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Here are Sharekhan’s 12 top picks for Vikram Samvat 2077

Updated : 2020-11-02 14:29:47

For Samvat 2077, Sharekhan has hand-picked 12 quality stocks to create a portfolio, which is a mix of both large-caps and quality mid-caps. All the 12 companies in the portfolio have all the ingredients to outperform the broader market indices over the next 12 months and at the same time withstand volatility and emerge stronger, Sharekhan said.

 Tech Mahindra  | Sharekhan prefers Tech Mahindra on the back of anticipated improvement in growth in the enterprise segment, 5G opportunity, and scope for a rise in margins. It expects TechM’s USD revenue/earnings to clock a CAGR of 10.5%/15.5% over FY2021-FY23E. Meanwhile, any hostile development with respect to the current visa regime would affect employee expenses. Further, a delay in the pick-up of 5G-related spends would affect revenue estimates.
Tech Mahindra | Sharekhan prefers Tech Mahindra on the back of anticipated improvement in growth in the enterprise segment, 5G opportunity, and scope for a rise in margins. It expects TechM’s USD revenue/earnings to clock a CAGR of 10.5%/15.5% over FY2021-FY23E. Meanwhile, any hostile development with respect to the current visa regime would affect employee expenses. Further, a delay in the pick-up of 5G-related spends would affect revenue estimates.
 Kotak Mahindra Bank  |The bank’s strong operating metrics, prudent and agile leadership team, well-capitalized balance sheet, as well as the quality of its subsidiaries provide long-term value. The recent capital issue provides the bank with the wherewithal to pursue inorganic opportunities as well, Sharekhan said. It added that a prolonged lockdown and consequent rise in NPAs can pose risks to profitability.
Kotak Mahindra Bank |The bank’s strong operating metrics, prudent and agile leadership team, well-capitalized balance sheet, as well as the quality of its subsidiaries provide long-term value. The recent capital issue provides the bank with the wherewithal to pursue inorganic opportunities as well, Sharekhan said. It added that a prolonged lockdown and consequent rise in NPAs can pose risks to profitability.
 Bharti Airtel  | The brokerage remains positive on Bharti Airtel, considering its strong EBITDA performance, continued growth in 4G subscriber base and potential improvement in free cash flows. However, increasing competition could keep up the pressure on realisations, it said. Any slowdown in data volume growth could affect revenue growth.
Bharti Airtel | The brokerage remains positive on Bharti Airtel, considering its strong EBITDA performance, continued growth in 4G subscriber base and potential improvement in free cash flows. However, increasing competition could keep up the pressure on realisations, it said. Any slowdown in data volume growth could affect revenue growth.
 Larsen & Toubro  | L&T’s order inflow pipeline remains robust and provides healthy visibility for bagging orders ahead. The company is also better poised to ride any uncertainties owing to multiple levers such as a strong business model, diversified order book, and a healthy balance sheet. The brokerage expects L&T revenues and PAT to clock a CAGR of 11 percent and 22 percent over CY2021-23E.
Larsen & Toubro | L&T’s order inflow pipeline remains robust and provides healthy visibility for bagging orders ahead. The company is also better poised to ride any uncertainties owing to multiple levers such as a strong business model, diversified order book, and a healthy balance sheet. The brokerage expects L&T revenues and PAT to clock a CAGR of 11 percent and 22 percent over CY2021-23E.
 HDFC Life Insurance Company  | The insurance sector has huge growth potential in India, due to factors like a large protection gap, the expanding per capita income etc. Capable players like HDFC Life, armed with the right mix of products, services and distribution mix, are likely to gain disproportionally from it, Sharekhan said.  The stock trades at a valuation of 4.1x/3.4x its FY2022E/FY2023E EVPS. A well-diversified product bouquet, strong brand image, and strong metrics make HDFC Life attractive, it added.
HDFC Life Insurance Company | The insurance sector has huge growth potential in India, due to factors like a large protection gap, the expanding per capita income etc. Capable players like HDFC Life, armed with the right mix of products, services and distribution mix, are likely to gain disproportionally from it, Sharekhan said.  The stock trades at a valuation of 4.1x/3.4x its FY2022E/FY2023E EVPS. A well-diversified product bouquet, strong brand image, and strong metrics make HDFC Life attractive, it added.
