Top picks for New Year 2023: HDFC Securities recommends these 10 stocks to buy

Sharing its top picks for the new year 2023, domestic brokerage and research firm HDFC Securities has suggested ten stocks that investors can look to buy. Its top recommendations include SBI, PFC, Zensar Tech, RCF, ACC, Bharat Forge, Chennai Petroleum, IOC, L&T and PNC Infratech.

HDFC Securities’ top stock picks

ACC: “The new owners could take steps to grab this low hanging fruits soon. Also the synergies between Ambuja and ACC could be realized by the new owners in a better manner. Despite its large size, ACC gets valuation in terms of EV/T which is much lower than similar sized peers. We feel this gap could be bridged gradually,” the note stated.

Bharat Forge: BFL has bagged 178 cr order from Defence ministry to manufacture Kalyani M4 vehicles and expects further orders going forward. In Aerospace the company has already set the target to reach 1000 cr by FY23 from current 400 cr, highlighted the brokerage.

Chennai Petroleum Corporation Limited: CPCL has received environmental clearance from Ministry of Environment and Tamil Nadu Government has passed an order for the acquisition of 606 acres of land parcel adjoining the existing refinery site. Procurement and Engineering activities for the project have already commenced and site activities will now gain momentum, as per HDFC Securities.

Indian Oil Corporation (IOC): “For FY23, at a consolidated debt level, against the debt repayment obligations of around 11,300 crore, company has repaid around 4,600 crore during H1FY23.  IOCL is set to commission various projects over the next two years, boosting growth.”

Larsen and Toubro: L&T is targeting to reduce debt by 5000 crore over next 2-3 years. The company expects the bid to award ratio to further improve in H2FY23 to 55%+ which, as per HDFC Securities, would drive the order inflows.

PNC Infratech: The company is expecting around Rs100-120 crores of capex during FY23 and anticipates to receive new orders during FY23. This provides strong momentum in revenue visibility over the years, said the brokerage.

Power Fin Corporation: “PFC’s high dividend seems sustainable as it has lent to relatively risk-free public sector entities and its capability to distribute dividends remains good even in case a certain portion of its private sector lending does not perform. We feel that such high dividend yield and low valuations provide a margin of safety for investment in the company.”

RCF: “Gas turbine project and ammonia plant revamp at Trombay have been undertaken to reduce the energy consumption in manufacture of urea. The projects costing 500 Cr are expected to have a payback period of 2 – 3 years.”

State Bank of India: “The subsidiaries are performing exceptionally well and adding substantial value to the bank’s valuation. This will also help SBI hedge against downturns in specific segments and access multiple growth avenues. Its subsidiary value also provides a margin of safety. We see a potential for a meaningful narrowing of SBI’s valuation discount to its private bank peers.”

Zensar Tech: “The company mentioned margins have bottomed out and are likely to improve hereon led by levers of improved service mix, optimising employee pyramid, rationalisation of SG&A and hiring costs, and improved utilisation.”

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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