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Short-term picks: MOSL lists 5 finance stocks with 1-3 month time frame

Updated : October 07, 2020 02:02 PM IST

Business growth showed strong momentum for financials in the September quarter despite weak economics. Steady improvement is also seen in business volumes as they return to pre-COVID levels. In a recent report, Motilal Oswal has listed five high conviction ideas from the financials space which it expects to do well in the short to medium term. One can buy this basket of 5 stocks with a potential upside of 10-12 percent over a time frame of 1-3 months, it added. Let's take a look:

 ICICI Bank:  As per the brokerage, June quarter earnings were in line despite the bank prudently making higher provisions toward COVID-19. Overall, the moratorium book has declined and the bank has built a relatively higher provisioning buffer at 1.3 percent of loans to endure the COVID crisis, added MOSL.
ICICI Bank: As per the brokerage, June quarter earnings were in line despite the bank prudently making higher provisions toward COVID-19. Overall, the moratorium book has declined and the bank has built a relatively higher provisioning buffer at 1.3 percent of loans to endure the COVID crisis, added MOSL.
 HDFC Bank:  The lender has delivered strong business growth despite weak economic trends and consumer sentiment, said MOSL. It added that it has also reflected strong deposit trends, led by CASA. Thus, MOSL expects HDFC Bank’s strong liability franchise and the fixed-rate nature of the book to continue to support the margin trajectory.
HDFC Bank: The lender has delivered strong business growth despite weak economic trends and consumer sentiment, said MOSL. It added that it has also reflected strong deposit trends, led by CASA. Thus, MOSL expects HDFC Bank’s strong liability franchise and the fixed-rate nature of the book to continue to support the margin trajectory.
 HDFC : As per the brokerage, business volumes are returning to normal levels for the NBFC. Individual loan applications increased 12 percent YoY, and loan approvals were up 9 percent YoY in the September quarter, added MOSL. HDFC remains among its top picks in the sector. The Real Estate sector is seeing a gradual turnaround and HDFC is well-poised to benefit from the same, the brokerage further noted.
HDFC: As per the brokerage, business volumes are returning to normal levels for the NBFC. Individual loan applications increased 12 percent YoY, and loan approvals were up 9 percent YoY in the September quarter, added MOSL. HDFC remains among its top picks in the sector. The Real Estate sector is seeing a gradual turnaround and HDFC is well-poised to benefit from the same, the brokerage further noted.
 M&M Finance:  Month-on-month improvement in disbursements and collections is encouraging, noted the brokerage. Within its product mix, tractors, entry-level cars, and LCVs are likely to do well. The company has taken over Rs 1100 crore COVID-19 provisions over the past two quarters, amounting to nearly 2 percent of the loan book, MOSL further stated in its report.
M&M Finance: Month-on-month improvement in disbursements and collections is encouraging, noted the brokerage. Within its product mix, tractors, entry-level cars, and LCVs are likely to do well. The company has taken over Rs 1100 crore COVID-19 provisions over the past two quarters, amounting to nearly 2 percent of the loan book, MOSL further stated in its report.
 Cholamandalam Finance:  According to MOSL, two aspects of the firm's vehicle finance business stand out versus most peers: (i) it is well-diversified across product segments and (ii) there is no state-level concentration – the largest state accounts for only 11 percent of the total portfolio. Products linked to farm income, such as tractors, are likely to fare better given the strong monsoons and healthy rabi crop harvest, it added.
Cholamandalam Finance: According to MOSL, two aspects of the firm's vehicle finance business stand out versus most peers: (i) it is well-diversified across product segments and (ii) there is no state-level concentration – the largest state accounts for only 11 percent of the total portfolio. Products linked to farm income, such as tractors, are likely to fare better given the strong monsoons and healthy rabi crop harvest, it added.
Published : October 07, 2020 02:00 PM IST
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