 Asian Paints  | With a sturdy balance sheet, consistent cash flows and cheery dividends, Asian Paints remains one of the better picks among consumer players with a 14 percent earnings CAGR over FY20-23E, the brokerage said. The stock is trading at 52x its FY2023E.
Asian Paints | With a sturdy balance sheet, consistent cash flows and cheery dividends, Asian Paints remains one of the better picks among consumer players with a 14 percent earnings CAGR over FY20-23E, the brokerage said. The stock is trading at 52x its FY2023E.
 Amber Enterprises  | With a uniquely scalable and sustainable business model, the brokerage said it expects Amber to clock a 32 percent/54 percent/87 percent CAGR in Revenue/EBITDA/PAT over FY2021E-FY2023E led by enhanced capacity, increased product offerings and customer penetration coupled with healthy demand outlook for the electronic outsourcing industry.
Amber Enterprises | With a uniquely scalable and sustainable business model, the brokerage said it expects Amber to clock a 32 percent/54 percent/87 percent CAGR in Revenue/EBITDA/PAT over FY2021E-FY2023E led by enhanced capacity, increased product offerings and customer penetration coupled with healthy demand outlook for the electronic outsourcing industry.
 APL Apollo Tubes  | A superior growth outlook, robust RoE of 23-25 percent, and strong balance sheet make it a strong re-rating candidate, Shareskhan said. It expects EBITDA/PAT to register 25 percent/34percent EBITDA/PAT CAGR over FY2021E-FY2023E.
APL Apollo Tubes | A superior growth outlook, robust RoE of 23-25 percent, and strong balance sheet make it a strong re-rating candidate, Shareskhan said. It expects EBITDA/PAT to register 25 percent/34percent EBITDA/PAT CAGR over FY2021E-FY2023E.
 Info Edge India  | With its dominant market share and strong cash-flow generation capabilities, any slowdown in the economy would provide the company an opportunity to gain market share among close peers. With the recent QIP, Info Edge has a cash balance of Rs 33 billion that would be largely used for big-ticket M&As in one of its operating businesses. However, intense competition from both international and domestic players in the recruitment business could affect the growth trajectory and margins of the recruitment business.
Info Edge India | With its dominant market share and strong cash-flow generation capabilities, any slowdown in the economy would provide the company an opportunity to gain market share among close peers. With the recent QIP, Info Edge has a cash balance of Rs 33 billion that would be largely used for big-ticket M&As in one of its operating businesses. However, intense competition from both international and domestic players in the recruitment business could affect the growth trajectory and margins of the recruitment business.
 Ipca Labs  | The brokerage is of the view that strong revenue growth and margin expansion, almost near-nil remedial costs, a sturdy balance sheet and healthy return ratios augur well for Ipca. Sales and PAT are expected to grow by 18 percent /41 percent CAGR for FY2020-FY2022.
Ipca Labs | The brokerage is of the view that strong revenue growth and margin expansion, almost near-nil remedial costs, a sturdy balance sheet and healthy return ratios augur well for Ipca. Sales and PAT are expected to grow by 18 percent /41 percent CAGR for FY2020-FY2022.
 SRF Limited  | The brokerage believes that calibrated expansion in the right segments (chemicals and packaging films) will help the company deliver a healthy revenue/PAT CAGR of 16 percent/22.6 percent over FY2020-23E.
SRF Limited | The brokerage believes that calibrated expansion in the right segments (chemicals and packaging films) will help the company deliver a healthy revenue/PAT CAGR of 16 percent/22.6 percent over FY2020-23E.
 Tata Consumer Products  | The integration of Tata Chemical’s consumer business with Tata Consumer Products heightens sustainable revenue and PAT growth visibility owing to multiple growth levers.
Tata Consumer Products | The integration of Tata Chemical’s consumer business with Tata Consumer Products heightens sustainable revenue and PAT growth visibility owing to multiple growth levers. "We expect consolidated revenue and PAT to grow at CAGR of 12 percent and 20 percent over FY2020-23E."
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