Top Stock Picks: Bank, NBFC & HFC Stocks To Buy Ahead of Q4FY22 Results

The brokerage firm HDFC Securities has given an eye on the banking space and has picked up Axis Bank for a target price of Rs 1,021, Bandhan Bank for a target price of Rs 406, City Union Bank for a target price of Rs 213, Federal Bank for a target price of Rs 126, ICICI Bank for a target price of Rs 1,001 as its top picks with a buy rating. Whereas, Cholamandalam Investment and Fin Co (CIFC) for a target price of Rs 774, CreditAccess Gr for a target price of Rs 994, and SBI Card with a target price of Rs 1,255 are the brokerage's top selections in the NBFC and HFC sector, with a buy rating ahead of Q4FY22E results.  

Banks	Recommendation	Target Price in Rs
AU Small Finance Bank	REDUCE	1,264
Axis Bank	BUY	1,021
Bandhan Bank	BUY	406
City Union Bank	BUY	213
DCB Bank	ADD	131
Federal Bank	BUY	126
ICICI Bank	BUY	1,001
IndusInd Bank	REDUCE	968
Kotak Mahindra Bank	REDUCE	2,155
Karur Vysya Bank	ADD	58
RBL Bank	REDUCE	160
Ujjivan Small Finance Bank	REDUCE	21
NBFCs and HFCs	Recommendation	Target Price in Rs
Bajaj Finance	REDUCE	6,413
Cholamandalam Investment and Fin Co Ltd	BUY	774
CreditAccess Grameen Ltd	BUY	994
IndoStar Capital Finance Ltd	REDUCE	229
LIC Housing Finance Limited	REDUCE	409
Mahindra & Mahindra Financial Services Ltd	ADD	207
Repco Home Finance Ltd	ADD	290
SBI CARD	BUY	1,255
Shriram Transport Finance Co Ltd	ADD	1,641
Ujjivan Financial Services Ltd	ADD	201
Source: hdfcsec.com. Data as of 14 April 2022

Disclaimer- Investing in stocks is risky and investors need to be cautious. Neither Brokerage nor the author would be responsible for any losses incurred based on decisions made from the article. Please consult a professional advisor and avoid investing lumpsum amounts.

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4 Multibagger Stocks That Will Soon Issue Bonus Shares

Bonus shares are issued in some provided proportion to the company's existing shareholders free of cost. From the company's free reserves, the bonus shares are issued at the existing FV of equity shares of the company.

So, here are 4 multibagger scrips that will go ex-bonus next week and hence will be soon adding bonus shares for your existing shareholding in the stock. So, check if you hold any of the below scrip and eligible for bonus shares.

BSE 

The monopoly stock exchange that turned out to be quite lucrative for investors with 1-year return of 421% announced bonus share issuance. The company on February 8, 2022 announced that it shall pay bonus shares in the ratio of 2:1 i.e. 2 shares of Rs. 2 each for every one full paid up share of Rs. 2 each held by the shareholders of the company as on record date fixed at March 22, 2022 and hence the stock shall trade ex-bonus from March 21, 2022. BSE stock ahead of the stock turning ex-bonus trades lower by over 5% on Thursday (March 17, 2022) at a price of Rs. 2811 per share, while the stock's 52-week high price is Rs. 3140. BSE as per the latest m-cap is the small cap company with a high public shareholding. The corporatized entity that offers a transparent platform for trading in equity, mutual funds, debt and derivatives instruments.

Virinchi 

The company has announced 1:1 bonus share issuance and shall again go ex-bonus on March 21, 2022. The small cap company from the software space works to offer market lending loan management system for short term micro credit industry, full scale IT services with speciality in Analytics & Mobility and Healthcare Delivery Business in India comprising Three Operating Hospitals with a Pan-India Healthcare Mobility solution. Established in 1991, the company operates out of Hyderabad. For the purpose of eligibility determination for bonus shares, record date is March 22, 2022.

DJ Mediaprint & Logistics 

A small cap company's is a leading provider of Integrated Printing, Logistics and Courier solutions in India and overseas with an extraordinarily networked transport operations, pre-eminent quality standards and leading processes & operations. It also provides Bulk Mailing, Speed Post, Records Management, Manpower Supply, RTO Management, Bulk Scanning, Moving and other services. The company also announced 1:1 bonus share issuance on 3rd February and the stock shall turn ex-dividend on 24th March, while the record date for the said bonus is March 25, 2022.

Nandan Denim 

This is the country's leading denim supplier. The company's annual denim production capacity is 110 million meters. The company supplies its fabric to its clientele in over 27 nations across the globe. The other products of the company are shirting and yarn. This company on February 10, 2022 announced bonus shares in the ratio of 2:1 and the stock shall trade ex-bonus from March 24, 2022, while the record date is March 25, 2022.

Effects of bonus share issuance one should know 1. Increases number of outstanding equity shares 2. Reduces share price in proportion to number of bonus shares issued 3. Reduces free reserves and surplus of the company. 4. Creates implicit value per shareholder 5. Increase liquidity in shares on the stock exchanges 6. Reduces per share ratios i.e. EPS, book value per share etc.

