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HDFC Securities says these 10 stocks could double wealth in 3 years

SUMMARY

With the beginning of a new year, investors would review their portfolios and chalk out a new strategy for a new year. To help in the process, HDFC Securities has listed 10 stock ideas from large, midcap and smallcap sectors that can potentially double earnings in three years (FY19 to FY22). As per the broekrage, these stocks have the right framework in place and have withstood the slowdown well and their business offers enough scope for growth and market share gains. Let's take a look at HDFC Securities’ stock recommendations for 2020. (Disclaimer: CNBCTV18.com advises users to check with certified experts before taking any investment decisions.)

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By Pranati Deva  January 3, 2020, 2:22:30 PM IST (Published)

Axis Bank:
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Axis Bank: As per the brokerage asset quality worsening has peaked out for corporate facing banks. This is evident also in the case of Axis bank as absolute NPAs have been reducing on QoQ basis since the last 5 quarters, it added. Higher corporate delinquencies are will also be over by end of this fiscal year, the brokerage further said.

ICICI Bank:
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ICICI Bank: The lender image has recovered after suffering from allegations about its previous CEO and a sharp increase in NPAs until last year. With lower incremental slippages, improving loan growth, superior liability franchise and revival in core operating profit, the brokerage believes the bank is well-positioned to tap the strong growth opportunities available in the banking space.

SBI Life Insurance Company:
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SBI Life Insurance Company: India has highly underpenetrated insurance market compared to the other parts of the world with a life insurance penetration of less than
3 percent and this presents immense opportunities for the company to expand the life insurance business, the brokerage noted.

UltraTech Cement:
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UltraTech Cement: As per the brokerage, the rise in utilization levels rise for the company, and stabalisation of costs will help the pricing power in recovery. It expects a 13 percent rise in revenue led by its cost leadership, pricing, improving realisation and strong volumes over FY19-22. With Ultratech pan India presence and strong sustainable financials, it would continue to trade at a premium over mid-sized cement companies, it added.

APL Apollo Tubes:
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APL Apollo Tubes: As per the brokerage, the company has the largest and most entrenched distribution network in the structural steel sector India currently. it added that the recent acquisition of Apollo Tricoat which is the first company to introduce ‘Galvant Technology’ will enable the company to expand its portfolio in the high margin segment.

Apollo Hospitals:
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Apollo Hospitals: As per the brokerage, the company continues to maintain its healthy revenue growth while increasing its capacity and maintaining steady operating profitability. The company's liquidity profile is expected to improve in near to medium term on account of healthy operating profitability, reduced Capex intensity and increased fund flow from identified asset monetization plans, it added.

Gujarat Gas:
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Gujarat Gas: The company's focus remains on striking a balance between right volumes and margins at appropriate time intervals, according to the brokerage. It is expected to report its highest volume growth going forward, aided by higher demand from ceramic tile makers in Morbi, Gujarat, the broekrage added. It further noted that the inclusion of gas under GST could be the next key trigger.

IFB Industries:
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IFB Industries: According to the brokerage, IFB’s investment in technology development and product innovation makes it different from its peers. A substantial improvement in product diversification, localisation plans, favourable product mix and control over
operating expenditure are likely to result in margins expansion.

Sudarshan Chemical Industries
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Sudarshan Chemical Industries: Over FY19-22E, the brokerage expects revenue to see 13 percent CAGR while net profit may see a strong 28 percent CAGR on the back of 310 bps margin expansion and lower corporate tax rate. It added that the company has guided for Rs 200 crore Capex plan for this year and another Rs 200 crore Capex for the next year (FY21).

Trent
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Trent: Accelerated store addition of Westside, rightsizing of Star Bazaar stores coupled with consistent growth in Zara are further expected to accelerate Trent’s financial performance, said the brokerage. It expects steady same stores sales growth in Westside to continue despite the increase in store expansion. Given strong store economics, scalability and execution, the brokerage has a positive view on the stock.

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