As the test series between India and England takes off Wednesday, IIFL Institutional Equities has come out with its six stock winners for the test match team. The focus now shifts towards traditionalist form of stock picking against slam-bang style of the T20 making most of the headlines up till now. “The next one year or so will be a time for consolidation and require selecting players with strong secular fundamental techniques, balance sheet adaptability, earnings momentum to withstand the long sessions and the leadership acumen to reap the benefits of endurance,” the report titled “The return of the test match specialists” added.
Here are IIFL’s 6 stock winners for upcoming test cricket series:
Reliance Industries Limited (RIL): Since arrival of Jio, RIL suddenly has found momentum after being sidelined for most part of the decade. IIFL report includes the stock purely as next-generation telecom all-rounder. “Though outlook on RIL’s core refining and petrochemicals business is strong, execution surprise in JIO is likely to continue offering a much higher EV,” IIFL report said. RIL shares were trading at Rs 1150.75 up 1.87% today on BSE at the time of reporting.
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Larsen & Toubro (L&T): The stock is akin to a fast bowler who not only knocks down the top order batsmen (in an early uptick of investment cycle) with ease but is equally lethal with old ball (in late capex cycle). “However, there is no denying that L&T has spent time at the nets with strong cash flow focus and got fitter with divestment of the flabby non-core businesses,” report said. The shares of L&T were trading at Rs 1295.45 down 1.22% today on BSE at the time of reporting.
Infosys: The stock has been in great form since the year began. Not only the stock is good at facing USDINR bouncers, this is one player that almost selects itself, IIFL report said. “Still batting at a 25% discount to arch rival TCS, this Indian IT behemoth will try to narrow the valuation discount down before the season ends,” the report said. The shares of Infosys were trading at Rs 1351.05 down 1.71% today on BSE at the time of reporting.
Equitas Holdings: Like a good test player, Equitas has focused exclusively on provisioning and clean ups for last some years. “Now for the next three years, it will be all about operating leverage as the balance sheet grows. So RoEs will head to mid/high teens; and, Tier 1 is at a whopping 27%. Still very cheap, it is a tailor-made player for the test game,” the report added. The shares of Equitas Holdings were trading at Rs 139.30 up 0.18% today on BSE at the time of reporting.
Biocon: Although not a pure test player, Biocon has successfully established itself as a biosimilar leader in global arena. “Addition of US/EU revenues from the first wave of biosimilars could potentially help Biocon’s profits grow ~6x over the next five years and it, thus, makes a transition, from being a white ball swinger to becoming a red ball stickler,” the IIFL report said. The shares of Biocon were trading at Rs 583.15 down 0.63% today on BSE at the time of reporting.
Yes Bank: The bank that was easier considered a bit flashy on underwriting standards has changed its game considerably to suit the test cricket style. “Being cautioned by the new selection committee and recognising its true potential to becoming an all-format, pan-India legend, its strategic shift to retail assets & liabilities remains robust. Asset quality metrics are more normalised and Yes seems to have a much better all-round defensive and attacking game,” the report said. The shares of Yes Bank were trading at Rs 368.80 down 0.30% today on BSE at the time of reporting.