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2 Small Cap Stocks To Buy For Gains Up To 17% In 3 Months: HDFC Securities

In the holiday truncated week, Indian benchmark indices gained massively on positive global cues as the markets had already factored in a rate hike by the US Federal Reserve Bank. Nifty clinched levels of 17287.

Meanwhile, HDFC Securities has come up with positional calls based of technical analysis of the stock by the brokerage's research experts. The given stock ideas are based on the market movements by examining historical data, like price and volume. The analysis of data and charts is carried out for trading signals and price patterns to identify investment opportunities.

So, here are the 2 stocks from different industries given as a 'Buy' for gains up to 17% in just 3 months of time.

Zensar Technologies 

The small cap company is a technology consulting and services company with 10,000 associates in 33 global locations. The company's focus is on conceptualizing, designing, engineering, marketing and managing digital products and experiences for high-growth companies. The company renders its services to industries such as Hi-tech, Manufacturing, Banking & Financial Services, Insurance, Consumer Services, Public Services and Healthcare. HDFC Securities in its research report suggest to 'Buy' the stock of Zensar for a target of Rs. 440, which at the current price of Rs. 376.9 will mean gains of 16.74%. The time horizon for the investment is suggested to be 3 months with a stop loss maintained at Rs. 334.

Technical observation as per the brokerage 

Brokerage is of the view that after consolidating in the last 5 sessions, the stock has given a breakout. The stock has crossed above its 21 EMA which suggests of bullishness in the counter. "Major momentum oscillators are showing positive indications. RSI oscillator is placed above 50 and rising upwards, Indicating strength in the current uptrend", notes the brokerage. So in view of these observations, the brokerage recommends to buy Zensar at the current price and average at Rs. 350 for the upside target of Rs. 400 and Rs. 440. 

Angel One 

This is another small cap company previously known as Angel Broking. The company is amongst the leading independent full-service retail broking house.

Technical observation as per the brokerage 

The stock has corrected from its high scaled in October 2021 of Rs. 1689. Then in December, the stock found support at Rs. 990 and since then has strongly rebounded. During this week, the stock broke out of 1180-1380 range on the back of healthy volumes, indicating the stock is set to continue its intermediate uptrend. Further, weekly momentum readings like the 14-week RSI are picking up, which is encouraging. The Relative Strength Comparative indicator too is climbing higher, indicating the stock is likely to outperform the Nifty index. 

Stock                               Buying range              Current market price      Target         SL 

Zensar Technologies    Rs. 350 for averaging          Rs. 376.95                    400/440       334 

Angel One                       1440-1472.3                      Rs 1472.3                    1615/1760    1330 

Both the above investment ideas are for the time horizon of up to 3 months.

Disclaimer: The above stocks are taken from the brokerage report of HDFC Securities based on technical analysis. Please engage in your own analysis before taking on any such risky bet.

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Sharekhan Recommends 5 Pharma Stocks To Buy For Upto 57% Upside

 

These are 5 pharma stocks that have been recommended by brokerage firm Sharekhan to buy for good returns.

Aurobindo Pharma (ARV)

Maintaining a Buy rating for Aurobindo Pharma (ARV), with a Target Price of Rs. 875, Sharekhan estimates an upside of 33%. However, Sharekhan revised earnings estimates for ARV down by around 5% for both FY22E and FY23E.

Cipla

Maintaining a Buy rating for Cipla, with a Target Price of Rs. 1,150, Sharekhan estimates an upside of 28%. the company reported a strong Q2FY22 report, and the brokerage firm is expecting healthy results for FY2022E and FY2023E.

Cadila Healthcare

Maintaining a Buy rating for Cadila Healthcare, with a Target Price of Rs. 720, Sharekhan estimates an upside of 57%. the company also reported a healthy report for the Q2FY22, and Sharekhan is estimating a similar growth in the upcoming days.

Ipca Laboratories

Maintaining a Buy rating for Ipca Laboratories, with a Target Price of Rs. 2,675, Sharekhan estimates an upside of 30%. However, the management is expecting near-term challenges for the company's API business, along with possibilities of a rise in raw material and logistics prices. Sharekhan has downgraded the company's estimates for FY22E to FY24E by 4%-7%.

Lupin

Maintaining a Buy rating for Lupin, with a Target Price of Rs. 1,210, Sharekhan estimates an upside of 35%. The Q2FY22 results of the company have fallen marginally due to escalating raw material prices. The brokerage firm has revised down the company's estimates by 8-10% for FY22E/FY23E.

Source - Goodreturns.in

Disclaimer-

Investing in stocks is risky and investors need to be cautious. Neither Brokerage nor the author would be responsible for any losses incurred based on decisions made from the article. Please consult a professional advisor and avoid investing lumpsum amounts.

