After under-performance in May, Indian equity market has recovered sharply in June even as coronavirus cases went up across the world. It is unlikely that the recovery will be a V-shaped one. In fact, it may take some time for the global economy to recover to its pre-Covid levels, said Angel Broking report.
The research report further said, "We remain positive on the markets from a longer term perspective and we feel that investors should be judicious in their stock selection from here on and should focus on companies with high quality business franchises which have strong revenue visibility going forward."
According to the brokerage, it has claimed that its 'top picks' have delivered returns of 50.9 percent since October 30, 2015 (its inception). Meanwhile, in comparison, the BSE 100 index rose little over 27 percent during the same period.
Source: Angel Broking Research ReportAmong all top picks, here are the 5 big bets from Angel Broking:
1. Hindustan Unilever:
The brokerage said that the FMCG giant has a strong balance-sheet along with free cash flow and higher profitability. Going forward, expect HUL to report healthy bottom-line growth due to healthy volume on back of strong brand, wide distribution network, added the report.
2. Avenue Supermarts: From other consumer goods space, the research house noted that the company offers significant discount compared to e-commerce. Modern trade and general trade would drive the revenue growth. "We expect DMart to report consolidated revenue/PAT CAGR of 19 percent/26 percent, respectively, over FY2019-22E," the report said further.
3. Dr Reddy's Laboratories: Recently Dr Reddy's has acquired domestic business of Wockhardt pharma for Rs 800 crore in an all cash deal. With this, the company will get 62 brands with total annual sales of Rs 1,830 crore, which we believe is value accretive for the company, added Angel Broking.
4. Reliance Industries: The brokerage feels that the retail arm of RIL will be a key value driver over the long run though there would be some impact on
business in FY21 due to the Covid-19 outbreak. "Telecom business to witness robust growth over the next few years due to tariff hikes and shift of subscribers from Vodafone Idea to other telecom players," added the report.
5. HDFC: From financials space, Angel Broking picked three largecap stocks i.e. HDFC, ICICI Bank and Bajaj Finance. For HDFC, the report said that it's superior know-how of the segment; strict underwriting practices and
buffer provision would help it to better manage the credit loss. It further said, "At ~1.75x its FY2022E BV (book value), we believe is reasonable considering its robust operating metrics, experienced management, healthy provision and sustainable business model."
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