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Budget 2021: Here are five pre-budget stock picks by HDFC Securities

Updated : 2021-01-27 15:10:44

The Union Budget 2021 will be presented on February 1 and HDFC Securities' Retail Research desk has come up with its five pre-budget picks. The brokerage recommends buying these stocks on dips with a time frame of two quarters.

 Bharat Electronics | TP: Rs 148  | Defence sector (especially capex allocation to domestic manufacturers) could receive an increase in budgetary allocation against the backdrop of the ongoing military face-off between India and China. HDFC Securities feels the fair value of the stock is Rs 148 (18.0x FY23E) over the next two quarters.
Bharat Electronics | TP: Rs 148 | Defence sector (especially capex allocation to domestic manufacturers) could receive an increase in budgetary allocation against the backdrop of the ongoing military face-off between India and China. HDFC Securities feels the fair value of the stock is Rs 148 (18.0x FY23E) over the next two quarters.
 Escorts | TP: Rs 1,457  | Escorts, being one of the large tractor manufacturers in India, is likely to benefit from increased budgetary support towards agriculture. Further enhancement in railway capex could also benefit Escorts. The brokerage said the investors can buy the stock at LTP and add on dips to Rs 1,180-1,190 band (13.0xFY23E EPS) for fair value of Rs 1,457 (16.0x FY23E EPS) over the next two quarters.
Escorts | TP: Rs 1,457 | Escorts, being one of the large tractor manufacturers in India, is likely to benefit from increased budgetary support towards agriculture. Further enhancement in railway capex could also benefit Escorts. The brokerage said the investors can buy the stock at LTP and add on dips to Rs 1,180-1,190 band (13.0xFY23E EPS) for fair value of Rs 1,457 (16.0x FY23E EPS) over the next two quarters.
 Healthcare Global Enterprises | TP: Rs 180  | Government’s plan of reaching 2.5 percent of GDP on healthcare sector by 2025, is expected to be implemented by the announcement of significant allocation in budget. HCG is poised to see strong growth in the health-related surgeries which had got postponed due to COVID-19. With the capex cycle coming to an end, we could see an improvement in return ratios, the brokerage firm said.
Healthcare Global Enterprises | TP: Rs 180 | Government’s plan of reaching 2.5 percent of GDP on healthcare sector by 2025, is expected to be implemented by the announcement of significant allocation in budget. HCG is poised to see strong growth in the health-related surgeries which had got postponed due to COVID-19. With the capex cycle coming to an end, we could see an improvement in return ratios, the brokerage firm said.
 Hindustan Petroleum Corporation Ltd| TP: Rs 250  | Upcoming Budget 2021 could bring an important development as well as an announcement for oil and gas industry and the government could transform India into a gas-based economy. The high profile target for divestment in FY22 could mean that BPCL’s divestment could come on fast track. HDFC Securities believes that the trickle-down effect of this could be felt on HPCL’s stock price.
Hindustan Petroleum Corporation Ltd| TP: Rs 250 | Upcoming Budget 2021 could bring an important development as well as an announcement for oil and gas industry and the government could transform India into a gas-based economy. The high profile target for divestment in FY22 could mean that BPCL’s divestment could come on fast track. HDFC Securities believes that the trickle-down effect of this could be felt on HPCL’s stock price.
 JK Cement | TP: Rs 2,400  | Expected proposals in the budget for real estate sector which can improve demand environment in the housing and infrastructure sector that will lead to higher demand of cement and building material. JK Cement has a multi-region presence which will help the company to take benefits of demand from different regions.
JK Cement | TP: Rs 2,400 | Expected proposals in the budget for real estate sector which can improve demand environment in the housing and infrastructure sector that will lead to higher demand of cement and building material. JK Cement has a multi-region presence which will help the company to take benefits of demand from different regions.
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