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Bet on these 3 stocks for double-digit returns:

Can you name a few stocks that look attractive at current levels and can give double digit returns in a month or so? Can you explain technical reasons that can support your advice?

Axis Bank: The Nifty Bank index has been an outperformer since quite a few sessions. Axis Bank is on the verge of a multi-year breakout. The breakout will get confirmed above Rs 828 mark and once that is taken out we expect a fast upside momentum in the stock. Traders are advised to buy the stock above Rs 828 with a stop loss of Rs 790 for an upside target of Rs 910 in the coming three-five weeks.

IDFC First Bank: After the sharp fall from the top of Rs 69, IDFC First Bank took a U-Turn from the support of Rs 40 which was the placement of 200-week EMA. After that the stock has confirmed a falling trend line breakout above Rs 50 mark. The stock has a placement of 200 DEMA at Rs 52 and above that we expect sharp upside in the counter. Traders are advised to buy the stock near Rs 50 with a stop loss of Rs 45 for the upside potential target of Rs 60 in coming 3-5 weeks.

PC Jeweller: PC Jeweller has recently confirmed a range breakout above Rs 27 and then rallied towards Rs 31 mark. Due to the ongoing profit booking in the market; the stock has again retested the breakout zone. At this point in time; the risk reward looks lucrative to go long for a trader. Traders can buy the stock above Rs 29 with a stop loss of Rs 26 for an upside target of Rs 35 in coming 3-5 weeks.

What should investors do with Reliance Industries, Yes Bank and ICICI Bank on Monday?

With regards to Reliance Industries, the stock is showing some signs of exhaustion. Despite the result, we are of the opinion that one should wait for a dip towards Rs 2,500 to make it an attractive buy. Those holding the same should continue to hold.

Yes Bank is still in a no trading zone till the time it is below Rs 15. Once it crosses Rs 15 then we expect some sharp momentum in the stock. Fresh buying is advisable only above Rs 15 in Yes Bank.

ICICI Bank is still trading and trading at its life high. The momentum shall continue till the time stock is above Rs 735. Short term traders who are holding ICICI Bank should continue to hold with Rs 735 as a stop loss. For investors we feel that the stock is poised for much higher levels once the Nifty Bank index clears 41,000 mark.

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Banking Stocks To Buy As Suggested By Motilal Oswal For Up To 30% Gains

Motilal Oswal has a buy call on 7 banking stocks in its latest India Strategy report. According to the report, among the banking stocks include private sector, public sector and small finance banks. "We estimate public sector banks to report improved operating performance, supported by modest business growth and a gradual reduction in provisions," the brokerage has said.

Equitas Holdings

Current market price- Rs 123

Target price - Rs 160

The brokerage sees a near 30% upside on the stock of Equitas Holdings and believes that net interest margins would remain stable at around 8%. The brokerage says that it remains watchful of asset quality in MSME book; focus to remain on CE and restructuring book, it has noted.

Federal Bank: Buy the stock for a price target of Rs 110

Current market price - Rs 84

Target price - Rs 110

Federal Bank is another stock where the brokerage sees a near 30% upside from the current levels. Motilal Oswal believes that the Business growth for Federal Bank would remain modest, while asset quality will remain a monitorable.

Indian Bank: Buy the stock with a price target of Rs 175

Current market price - Rs 140

Target price - Rs 175

The brokerage sees a near 25% upside on the stock of Indian Bank from the current levels. Motilal Oswal believes that the loan growth will witness an uptick and the margins for the bank would remain stable around 3.1%.

RBL Bank

Current market price - Rs 192

Target price - Rs 235

The brokerage sees an upside of nearly 23% on the stock of RBL Bank and has a buy call on the stock. Motilal Oswal Financial Services believes that asset quality of the bank will remain under pressure on exposure to MFI / Credit Cards. Among the monitorables according to the brokerage would be Growth in deposits and liquidity positioning.

Buy AU Small Finance Bank stock

Current market price - Rs 1226

Target price - Rs 1400

According to the brokerage margins for the bank are likely to witness an increase to 5.7%, while CoF and C/I ratio are other key monitorables. It also feels that business growth will witness a healthy pick-up.

Axis Bank: Buy the stock with a price target of Rs 925

Current market price - Rs 780 

Target price - Rs 925

According to Motilal Oswal, credit costs will remain elevated for Axis Bank, while slippage - a key monitorable to assess the impact on asset quality. The margins for the bank are expected to remain stable, while the brokerage expects business growth to pick-up.

Bank of Baroda

Current market price - Rs 84

Target price - Rs 100

The brokerage sees an upside of at least 19% on the stock of Bank of Baroda from the current market price of Rs 84. Elevated credit costs are likely to keep earnings under pressure, while slippages to our expected to be under pressure, feels Motilal Oswal.

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Auto Ancillary Stocks To Buy As Suggested By Emkay Global

 Buy Apollo Tyre with upside potential of 37%

Emkay Global suggests buying the stock of Apollo Tyre for a target price of Rs. 305 per share, i.e. an upside of over 37 percent from the last traded price of Rs. 222.

