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Five Stocks That Have 100% Analysts’ Support Amid Rising Volatility

The better time to invest in markets is during times of heightened volatility, India’s largest asset manager S Naren said in an interview to BloombergQuint.

From being the best in Asia to wiping out yearly gains in a month or so—it’s been a roller-coaster ride for Indian equities. Despite the volatility, analysts have remained bullish on a handful of stocks.

Out of the 185 Indian stocks tracked by at least 10 analysts, only five have a 100 percent ‘Buy’ rating, according to Bloomberg data.

Here’s a look into why analysts are bullish on the companies and what are the challenges:

Mahindra & Mahindra Ltd.

The utility vehicles maker is the most preferred stock in India and across the world. More than 44 analysts track the stock with a 100 percent ‘Buy’ rating.

M&M is more likely to benefit from a rural recovery on the back of a strong franchise of tractors and small commercial vehicles, according to analysts from JPMorgan and SBICAP Securities. They are bullish on the back of a turnaround in the company’s loss-making truck and two-wheeler businesses, upcoming festive season and new launches.

A drop in market share, losses of unlisted subsidiaries and a weaker rural economy pose risks for the company.

ICICI Prudential Life Insurance Co.

A strong distribution network, robust growth outlook, strong persistency ratio and an improving mix of protection products—that ensure income to a policyholder’s family in the event of death or illness due to an adversity—have kept analysts bullish on ICICI Prudential Life.

The insurer, however, failed to generate any returns in the last 12 months because of a fall in market share amid a volatility in equity markets and rising interest rates.

SBI Life Insurance Co.

Analysts are upbeat on SBI Life on the back of its access to parent’s more than 22,000 bank branches, well diversified customers and a lower-than-industry operating cost.

Also, the rising share of protection business that continued to drive new business margins—a measure of profitability—aided its financials, analysts said. But the insurer, too, hasn’t generated any return in the last 12 months because of issues related to its asset book risk, including an exposure to crisis-hit IL&FS Securities Services Ltd. amid tightening liquidity among non-bank lenders.

Ahluwalia Contracts India Ltd.

A rising order inflow, negligible debt and an improving growth outlook improved analysts’ confidence on the stock. Also, the mid-sized engineering, procurement and construction company was able to meet its full-year order inflow guidance of Rs 2,000 crore in the first six months.

Slower project execution and tax issues, however, weighed on its performance in the last 12 months.

Ashoka Buildcon Ltd.

Analysts are upbeat because of the company’s strong balance sheet, financial closure of all hybrid annuity model projects, healthy order book and lower valuations.

Ashoka Buildcon, according to Macquarie, has the highest order book-to-revenue ratio among the mid-cap engineering, procurement and construction companies, thereby increasing the revenue visibility beyond financial year 2020-21.

But issues related to land acquisition, rising interest rates, upcoming elections and a general negative perception towards infrastructure companies impacted the stock’s performance.