariff hike soon which will improve Bharti Airtel’s Average Revenue Per User. 

HDFC Bank – BUY

India’s largest private sector lender HDFC Bank has been witnessing growth as customers rush to safety in these uncertain times. Although there are risks even to HDFC Bank at the present juncture, it is much better placed when compared to peers. “We believe that the bank’s otherwise strong underwriting standards, risk management and recovery architecture should limit the impact,” they said. Today the bank received approval from the Reserve Bank of India to appoint Sashidhar Jagdishan as the new Managing Director and CEO of the bank when Aditya Puri quits later this year.

Infosys – BUY

The Information Technology major gets the backing of analysts at Emkay Global who have replaced Reliance Industries in their Alpha Portfolio with Infosys. Infosys managed to beat revenue and margin expectations in the April-June quarter. IT companies have had good deal wins in the first quarter of this fiscal helping their revenues grow. “We believe that the worst of the margin decline is behind Infosys and we could continue to see strong margin performance, aided by revenue growth as well as operational levers like onshore/offshore shift and pyramidization,” said Emkay Global. 

Britannia – BUY

In a shift towards consumption of packaged goods in the wake of the spreading virus, Emkay Global believes Britannia’s leadership position in the biscuits category is what will help the company. “Besides a steady innovation pipeline, distribution expansion and market share gains in biscuits, the company’s step-up in new launches across adjacent categories are likely to improve its growth momentum,” Emkay Global noted. 

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