The APMEA (20%) and Europe areas will drive revenue growth (3 percent ). Despite the greater size, EBITDA margins should fall due to delays in commodity inflation pass-through.

Exide Industries

Emkay Global suggests buying the stock of Exide Industries for a target price of Rs. 4,420 per share, i.e. an upside of over 17 percent from the last traded price of Rs.3771.

Replacement and industrial markets should drive revenue growth. Due to a favorable base, the company should outperform AMRJ in terms of sales growth. Despite the greater size, EBITDA margins should fall due to delays in commodity inflation pass-through.

Buy Motherson Sumi with upside potential of 34%

Motherson Sumi's stock is recommended by Emkay Global with a target price of Rs. 300 per share, representing a gain of almost 34% over the latest traded price of Rs.224.

Total revenues are likely to fall due to poor performance in the SMR PBV sector (-20 percent yoy). In comparison, the solo (22 percent) and PKC (42 percent) categories are predicted to increase at a good rate. Due to lower scale and delays in commodity inflation pass-through, the EBITDA margin may fall.

Buy Bharat Forge with upside potential of 27%

Emkay Global has set a target price of Rs. 920 per share for Bharat Forge's stock, reflecting a gain of over 27% over the current market price of Rs.722.

Domestic CVs (115 percent yoy), foreign CVs (189 percent), and overseas industrials should all see considerable growth (77 percent ). Despite a lag in commodity inflation pass-through, we estimate EBITDA margin expansion due to increased scale.

 

Buy Minda Industries with potential of 14%

Emkay Global has set a target price of Rs. 840per share for Minda Industries's stock, reflecting a gain of over 14% over the current market price of Rs734.

Growth in sectors such as Castings, Seating, Switches, and Others (sensors, etc.) will boost total revenue growth. Acoustics and lighting systems, on the other hand, are expected to decline. EBITDA margins may decline, owing to delays in commodity inflation pass-through and increasing personnel expenses

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4 NSE Stocks With High Dividend Yield Up To 10%

The annual dividend payments to shareholders represented as a percentage of the stock's current price are known as a dividend yield. This statistic indicates how much future income you may expect from a company based on the price at which you could buy it now, assuming the dividend remains unchanged.

To calculate a stock's dividend yield, multiply the amount of a single payment by the number of payments per year. There is no guarantee that future dividends will be paid in the same amount as previous payments if they are paid at all.

Indian Oil Corporation

Indian Oil Corporation Limited, also known as IndianOil, is a government-owned company in India. It is owned by the Ministry of Petroleum and Natural Gas of the Government of India, which is based in New Delhi. As of 2021, the government firm is placed 212nd on Fortune's Global 500 list of the world's largest enterprises. With a net profit of $6.1 billion for the fiscal year 2020-21, it is the country's largest government-owned oil firm.

Dividend History

Since August 27, 2001, Indian Oil Corporation Ltd. has declared 33 dividends. Indian Oil Corporation Ltd. has declared an equity dividend of Rs 12.00 per share in the last 12 months. At the current share price of Rs 106.35, this equates to an 11.28 percent dividend yield.

Coal India

Coal India Limited (CIL) is a coal mining and refining company controlled by the Indian government. It is owned by the Ministry of Coal of the Government of India, which is based in Kolkata, West Bengal, India. It is the world's largest coal producer and a Maharatna public sector initiative. India's coal resources are estimated to be in excess of 326 billion tonnes. The reserves are sufficient to meet the demand for several centuries at the current rate of production.

Dividend History

Since February 18, 2011, Coal India Ltd. has issued 18 dividends. Coal India Ltd. has declared an equity dividend of Rs 12.50 per share in the last 12 months. This translates to a dividend yield of 9.0 percent at the current share price of Rs 138.85.

Power Finance Corporation

Power Finance Corporation is an Indian financial corporation that is owned by the Indian Ministry of Power. It is the financial backbone of the Indian power sector, having been established in 1986. The corporation, which was initially completely owned by the Indian government, became public in January 2007. The IPO was oversubscribed by more than 76 times, making it one of the largest for an Indian company's initial public offering.

Since September 7, 2007, Power Finance Corporation Ltd. has declared 27 dividends.

Power Finance Corporation Ltd. has declared an equity dividend of Rs 10.00 per share in the last 12 months. This equates to a dividend yield of 7.95 percent at the current share price of Rs 125.85.

REC

In India's power industry, REC Limited, originally Rural Electrification Corporation Limited, is a public Infrastructure Finance Company. The firm is a government-owned corporation that finances and promotes power projects throughout India.

The company lends to the country's Central/State Sector Power Utilities, State Electricity Boards, Rural Electric Cooperatives, Non-Governmental Organizations, and Private Power Developers.

Dividend History

Since September 8, 2008, REC has paid out 27 dividends. REC Ltd. distributed an equity dividend of Rs 13.00 per share in the previous 12 months. This amounts to a dividend yield of 8.95 percent at the current share price of Rs 145.25.

