Picks these 21 mid, smallcap and largecaps for long term investment

anjujadon — Wed, 12 May 2021 23:14:51 +0000

best stocks to buy in india for long term 2021 we are 21 small mid and largecap stocks that investors can put their money in systematically over the next few years. prospects of Indian economy and corporate earnings growth over the next few years. Based on that, the broking house has picked in these stocks that investors can put their money in for the long term.

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Mahindra and Mahindra

The company aims to increase its farm equipment revenues from overseas markets to over 50% from 37% currently, even as it aspires to increase its share in the domestic tractor market from the current 43% to 50%. It is looking to increase revenue in all the three key overseas regions – from the current $450mn to a billion dollar in Japan, from $470mn to a billion dollar in the Americas and from the current $240mn to half a billion in Turkey

Tata Motors

The management of the company expressed its intent to become debt-free over the next three years at its FY20 AGM and is open to partnership in domestic PV business given the segment’s capex needs.

Dr Reddy’s Laboratories

Dr. Reddy’s on account of 1) widely-distributed revenue mix 2) 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 USFDA issues.

Reliance Industries

The company has a strong market position and operates its petrochemical plants at full capacity. The company is looking to expand into multiple new digital products and services.

Infosys

Infosys has guided revenue growth of 12-14 percent, which represents strong growth potential despite a robust FY21 performance. The company expects healthy traction in large deals, digital technologies and has a healthy deal pipeline. The recent Daimler deal will support growth in the vertical in FY22E

GAIL India

The gas transmission business of GAIL is likely to be in a sweet spot owing to (1) increase in domestic gas production, (2) increase in demand of RLNG, (3) completion of major pipelines in eastern and southern part of India. GAIL with its dominant position in gas pipeline infrastructure should be the largest beneficiary.

Aurobindo Pharma

HDFC Securities 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.

Hindustan Unilever

HUL is a play on consumption growth in India. It has proved its ability to implement effective price hikes and to grow ahead of the market. Disruptive times are particularly hard on unorganised players, which may lead to HUL gaining market share.

ICICI Bank

The bank is well capitalised, which will act as a cushion against further asset quality shocks and lower CASA growth if any. The bank has a very strong retail loan book composition and PCR is also industry’s best. This indicates that ICICI Bank is better placed than peers to deal with the anticipated stress due to COVID-19.

NMDC

Management anticipates 35-36mt production in FY21. Production should be ramped up to 40mt in FY22. Commissioning of steel plant (expected by June 2021 subject to travel by international experts) is an additional trigger for the stock. The stock is trading at discount to global peers and its own past seven year range.

ACC

ACC has a debt-free balance sheet with strong cash position despite on-going capex. Also, it has a strong cash flow from operating activities. Working capital days are expected to remain stable which will again help to the company to maintain balance sheet strength.

State Bank of India

SBI is a financial conglomerate. Through its various subsidiaries and JV companies, it has a presence in insurance, asset management, credit cards and various other services, including stakes in various regional rural banks. All these are performing exceptionally well and adding substantial value to the bank’s valuation.

ITC

ITC is one of the leading FMCG companies in the country and at such low valuations, we feel there is very limited downside potential with the risk-reward ratio in the current market scenario in favour of ITC.

Hindustan Petroleum Corporation

HDFC Securities 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 crore on standalone basis as on March 31, 2020

Larsen & Tourbo

The company’s management expects the working capital to sales ratio to come down around 18-20 percent going forward. The company has exited from inefficient capital assets and non-core businesses and reduced the debt level. The monetisation of non-core assets would be the key part of the company’s strategy, bringing efficient capital utilisation and leading the ROE.

Sun Pharmaceutical Industries

The share of injectables, specialty, biosimilars, and complex products in US revenues is expected to increase significantly over the next three-four years. Improving quality of pipeline in the US will not only ensure that the growth rate holds up better but will also drive higher profitability.

Tata Power

Regulated RoEs play a very important role in 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 Life Insurance Company

The broking house says that HDFC Life is a long-term compounding growth story. The company’s focus on superior product mix with a greater focus on high margin business, diversified distribution mix and high technology focus puts the company ahead of the curve.

Birla Corporation

The company 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.

Bajaj Auto

The company has negligible debt levels and is likely to maintain its debt-free status, given that its annual capex requirement of around Rs 500-800 crore can be easily met through internal cash accrual of Rs 2,500-3,000 crore post dividend payout. Return ratios continue to remain strong above 20 percent.

Tata Consumer

The broking house expects the company to gain market share across its domestic core portfolio through its focused power brands strategy, innovation across portfolio, aggressive above-the-line spends and improvement in its distribution reach.

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