1 / 9Mahindra & Mahindra | The company has maintained a market share of over 40 percent in the last decade, aided by its superior channel reach and understanding of market dynamics. M&M has been focusing on improving its return ratios by closely scrutinising its loss-making entities, the brokerage said.
2 / 9Dr Reddy’s Laboratories | HDFC Securities likes Dr Reddy’s on account of 1) widely distributed revenue mix 2) a strong focus on domestic business, 3) injectables pipeline for US and EU, 4) healthy balance sheet and return ratios and 5) resolution of all major US FDA issues.
3 / 9GAIL (India) | The gas transmission business of GAIL is likely to be in a sweet spot owing to (1) an increase in domestic gas production, (2) an increase in demand of RLNG, (3) completion of major pipelines in the eastern and southern part of India. GAIL with its dominant position in gas pipeline infrastructure should be the largest beneficiary
4 / 9Aurobindo Pharma | We remain positive on Aurobindo on the back of a) strong complex injectables (manufacturing capabilities/capacity), b) healthy business of API over 3 years, c) improving profitability of the Europe business, d) to cater the vaccine opportunity over the medium term, and e) reduced financial leverage, the brokerage house said.
5 / 9NMDC | Management anticipates 35-36 mt production in FY21. Production should be ramped up to 40 mt in FY22. Commissioning of steel plant is an additional trigger for the stock. The stock is trading at discount to global peers and its own past seven-year range, HDFC Securities said.
6 / 9ACC | The company has a debt-free balance sheet with a strong cash position despite ongoing capex. Also, it has a strong cash flow from operating activities. Working capital days are expected to remain stable which will again help the company to maintain balance sheet strength.
7 / 9Hindustan Petroleum Corporation | We expect GRMs will recover with pickup in economic activity and lower operating cost (due to soft spot LNG prices) will support earnings. HPCL’s liquidity is expected to remain strong, aided by healthy cash flow generation and sizeable cash and cash equivalents of Rs 5,458 cr on a standalone basis as on March 31, 2020, the brokerage said.
8 / 9Tata Power Company | Regulated RoEs play a very important role in the profitability of both power generating and transmitting companies. As the company’s profitability is largely inter-linked and dependent on regulated RoE and finance charge, any reduction in interest rates going forward will help the company to expand its margin profile, as the regulated RoE of 15.5% has been set for the next five years (until 2024), HDFC Securities said.
9 / 9Birla Corporation | BCL has ambitious capacity expansion plans that could suppress profitability in the medium term Also dispute among the promoters creates uncertainty about the future plans till it is resolved.