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Four Stocks To Buy For Long Term

Dabur India 

Current market price	Rs 603
Target price	Rs 714
Upside	18.00%

Broking firm, Motilal Oswal has said to buy the stock of Dabur India with an upside target of 18% on the stock. According to the broking firm, the management's confidence remains double-digit sales growth prospects for FY22, despite a challenging base for the Healthcare business in the remaining quarters. It also has a target of maintaining or growing FY22 EBITDA margin YoY, despite the ongoing rise in material costs, is encouraging.

"Dabur has delivered double-digit topline growth in two of the past three years, unlike most peers, and is likely to do so again in FY22.

New products now contribute 5-6% of sales. Earnings growth, after the ongoing investment in these initiatives, will be even stronger than topline growth after completion of the investment phase for the above mentioned initiatives (and a temporary reset on account of a step up in taxation levels to 22% in FY22 from 17.6% in FY21). We maintain our buy rating," the brokerage has said.

Castrol

Brokerage firm, Motilal Oswal also has a buy call on the stock of Castrol, with a 22% upside target from the current levels.

Current market price	Rs 140
Target price	Rs 170
Upside	17.00%

According to the brokerage firm, the management guided that demand momentum has picked up since June'21 and is expected to continue (although a potential third wave may be a critical development).

"Castrol has always enjoyed its brand equity heritage, and we believe it would be able to secure its profitability with a better product mix, cost control, and the launch of advanced products with better realization. We value the stock at 20 timesJune'23E EPS to arrive at target price of Rs 170. Maintain Buy," the brokerage has said.

Punjab National Bank

Motilal Oswal has a neutral call on the stock of Punjab National Bank, but, sees an upside of 11% on the stock from current levels.

Current market price	Rs 40.40
Target price	Rs 45
Upside	11.00%

Punjab National Bank reported a healthy performance, supported by a pick-up in net interest income, higher other income, and lower operational expenditure, even as provisions stood stable QoQ.

"Business growth remains muted, however margin witnessed a sequential uptick. The bank expects growth to pick up, led by RAM segments, while the Corporate book too would undergo a gradual recovery. Asset quality was largely stable, despite higher slippages, supported by recoveries and upgrades. SMA 1 and 2 book stands elevated at 3.9% of loans, while restructured book, at 2.02% of loans (expect a further restructuring of Rs 15-20 billion), keeps us watchful over the near term. We estimate a RoA/RoE of 0.6%/8.8% by FY23E. We resume coverage with a Neutral rating and a target of Rs 45 (0.6 times FY23E ABV)," the brokerage has said.

Bharti Airtel

The brokerage is also bullish on the stock of Bharti Airtel. The brokerage says that Africa will remain the underdog and the business saw strong 9% EBITDA growth QoQ, backed by all-round growth in Data and Airtel Money consistently over the last few quarters. It generates Rs 400-500m FCF and remains a business that exhibits low leverage and healthy growth. Motilal Oswal says that despite robust data traffic volumes of 108b GB (18.9 GB/user), data traffic/subscribers are 50% that of RJio.

According to Motilal Oswal the EBITDA has been 30% higher for the last year, highlighting that the healthy subs/ARPU equation is showing gains. All this without any tariff hikes, the brokerage has said. It has a buy on the stock, but has not indicated any target prices for the same.

DISCLAIMER

Investing in stocks is risky and investors need to be cautious. Neither Brokerage nor the author would be responsible for any losses incurred based on decisions made from the article. Please consult a professional advisor and avoid investing lumpsum amounts.

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Three Smallcap Stocks to Include in Your Portfolio

 In the smallcap universe, we have picked up three scrips that hold promise for the future.

Rossari Biotech Ltd

Rossari Biotech is a specialty chemical and textile chemical manufacturing company. It is the largest textile specialty chemical manufacturer of India. They operate in three main segments: Home and personal care, Textile chemicals, Animal Health, and Nutrition products. They have over 2,000 plus products under these three categories. The key strength of the company is that they have a very diversified product portfolio. With a good research facility and pan India distribution network, they can increase their customer base. The current situation of the pandemic has made people realize the importance of hygiene. Thus the demand for disinfectants, antibacterial and antimicrobial textile material has increased significantly. The need for these products will expedite its revenue growth.

From the last five years, the company has reported a steady rise in revenue and net profits. Its net profit was Rs 79.10 crore in FY2021, up 403% compared to Rs 15.72 crore in FY2017. In FY2021, Rossari reported a consolidated total income of Rs 700.62 crore, up 16% from Rs 603.7 crore in FY2020. Its profit after tax was up 20.7% year-on-year during the same period. The stock gained 69.8% in a year, 40.3% in six months, and 1.8% in a month. Currently, it is trading at an 8.4% discount to its 52-week high.

