The 10 actions for the new year of Hdfc Securities
HDFC Securities expects volatility to continue, but at a slower pace.
After a difficult and forgettable Samvat 2078 for global equities, HDFC Securities expects volatility to continue, albeit at a slower pace. The brokerage believes that the Indian economy remains in an ideal position compared to many other economies.
“The domestic investment cycle is showing signs of recovery and, with normal monsoons, the foundations have been laid for the economy to return to previous growth rates,” the firm wrote in its note.
For the upcoming Samvat, the brokerage continues to favor nationally oriented businesses and opportunities in healthcare, defense, banking, entertainment and infrastructure.
Here are their 10 stock picks for the year:
One of India’s largest integrated private health service providers has begun a low-investment brownfield expansion in which it plans to add 500-700 beds through an asset-light model by taking on the management and operation of existing hospitals. It will also launch pharmacies in Saudi Arabia. It is planned to increase the share of business in India to 40% over the next three years. HDFC Securities finds the stock’s current valuation attractive and highly discounted relative to its Indian peers. He also expects the divestiture and restructuring of the GCC business to unlock value.
A leading defense PSU, Bharat Dynamics is setting up three new units in Telangana, Maharashtra and Uttar Pradesh to meet increased demand from the armed forces. The current order book is worth nearly Rs 13,000 crore and the company is also exploring export markets. Steady order flow, a focus on indigenization and internal efficiency would fuel the stock’s earnings growth, according to the brokerage.
BEL’s backlog as of June 30 this year stood at Rs 55,333 crore, or 3.3 times its revenue for the past 12 months. HDFC Securities expects the company to exceed its current year guidance of 15% revenue growth and EBITDA margins of 21-23%. The company’s financial profile remains strong due to healthy profitability, zero net debt and strong debt hedging measures. HDFC Securities expects net income to grow at a compound rate of 10% over the next two years.
The cement company MP Birla Group intends to increase its capacity to almost 30 million tons, from the current 20 million tons, by 2030. The company’s manufacturing units in Uttar Pradesh and Madhya Pradesh have been recognized as megaprojects by the government and are eligible for special incentives. . HDFC Securities believes that the cost reduction measures taken by the company will contribute to revenue and profit growth. He also expects electricity and fuel costs to be more favorable for the company in the second half of this fiscal year.
The third largest pharmaceutical company in the domestic formulations market is expected to launch key products in the second half of this fiscal year. It also plans to launch four complex generic injection products in the next fiscal year. The brokerage firm forecasts compound revenue of 9.5% and a compound net income growth rate of 19.5% over the next two fiscal years. US activity is also expected to grow at a compound rate of 18% over the next two years.
Shares of the nation’s largest nitric acid maker have more than doubled in the past 12 months. It also announced its highest-ever quarterly revenue and profitability last year. HDFC Securities expects the company’s revenues to grow to 14% while margins remain in the 18-20% range over the next two years. High regulatory barriers to entry, better capacity utilization and high rates of return are other major strengths.
India’s second-largest private bank by asset size has significantly reduced its corporate exposure and expanded its loan portfolio with a focus on retail. Moreover, it is one of the largest financial services conglomerates, as the business of its subsidiaries also continues to grow. With India’s banking sector on the cusp of a credit bull cycle, ICICI Bank is one of the best positioned, according to HDFC Securities. He also expects affiliates to add good value to the overall valuation.
HDFC Securities appreciates RVNL’s asset-light business model, which allows the company to maintain its balance sheet stress-free and reduce inventory days. He expects steady business flow for the company due to the effort to improve rail transportation infrastructure. The company also has a 5% dividend yield and HDFC Securities finds its valuations attractive given the outlook. However, a potential government offer for sale may be a short-term overhang.
Present in the field of television broadcasting for more than two decades, the company has expanded its basket of channels to 33 to date. HDFC Securities expects compound revenue growth of 11.2% over the next two years. With cash worth Rs 1,100 crore on its books, offers the opportunity to invest in the linear or OTT space. Future growth prospects, a healthy cash balance and reasonable valuations keep the brokerage positive on the stock.
HDFC Securities expects strong growth in the express logistics industry and believes TCI Express is well positioned to benefit from it. It expects the company to generate free cash flow worth Rs 310 crore until financial year 2025. With improving profitability, the brokerage also expects return ratios such as return on equity and return on capital employed remain high.