1 / 5HDFC Bank: Within the Indian financial system, the macro scenario has been playing out in a way that would immensely benefit larger well‐governed and well-capitalized private banks having solid outreach and higher brand comfort. As per the brokerage, HDFC Bank is set to witness accelerated market share gains in years to come, already visible in its recent resilient loan growth delivery amid anemic system‐wide growth. It further added that strengthening market position and benefits from digitization are making earnings profile resilient in the long run and doesn't expect the impending management transition to impede on the franchise progress or profitability.
2 / 5VST Industries: While many are looking at ITC as a contra bet, it’s worthwhile looking at VST Industries in its place. The 3rd largest tobacco company, with brands like Charms, Charminar Total, has gained market share, growing cigarette volumes by 8 percent and revenues by 18 percent in the last couple of years, the brokerage mentioned. With its dominance in a small‐sized segment (less than 60mm), the brokerage expects the company to have double the industry growth run‐rate for the next 2‐3 years.
3 / 5ICICI Prudential Life: The brokerage expects Indian life insurers to see significant traction (+30 percent CAGR) in the protection segment driven by the ‘fear for life’ sentiment in the current pandemic. ICICI Prudential Life Insurance is the brokerage's preferred pick to play in this theme as it expects the firm to maintain its strong trajectory in the protection segment. Valuation of the firm is at a steep discount to HDFC Life and SBI Life and is close to regional peers, which have significantly higher balance sheet risk, it added.
4 / 5CDSL: As per the brokerage, CDSL may be another smart bet in the non‐lending space. 1.2 million investor demat accounts were opened with the CDSL in March and April alone. Overall, the company witnessed a 22 percent jump in new accounts in FY20, surpassing the competition, for the first time, to reach over 21 million cumulative investor accounts, it added. The company has witnessed CAGR of 12 percent in the last ten years and going forward, the brokerage expects the firm's expenses to be lower in the absence of high provisions made for statutory liabilities and legal matters, helping PAT grow faster.
5 / 5Greenlam Industries: Greenlam is the largest laminate player in India with 18 percent domestic share and third-largest globally with a huge potential market size of Rs 500 billion. Having a strong track record of revenue/EBITDA CAGR of 15 percent/17.5 percent
over FY10‐FY19, the brokerage believes Greenlam can replicate the same performance over the next decade as well ‐ aided by structural tailwinds both in the domestic and overseas market. It sees Greenlam emerge even stronger post COVID as its balance sheet continues to be strong.