Route Mobile Ltd 

Route Mobile is India's one of the leading cloud computing services providers. They offer services to enterprises, OTT players, and mobile operators. The company also offers text messaging, voice calling, firewall, email services to their clients worldwide. The recent acquisition of the email communication platform of Sarv Webs will help the company provide a complete customized email interaction platform to its clients. The growing use of OTT platform, OTP services by various sectors should boost its revenue in the future. The three years revenue CAGR growth was 40.8% and 39.9% for net profit. Revenue was Rs 1,422.2 crore in FY2021, up 46.9% compared to Rs 968.1 crore in FY2020. Its net profit of Rs 133.3 crore more than doubled during the same period. The scrip returned 225.1% in a year, 66.8% in six months, and a staggering 24.8% in a month, indicating continued momentum in the stock.

Mazagon Dock Shipbuilders Ltd

Mazagon Dock is a government company operating under the Ministry of Defense. The company is known as 'hip builders of the nation'. The company's shipbuilding division offers building and repairs of naval ships, whereas the submarine and heavy engineering divisions include building, repairing, and refitting diesel-electric submarines. Overall the outlook for the defense sector is positive. The government has recently banned importing 101 defense items reflecting the Government'sGovernment's focus on promoting and creating opportunities for Indian companies. It should drive the top-line of Mazagaon shipbuilders in the near to medium term.

The company's net profit in Q4FY2021 was Rs 230.54 crore, up a whopping 455% compared to Rs 41.55 crore in the corresponding period of fiscal 2020. The scrip jumped 51.8% in a year, 27.9% in six months, and 3.6% in a month, indicating a continued momentum.

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Two Stocks in Midcap and Smallcap for Investment

We expect that companies with a robust global network and sales in diverse geography will likely benefit the most. A few mid-cap and small-cap companies are poised to do well in this space near to medium term.

Rajratan Global Wire Ltd

Established in 1988, Rajratan Global Wire manufactures high carbon steel wire in India. It specializes in the manufacturing of automotive tyre bead wire, high-quality spring and rope wires. The company is one of the largest bead wire manufacturers in Asia. The company has two manufacturing facilities at Pithampur in Madhya Pradesh and Ratchaburi in Thailand. The Company exports products to customers in India (from Thailand), Italy, the USA, The Czech Republic, South Korea, Malaysia, Indonesia, Philippines, Vietnam, Sri Lanka, Finland, and Bangladesh. The Indian tyre industry is projected to grow 13-15% by value and 7-9% by tonnage in FY2022, driving the growth in the OEM and replacement segments. The Government of India's focus on infrastructural development is expected to shoot up automobile offtake and, in turn, tyres.

Rajratan Global Wire is mulling to up a new manufacturing facility of tyre bead wire with a capacity of 60,000 tonnes per annum with a proposed capital expenditure of Rs 300 crore. It is currently operating at 80%- 90% at both India and Thailand locations. The company posted stellar results in the quarter ended June 2021. Its revenue grew 182% to Rs 182.3 crore in Q1FY2022 from Rs 64.6 crore in Q1FY2021. Its net profit skyrocketed a mind-blowing 1228.5% to Rs 21.9 crore from Rs 1.6 crore in Q1FY2021. Rajratan has achieved a leadership position in India's tyre bead wire business with a global scale of operations in a short period. Promoters have steadily increased their holding to 65% at the end of June 2021. In a year, the scrip more than six folded increased investors' wealth. It is up 263.7% in six months and 41% in a month. The stock was in upper circuit closing at Rs 1867.2 on Friday, July 23.

Sundram Fasteners Ltd

Sundram Fasteners is a 55-year old company belonging to the TVS Group. The company manufactures fasteners, power train components, sintered metal products, iron powder, cold extruded parts, radiator caps, water pumps, oil pumps, and wind energy components. Sundram's high precision and critical components are used in the automotive, infrastructure, windmill, and aviation sectors. Sundram's revenue comes from 52% domestic OEMs, 13% aftermarkets, and 35% exports. The government's infrastructure development drive and focus on urban transportation, a better outlook for the automotive sector driven by scrappage policy, sequential recovery in the US markets should push the company's top-line growth. Sundram's diverse product and customer portfolio reduces the associated operational risks. The company intends to grow the share of exports in its overall revenue to 50% through new, value-added products launches. It has recently introduced transmission products apart from working on hybrid electric vehicle products to increase revenue to minimize dependence on traditional fasteners business.

In FY2021, although its revenue declined roughly 2% year-over-year, its EBITDA increased 5.5%. On a 9-year CAGR basis, revenue growth was 4%, and operating profit growth remained 6.8%. Net profit CAGR during the same time was 12.7%. In Q4FY2021, revenue rose 14.4% year-on-year, and net income grew 4.7%. The stock increased investors' wealth by 90.9% in a year, 38% in six months. The scrip is roughly trading at a 12% discount to its 52-week high of Rs 867.7.

DISCLAIMER

Investing in stocks is risky and investors need to be cautious. Neither Brokerage nor the author would be responsible for any losses incurred based on decisions made from the article. Please consult a professional advisor and avoid investing lumpsum amounts.

