Three Veteran Analysts’ Top Stock Picks To Ride The Rally

The Covid-19 pandemic disrupted the world economy in Samvat 2076, causing volatility in equity markets.

The pandemic triggered a global selloff, with the Nifty 50 Index tumbling 40% from the record high till its March low. The Indian equity benchmark has since seen a one-way rebound, wiping out losses to hit a new record.

BloombergQuint spoke with three market veterans on investment ideas to ride the rally. Sudip Bandhopadhyay, group chairman of Inditrade JRG Group; Vinay Khattar, head of research at Edelweiss Investment Research; and Deepak Shenoy, chief executive officer at Capitalmind, suggest their picks for Samvat 2077.

Here are the stocks they are betting on and why:

Sudip Bandhopadhyay

State Bank of India

• Strong retail credit growth momentum.
• Overall economic recovery leading to possible improvement in asset quality and potential recoveries through the NCLT process.
• Strong liability profile with adequate capital and opportunities for raising fresh capital through public market and/or disinvestment in subsidiaries.
• Strong performance of subsidiaries.

DLF

• Pick-up in both residential and commercial demand.
• Significant unused land parcels in Gurgaon and New Delhi.
• Reduction of fixed cost and opportunities of further improvement in debt position through land monetisation.

ITC

• Strong free cashflow from cigarettes business to continue in the foreseeable future.
• Improving FMCG performance including wider margins.
• Significant undervaluation compared to peers.

Vinay Khattar

Zydus Wellness

• New leadership talent, launch of international business and extension of different product categories.
• Launch of smaller product stock keeping units and distribution muscle from parent Cadila Healthcare.
• Heinz Acquisition in 2019.
• Expect sales growth of 10% and PAT growth 47% CAGR.

SBI Card

• Competitive advantage of its parent’s distribution network.
• Gaining volume market share, improving average spend per card.
• Current return on asset and return on equity sustainable.
• Ample capital adequacy, liquidity and comfortable provisioning.
• Expect PAT to register 25% CAGR over FY20-23E.

Rosari Biotech

• Considerable focus on research and development.
• Home personal and performance chemicals turnover up 5 times.
• Seeding other areas for future growth – like personal care segment.
• Balance sheet is debt free with high return on capital employed.
• Revenue, EBITDA and PAT to compound by 22%, 24% and 26% over FY20-23E.
• Capacity slated to more than double by Q4FY21 supporting growth.

Deepak Shenoy

Naukri (Info Edge)

• Gives us both the online recruitment business, and about 20% of Zomato, a similar percentage of PolicyBazaar and a bunch of other startups.
• Now a quasi-venture capital fund with ownership across the startup ecosystem.

Nasdaq 100 (ETF or Fund)

• Allows participation in innovation in the U.S. technology companies.
• Will get companies like Apple, Microsoft, Zoom, Tesla, Google , Adobe, AMD and Intel.