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Top investment ideas by KRChoksey Research as markets recover from lows

Updated : 2020-07-23 14:58:00

Markets have rebounded sharply from their March lows with a number of stocks surging near their multiple-month highs. In such an environment, it is important to look ta multiple factors like financials, leadership, growth potential, valuations in order to pick stocks. KRChoksey Research, in a recent report, has listed 6 such stocks the investors can bite into. Here's a look at them:

 Tech Mahindra:  The brokerage sees a 16 percent upside in the stock with a target at Rs 657. It added that the valuation of the stock remains attractive and its growth prospects remain intact with leadership in telecommunication. Tech Mahindra has the largest exposure to Telecommunication business compared to its peers, a resilient sector that has a limited impact of COVID-19. While there will be a delay in Telecom capex spending by 1-2 quarters, it believes that 5-G would offer significant upside to the stock.
Tech Mahindra: The brokerage sees a 16 percent upside in the stock with a target at Rs 657. It added that the valuation of the stock remains attractive and its growth prospects remain intact with leadership in telecommunication. Tech Mahindra has the largest exposure to Telecommunication business compared to its peers, a resilient sector that has a limited impact of COVID-19. While there will be a delay in Telecom capex spending by 1-2 quarters, it believes that 5-G would offer significant upside to the stock.
 HDFC AMC:  The brokerage sees a 17 percent upside in the stock with a target at Rs 2,970. HDFC AMC is a strong retail brand with a unique investor base of 5.6 million as of Q4 FY20. The brokerage continues to stay positive on the stock and expects the premium valuation to continue on the back of its market leadership position, diversified product portfolio, higher operational efficiency, association with reputed HDFC group, and several strategies focused on digitization of the business channels for improvement in margins.
HDFC AMC: The brokerage sees a 17 percent upside in the stock with a target at Rs 2,970. HDFC AMC is a strong retail brand with a unique investor base of 5.6 million as of Q4 FY20. The brokerage continues to stay positive on the stock and expects the premium valuation to continue on the back of its market leadership position, diversified product portfolio, higher operational efficiency, association with reputed HDFC group, and several strategies focused on digitization of the business channels for improvement in margins.
 Bajaj Finserv:  The brokerage sees an 18 percent upside in the stock with a target at Rs 7,282. Gaining from Bajaj Finance’s strong customer and retail franchise in consumer lending, The brokerage expects Bajaj Finserv to deliver strong revenue growth at a CAGR of 7.9 percent from FY20-FY22E. On a YoY basis, the company witnessed robust growth in premium mobilization for both life and general insurance business for FY20.
Bajaj Finserv: The brokerage sees an 18 percent upside in the stock with a target at Rs 7,282. Gaining from Bajaj Finance’s strong customer and retail franchise in consumer lending, The brokerage expects Bajaj Finserv to deliver strong revenue growth at a CAGR of 7.9 percent from FY20-FY22E. On a YoY basis, the company witnessed robust growth in premium mobilization for both life and general insurance business for FY20.
 Dr Reddy's:  The brokerage sees a 16 percent upside in the stock with a target at Rs 4,552. The company's June-quarter earnings were better than expected on account of better performance in the US market and the brokerage expects this trend to continue in FY21 as well with more approvals for its pending ANDAs. Submission of key products like gNuvaring and gCopaxone to be completed soon and these products will contribute substantially in FY22 if approval goes through, it added. It continues to like the stock because of focus on improving the R&D productivity, and robust existing pipeline & planned launches in FY21.
Dr Reddy's: The brokerage sees a 16 percent upside in the stock with a target at Rs 4,552. The company's June-quarter earnings were better than expected on account of better performance in the US market and the brokerage expects this trend to continue in FY21 as well with more approvals for its pending ANDAs. Submission of key products like gNuvaring and gCopaxone to be completed soon and these products will contribute substantially in FY22 if approval goes through, it added. It continues to like the stock because of focus on improving the R&D productivity, and robust existing pipeline & planned launches in FY21.
 Sun Pharma : The brokerage sees a 15 percent upside in the stock with a target at Rs 550. It expects the company's bottom line to grow by CAGR 24.8 percent over FY20-22E on the back of the specialty segment and strong performance in the domestic market. In Q4, ramp up in global specialty business was encouraging and traction was seen in drugs like Ilumya, Yonsa, and Cequa, noted the brokerage.
Sun Pharma: The brokerage sees a 15 percent upside in the stock with a target at Rs 550. It expects the company's bottom line to grow by CAGR 24.8 percent over FY20-22E on the back of the specialty segment and strong performance in the domestic market. In Q4, ramp up in global specialty business was encouraging and traction was seen in drugs like Ilumya, Yonsa, and Cequa, noted the brokerage. "Although the company’s top line wasn’t affected much in Q4FY20 due to COVID-19, the impact of forex and one-offs affected net profit margin, despite improvement in EBITDA margin. On the COVID-19 treatment front, Sun received approval to conduct a clinical trial for the first phytopharmaceutical (plant-based) drug AQCH, results of the which is expected by October 2020," the brokerage report said.
 ICICI Bank:  The brokerage sees a 24 percent upside in the stock with a target at Rs 448. ICICI Bank’s asset quality metrics continued to show steady improvement in FY20, which is the key positive for the bank, said the brokerage. Besides, in these turbulent Covid-19 times, the bank is raising funds to further strengthen its book. It expects that the current lockdown scenario to be temporary, and loan growth should pick up in H2FY21.
ICICI Bank: The brokerage sees a 24 percent upside in the stock with a target at Rs 448. ICICI Bank’s asset quality metrics continued to show steady improvement in FY20, which is the key positive for the bank, said the brokerage. Besides, in these turbulent Covid-19 times, the bank is raising funds to further strengthen its book. It expects that the current lockdown scenario to be temporary, and loan growth should pick up in H2FY21.
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