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Two Large Cap stocks should add in your Portfolio

We have shortlisted two stocks that have already delivered strong returns, but they have tremendous potential to sustain and provide superior returns in the future.

Dixon Technologies (India) Ltd

Established in 1993, Dixon Technologies is a manufacturer and exporter of electronics items. The company started its journey with the manufacturing of color TVs in 1994. Since then, it has expanded its product portfolio by manufacturing many electronic and lighting products, including mobile phones, CCTV security systems, washing machines, battens, downlighters, and LED lights. The company is a contract manufacturer of many electronic items for Philip, Samsung (KS: 005930 ), Xiaomi, and Panasonic. Dixon is looking for backward integration and spreading its wings into various categories related to its products. On the Q4FY2021 conference call, the company’s management expressed confidence to triple its revenue in the next three to four years on an FY2021 basis.

In the last three years, Dixon has more than tripled its revenue. The company posted a 47% year-on-year jump in its revenue in FY2021 to Rs 6,448.2 crore from Rs 4,400.1 crore in its previous year. Its 9-year revenue CAGR stood at ~30%, and its net profit CAGR remained at 75% during the same time frame. Steady opening-up of the global economy, high disposable income, penetration of mobile in across the urban, semi-urban, and rural India, e-commerce growth driving last-mile delivery, Dixon’s increasing share in domestic electronic manufacturing, global brands’ China+1 strategy to strengthen supply chains, Indian Government’s support through PLI scheme along with a healthy balance sheet make the stock a perfect pick for long term. In a year, Dixon Technologies stock more than doubled, touching nearly Rs 4,600 on July 22. Since its listing in September 2017, the scrip returned a whopping 764% to investors. It looks like the scrip is exhausted, but it returned 67.2% in the last six months and is poised to propel further. 

Polycab India Ltd 

Established in 1996, Polycab India manufactures and sells wires, cables, and fast-moving electrical goods (or FMEG) under the ‘POLYCAB’ brand. The company also manufactures and sells electric fans, LED lighting and luminaires, switches and switchgear, solar products, and conduits & accessories. Polycab diversified into engineering, procurement, and construction (or EPC) business in 2009. The company’s telecom division manufactures OFCs, FRP/ARP Rods, IGFR Yarns, and a complete array of end-to-end passive networking solutions. Polycab is India’s largest manufacturer of cables and wires, with an 18% market share in the organized market.

The present regime in India is hell-bent on improving the existing infrastructure and transforming the country into ‘Digital India.’ Constructing bridges, dams, civic amenities, and smart cities require cables and wires to transmit power. The same is true for fully blown digital commerce. Revival in the residential realty market, rapid urbanization, aspirations for a better life, customer awareness about safer and energy-efficient products should drive the demand for Polycab’s products in the future. On the financials front, Polycab registered an 8-year CAGR of 11.45% for total operating revenue by clocking revenue of Rs 8,856 crore in FY2021. Its profit after tax CAGR stood at a whopping 34.7% during the same time frame. More noteworthy is that Polycab recorded a 9.4% year-on-year growth in net profit in FY2021 touching Rs 831.3 crore despite pandemic woes. In a year, the scrip gained 129.4% and 58% in the last six months—currently, it is trading at a 6% discount to its 52-week high of Rs 2033.

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Three Stocks to Hold for Good Dividends and Best Returns

 

Markets are trading near their all-time highs, and the intense inflationary pressures are hovering over the Indian economy. The annual consumer inflation rate in India was 6.26% in June 2021, marginally lower than 6.3% in May 2021. The fixed deposit rates for more-than-365-days-FD in nationalized and private sector banks range between 5.5%-6.5%. It leaves investors searching for better returns on their funds. Dividend-paying stocks come to their rescue when markets are at a very high level or likely to move sideways. Steady and continuous dividend payouts provide cushion to investors and even cater to their on and off monetary needs. We have discovered three stocks that have a consistent dividend payment record. Apart from their consistent dividends, these stocks haven’t displayed any visible capital erosion in the last few years. We have picked up three stocks that are good dividend paymasters.

 

Oil India Ltd 

Oil India is India’s second-largest government-owned hydrocarbon exploration and production company with a Navratna status. The company is involved in the exploration, development, and production of crude oil & natural gas with geographical interests in India’s North East and Rajasthan. It is also engaged in the transportation of crude oil and the production of liquid petroleum gas. Oil India is a fully integrated upstream petroleum company. From March 27, 2020, the company’s shares have displayed an uptrend only.  It has consistently paid dividends in the last ten years. OIL announced a dividend of Rs 3.5 per share on February 11, 2021. Based on today’s closing price of Rs 161, the company’s dividend yield comes to 3.1%. Its dividend payout ratio is 19.7% compared to the industry’s 10.2%.

 

Balmer Lawrie & Co. Ltd. 

