With the market recovering from the carnage in the year's beginning, Yes Securities has replaced HCL Technologies with Repco Home Finance in its portfolio.
Speaking on the rationale of picking a small-cap financier, the brokerage explained that Repco Home Finance has a strong balance sheet with no exposure to construction finance. In fact, 80 percent of its portfolio is occupied with home loans with 26 percent for robust Tier-1 capital, it said.
The financier did not take any loan moratorium from its lenders. Additionally, it has also received large funding sanctions from SBI and National Housing Bank at lower rates, added the brokerage report.
Yes Securities believes that impairment of net worth is unlikely even in a worst-case scenario given that PPOP margin is around 3.5 percent. Therefore, the current valuation offers a good opportunity, it said.
The brokerage excluded IT giant HCL Technologies from its model portfolio due to the recent profit booking at higher valuations. It also feels that the stock has shifted to high beta names.
In June, the domestic brokerage had included Honeywell Automation and VST Industries, while reduced the weightage of Reliance Industries in its portfolio.
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