Despite the COVID-19 pandemic, India's equity markets kept rolling to new highs, except during February and March 2021, in the hopes of returning to normalcy. Though India’s macro numbers have started to show improvement, challenges like commodity price inflation and supply chain issues remain. Meanwhile, global brokerage firms like UBS are of the view that Indian equities look unattractive on the valuation front as they are “extremely expensive” compared to ASEAN. Here is a look at top 10 stocks that HDFC Securities and IDBI Capital Markets & Securities recommend buying
Max Healthcare Institute | IDBI Capital suggests buying the stock of the second-largest healthcare provider among listed players. MHI is focused on 2 metros -- Mumbai and Delhi NCR -- that deliver the highest average revenue per occupied bed (ARPOB) and are the most profitable markets in the country. According to IDBI, expansion of MHI will lead to visibility in growth. The stock is trading at a PER of 33x FY23 Bloomberg EPS estimates. The brokerage sees upside potential of 45 percent in MHI.
Bharti Airtel | This telecom stock is HDFC Securities' top pick among large caps. Bharti Airtel's average revenue per user (ARPU) is the highest mobile ARPU in India. The company is looking for new partners to enable 5G use cases and is expected to roll out 5G by H2FY23. HDFC Securities says investors can buy the stock at the last traded price (LTP) and add on dips to Rs 623 for a target of Rs 810.
Valiant Organics Limited | The chemical manufacturing company is IDBI Capital’s second pick as the diversification to newer products is likely to steer growth. VOL has incurred capex of Rs 4.4 billion during FY19-21 and the enhanced capacities should steer revenue growth for the next couple of years, according to the brokerage. The company is focused on maintaining 24-25 percent EBITDA margins on long-term basis, IDBI Capital said, adding that it sees upside potential of 52 percent in the VOL stock.
Hindustan Petroleum | HDFC Securities highlighted the company's second-largest share of product pipelines in India, its expansion of business portfolio to natural gas, renewables, and petrochemicals and its plan to invest Rs 65,000 crore over the next five years in several projects as some of the key triggers to buy the stock. The brokerage says investors can buy the stock at LTP and add on dips to Rs 280 for a target of Rs 385.
CCL Products | IDBI Capital says the coffee exporter’s capacity expansion will drive topline growth. CCL’s retail business revenue grew by 74 percent YoY to Rs 1,340 million during FY21, of which nearly two-thirds came from branded business. The company’s market share stood at 5 percent in FY21 in the domestic market, the brokerage said. It expects a 43 percent upside in the CCL stock.
Larsen & Toubro | A strong order pipeline, the benefits to the company's defence business from 'Aatmanirbhar Bharat' and 'Make in India' and its core E&C business, which is well-positioned to benefit from any capex upcycle, were cited as key triggers by HDFC Securities. The brokerage said investors can buy the stock at LTP and add on dips to Rs 1,598 for a target of Rs 2,077 by next Diwali.
Surya Roshni Limited | IDBI Capital has pointed to the firm being the largest exporter of GI pipes and its focus on high-margin API pipes as one of the key triggers. Surya, the second-largest manufacturer of LED lights in India is likely to gain market share with improvement in margins, it added. The brokerage has forecast the company’s EPS to grow at CAGR of 48 percent over FY21-23E and ROE to improve to 20 percent in FY23. It recommends buying the stock as it sees 40 percent upside potential in it.
Reliance Industries | According to HDFC Securities, RIL is among the top global petrochemical manufacturers. It is also looking to expand into multiple new digital products and services. Among other key triggers is the company's net debt-free status post fundraising programme for Jio and it is also the country's largest retailer by revenue and profitability. The brokerage recommends buying the stock at LTP and adding on dips to Rs 2,336 for a target of Rs 2,986.
Route Mobile | The company is one of the leading providers of the cloud-communication platform as a service (CPaaS) to enterprises. Pointing to strong industry trend as a key trigger, IDBI Capital believes this is likely to lead to 30 percent CAGR growth in CPaas over FY21-26. Route being one of the leading providers will be a key beneficiary of this tailwind. The brokerage sees 28 percent upside potential in the stock.
Adani Ports | The company's consolidated revenue reported a 98.8 percent growth YoY in Q1FY22, EBITDA grew by 59.9 percent and profit after tax (PAT) grew by 77 percent to Rs 1,341 crore. Moreover, a slew of acquisitions serves both the purpose of increasing fixed assets and reducing tailbacks in the overall logistics value chain, HDFC Securities said. The firm is also expanding its footprint in the logistics park, it added. The brokerage said investors can buy the Adani Ports stock at LTP and add more at Rs 695 for a target price of Rs 936 by next Diwali.