Balmer Lawrie and Company traces its roots to a more than 150-year-old partnership firm.  The company is a Miniratna-I public sector enterprise. The company manufactures steel barrels, industrial greases & specialty lubricants and is engaged in corporate travel and logistics services. For the last 20 years, the company has consistently paid dividends. For the year ending March 2021, the company declared an equity dividend of Rs 6 per share. At today’s closing price of Rs 137.6, the dividend yield comes at 4.4%, much better than the peer group’s dividend yield of 1.4%. The company’s dividend payout ratio was 85.3% against the peer group’s 29.7%. Despite being a dividend-paying company, its stock has delivered positive returns over the last few years. Balmer stock fetched a return of 32% in the previous five years, 15% in a year, 8.4% year-to-date, and 19.5% in the last six months. The upsurge in the company’s share price should support a decline in dividend payout in the future.    

 

Hindustan Zinc Ltd.

Hindustan Zinc is India’s largest and the world’s second-largest zinc-lead miner. The company’s mine life is over 25 years, with a reserve base of 150.3 million MT and mineral resources of 297.6 million MT. At present, the company holds a 78% market share in India’s primary zinc industry. Hindustan Zinc is also the 6th largest silver producer globally, with an annual capacity of 800 MT. The company has consistently paid dividends every year since 2001. For the year ended March 31, 2021, Hindustan Zinc has declared an equity dividend of Rs 21.3 per share. At the current share price of Rs 326.5, the dividend yield comes at 6.52%. Note that the company’s stock price fetched 60% in the last five years and 57.4% last year. In the previous six months, the scrip delivered a 21.8% return to shareholders. Hindustan Zinc provides an optimum combination of capital appreciation and dividend gains.

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Two Midcap Stocks for Long Term Investment

The BSE Midcap index returned 26.53% on a year-to-date basis, whereas it was up 66.25% last year. The previous three months delivered 14.3%, and it was up 2.1% in a month’s time frame. Thoroughly scrutinized mid-cap stocks have the power to change investors’ fortunes. We have scanned the mid-cap space and came up with two scrips that have the potential to create investors’ wealth over the long term.

 

Orient Electric Ltd (NS: ONTE )

Erstwhile Calcutta Electrical Company, Orient Electric became part of the 150-year old CK Birla group in 1954. The company manufactures fans, lighting, home appliances, switchgear, and other electrical solutions. Orient is the largest manufacturer and exporter of fans in India. Since 2018-19, the company partnered with De’Longhi group, which ensured gateway to premium brands of De’Longhi, Kenwood & Braun into India. Orient demerged its cement and consumer appliances business from Orient Papers. Orient Electric got listed in May 2018 post its demerger from Orient papers. Over the last few quarters, Orient Electric has increased its focus more on the niche products range and putting higher thrust on innovations. With the launch of new and premium products over the last few years, the company has successfully managed to remain ahead of the stiff competition in the electrical appliances space.

Orient Electric’s revenue CAGR for the last four years was 7.7%. While the Electric Consumer Durable segment’s revenue CAGR was 7.5%, the Lighting and Switchgear vertical posted an 8.4% CAGR. Revival of real estate augurs well for its Electric Consumer Durable business. Its operating EBITDA CAGR was 17.5% during the same period. Notably, despite pandemic-induced lockdowns, its operating EBITDA jumped 24.4% in FY2021 compared to its previous fiscal. Profit after tax CAGR for four years was a decent 23.7%. The company’s return on capital employed grew 1180 basis points to 38.7% in FY2021 from 26.9% in FY2018. For the year ended March 2021, Orient’s debt-equity ratio was a meager 0.03:1. The scrip returned around 90% to investors in a year and trading very close to its 52-week high.   

 

Hatsun Agro Product Ltd (NS: HAPL )

Hatsun Agro Product traces its root to 50-year old Arun ice cream. The company is engaged in milk and milk products, cattle feed, and fast foods. Hatsun is among the top players in the space in southern India. Milk and milk products constitute roughly 94% of the company’s total revenue in FY2021. While milk contributes 65% to revenue, the remaining 35% comes from value-added milk products. Hatsun’s branded liquid milk revenue growth is in line with market expectations. In FY2021, the company has expanded its geographical reach by opening a dairy plant in Maharashtra’s Solapur and paneer manufacturing facilities in Tamilnadu. It is in expansion mode, as is seen from its capital expenditure cycle. The board of directors has approved increasing its borrowing limit from Rs 1,500 crore to Rs 1,800 crore.

In Q1FY2022, Hatsun Agro posted a 20.8% year-on-year revenue growth to Rs 1546.2 crore from Rs 1,280.7 crore in Q1FY2021. Its net income jumped 4% during the same period. Notably, the company’s other than milk and milk products revenue jumped 27.6% in the quarter ended June 30, 2021, compared with the corresponding period last year. Expansion of existing product portfolio, gradual unlocking of economy, easing of supply chains and consumers’ shift from unorganized to organized milk and milk products should drive Hatsun’s top-line growth placing the stock as a long-term bet. The stock fetched an 85.4% yield to shareholders in a year and trading at an 8.7% discount to its 52-week high of Rs 1035.      

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