The Indian share market has been witnessing volatility as the second COVID-19 wave is causing fear amongst market participants.
The Indian share market has been witnessing volatility as the second COVID-19 wave is causing fear amongst market participants. India is reporting almost two lakh new cases per day as compared to one lakh cases during the peak of the first wave in September 2020. Given the intensity of the second wave, it will take some time for the government to bring it under control. Domestic research and brokerage firm Angel Broking expects the markets to consolidate in the near term. While the sharp increase in Covid cases is a matter of concern, the low mortality rate and expectations of ramp-up in vaccination over the next few months should help limit the fallout from the second Covid wave. “We believe that sectors which are rural-focused or will benefit from increased digitization and import substitution not only offer long term revenue visibility but are least likely to be impacted due to the second Covid wave,” it said.
Top stocks to buy:
HCL Technologies: The brokerage firm expects a 16.4 per cent rally in HCL Technologies share price. It has pegged a target price of Rs 1,161 apiece. It said that at CMP the stock is trading at a P/E multiple of 17.0x FY22 EPS estimate which is at a significant discount to the other large-cap IT companies like Infosys and TCS and offers tremendous value at current levels given market leader status in Infrastructure management.
IDFC First Bank: The stock will require to jump 52 per cent from the current levels to hit the target price of Rs 77 apiece. IDFC First Bank, post-management change has clearly outperformed in building liability franchise and retail lending. Since new management took charge, every quarter. liability franchise has been strengthened.
Federal Bank: Angel Broking sees a massive 53 per cent rally in Federal Bank stock price. It has a target price of Rs 110 apiece. NPA’s have remained steady for the bank over the past few years with GNPA for Q3FY21 at 3.38 per cent while NNPA ratio stood at 1.14 per cent. PCR at the end of Q3FY21 stood at 67 per cent which Angel Broking believes is adequate.
Shriram City Union: The brokerage house expects Shriram City Union Finance stock to rally 27 per cent. It has given a target price of Rs 1,800 apiece. Shriram City Union Finance is part of the Shriram group and is in the high margin business of lending to small businesses which account for nearly 60 per cent of the loan book as of the end FY20. The company also provides auto, 2-wheeler, gold, and personal loans. The company posted a good set of number s for the quarter due to positive surprise on the asset quality front.
NRB Bearings Ltd: With the Auto industry back on a growth track and exports also doing well for the company Angel Broking expects NRB Bearings stock to rally 49 per cent and do well going forward. The management has highlighted that exports growth should be in excess of 20 per cent for FY21 driven by demand from existing customers as well as new customers.
Escorts Ltd: Escorts stock is expected to jump nearly 30 per cent to Rs 1,573 apiece. With rural India relatively less impacted due to Covid-19, record food-grain procurement by government agencies as well as better than expected Kharif crop in 2020, Angel Broking expects the tractor industry to continue to outperform the larger automobile space in FY21 with Escorts a key beneficiary.
GNA Axles Ltd: GNA is expected to be one of the biggest beneficiaries of a strong growth outlook for truck sales in US and European markets which are witnessing a strong recovery in demand. The domestic brokerage house sees a 53.33 per cent jump in the share price, with a price target of Rs 550 apiece.
Ashok Leyland: Demand for MHCV was adversely impacted post peaking out due to multiple factors including changes in axel norms, increase in prices due to implementation of BS 6 norms followed by sharp drop in demand due to the ongoing Covid-19 crisis. Angel Broking has given a target price of Rs 145, a rally of 32 per cent.
Galaxy Surfactants Ltd: Company has a very strong relationship with MNC clients like Unilever, P&G, Henkel, Colgate-Palmolive and supplies raw materials to them not only in India but also in US, EU and MENA region. It has a target price of Rs 2,750 apiece, a gain of 7 per cent.
Metropolis Healthcare Ltd: Angel Broking is positive on the long term prospects of Metropolis Healthcare, given expected long term growth rates of 15% CAGR, stable margins profile and moderating competitive intensity. It has a price target of Rs 2,850, an upside of 15 per cent.
Carborundum Universal: While demand from the Auto sector has been robust Angel Broking expects demand from the metal industry to pick up given increased economic activity. The brokerage house expects a 25 per cent upside in the stock price.
PVR: Angel Broking expects a massive 77 per cent rally in PVR stock price. It has a target price of Rs 1,800 apiece. Multiplex screens are gaining ground in India at the expense of single screens. “Share prices have corrected significantly as most of the theaters are operating at very low capacity utilization due to the lack of any major releases due to the Covid-19 crisis,” it added.
(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.)