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Three Veteran Analysts’ Top Stock Picks To Ride The Rally

BloombergQuint spoke with three market veterans for investment ideas to ride the market rally in Samvat 2077.

An employee wears a protective mask while working at a diamond polishing unit in Ahmedabad, India. (Photographer: Sumit Dayal/Bloomberg)
An employee wears a protective mask while working at a diamond polishing unit in Ahmedabad, India. (Photographer: Sumit Dayal/Bloomberg)

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.