HDFC Bank to Apollo Pipes: Yes Securities’ top five stock picks for July
Domestic benchmark indices, Sensex and the Nifty have both had solid starts to the month of July thanks to strong buying across all sectors and encouraging global indications.
The benchmark indices settled at their record closing highs for the fourth straight session on Tuesday, continuing the domestic market’s milestone-setting frenzy. With a strong infusion of foreign money and an upbeat macroeconomic outlook, the Indian market has been on the rise. Analysts and brokerage firms are upbeat about the Indian market’s prospects over the medium and long terms.
Analysts claim that amid a sluggish global and a weak China, India stands out. Government investments in infrastructure, such as digital public infrastructure, and a surge in private consumption due to increased credit offtake would help the India narrative progress.
Additionally, analysts believe that companies have retained a portion of their gains due to the rapid and considerable decline in global inflation as well as the significant decline in major input prices for materials including oil, natural gas, lumber, palm oil, steel, and coal. As companies keep a portion of the advantage from lowering input prices, expanding margins and excellent results from banks and NBFCs would boost Sensex earnings. 2023 will be a successful year for Indian equities because valuations aren’t high at 16x FY25 EPS.
Based on the strong fundamental Amar Ambani, Head of Institutional Equities at Yes Securities, has recommended top five stocks to purchase in July. Here’s the list;
HDFC Bank Ltd – According to Amar, after the merger with HDFC Ltd, the bank intends to cross sell all products to all group customers post the merger. Bank is aggressively adding branches (~1500 branches p.a.) and this shall help them significantly going forward. The combined entity, with a large and growing distribution and customer franchise, more than adequate capital, healthy asset quality and profitability, will be best positioned to capture growth. Management aims to grow at a pace in which they can double their book size every four years.
HCL Technologies Ltd – By 2025, management foresees more than 50% of tech spends in the IT Services market to be Cloud‐based. Having been the first movers in this space, HCL has tie‐ups all the leading Hyperscalers, and are well positioned to leverage emerging opportunities. HCL’s vision is to be the preferred digital partner for Global 2000 enterprises, according to Ambani.
Metropolis Healthcare Ltd – Metropolis Healthcare’s wellness segment has shown an exceptional growth of 45% last year. The company has reported 18% non-covid revenue growth in FY23 being the highest among the leading diagnostic players in the industry.
It aims to open 90 labs and 1800 plus centres across the country by 2025. The company is working extensively on its IT infrastructure to strengthen its digital platform. Overall, the company expects double-digit growth in its core business due to various levers such as geographic expansion, infrastructure building, and product mix improvement.
Orient Cement Ltd – Orient cement commands major presence in West/South & Central markets, armed with an 8.5mtpa cement capacity. It has plans to expand its capacity in the west and central, thereby strengthening its position in these markets. It is ranked among one of the top efficient players with lowest operational costs. It has significantly deleveraged its balance sheet which has improved its profitability and enables to take on further capex projects without stretching its balance sheet, believes Amar.
Apollo Pipes Ltd– Management has guided for a stellar revenue growth of 35% CAGR over coming 4 years which shall be driven by 28-30% volume growth and 4-5% value growth. Company is focused on expanding their market share across India & hence they are planning a apex of ₹5 billion. This capex will be funded via equity infusion and internal accruals. With healthy tailwinds and company’s aggressive plans to expand market share and increasing contribution from plumbing portfolio, this shall help the company in expanding its gross margins as these are value added products, according to the Ambani.
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Updated: 05 Jul 2023, 12:58 PM IST
