Smart Moves
Analysts say largecap investments could repay investors long-term, considering elections.
India Inc. praised Finance Minister Nirmala Sitharaman’s interim budget, which prioritized infrastructure investment and fiscal restraint for sustainable growth. FM increased capex investment by 11% and tightened the budget deficit target to 5.1 percent for FY24-25 to boost growth.
Analysts predict largecap stocks may reward investors long-term if Budget uncertainty subsides. These 7 largecap stocks are attractive right now.
HDFC Bank is trading at Rs 1,466.
Due to a decadal drop in earnings per share (EPS), margin strain, and slow deposits, HDFC Bank’s stock has been the talk of the Street after its October-December quarter (Q3FY24) financials disappointed investors. HDFC Bank shares fell 12% after Q3 results. However, market watchers say the index heavyweight’s long-term growth story remains intact at acceptable pricing.
HDFC Bank trades at 2.4-2.5 times price-to-book (PB), compared to historical averages of 4x.
State Bank of India | Rs 647 CMP
State Bank of India gained almost 1 percent on February 1 when Finance Minister Nirmala Sitharaman announced a lower borrowing plan for FY25 at Rs 14.1 lakh crore, down from Rs 15.1 lakh crore in FY24. This reduced yields by 8 bps and boosted PSU banking stocks. Additionally, market experts believe PSU banking stocks are undervalued in the pricey market.
Phillip Capital analysts expected SBI’s loan growth to accelerate in Q3FY24 as system-wide credit growth increased. They noted that Q3FY24 net interest margins (NIMs) should stay unchanged at 3.27 percent.
Reliance Industries | Rs 2,852 CMP
Smart heavyweight Investors have traditionally trusted Reliance Industries in difficult markets. Foreign funds bought Reliance Industries (RIL) shares to hedge their short bets on the index, pushing them to an all-time high of Rs 2,917 a share on January 30, 2024.
Recently, Disney has agreed to sell 60% of its India business to Viacom-18 for $3.9 billion. RIL owns Viacom-18. Envision Capital Founder & CEO Nilesh Shah told CNBC-TV18 that RIL is the best investment opportunity now.
RIL’s Q3FY24 consolidated sales rose 3.8 percent and EBITDA 16.7 percent.
Maruti Suzuki | Rs 10,631 CMP
Several brokerages called Maruti Suzuki stock optimistic after Q3 results boosted it more than 4% on February 1. HSBC has a ‘buy’ call on the counter with a Rs 12,500 objective. Banking firm: “The company’s margins should improve with better operating leverage and few discounts”. Morgan Stanley rates the stock ‘overweight’ and targets Rs 11,228.
Motilal Oswal expects Maruti volume growth to improve due to sustained domestic PV growth, new SUV launches, and CNG adoption. “We expect a recovery in both market share and margins in FY25, led by an improvement in supplies, a healthy mix, and operating leverage,” stated. Prabhudas Lilladher and Axis Securities offer ‘buy’ ratings.
Airtel | CMP: Rs 1,150
The stock has risen over 31% in the last six months, compared to Nifty 50’s 11% growth.
On predictions of a tariff hike, BofA Securities upgraded the stock to “Neutral” and boosted the target price to Rs 1,145. Bharti Airtel should gain from a “meaningful tariff hike” in the next year, according to BofA Securities. The capital cycle should ramp up since Bharti’s spending focuses on device penetration. It said Bharti and Jio will gain market share faster as 5G implementation scales up.
Jefferies maintains a ‘buy’ rating and raised the stock’s target price to 1,300. Domestic brokerage Axis Capital has rated the counter ‘BUY’ with a target price of Rs 1,303 a share, believing the stable competitive environment sustains rises.
HSBC downgraded Bharti Airtel to ‘Hold’ but boosted its target price to Rs 1,125 from Rs 1,020. HSBC analysts expect Bharti Airtel’s growth drivers to continue, with higher ARPU and mobile market share. They predict non-mobile and capex intensity growth to slow. Reduced capex and mobile rate hikes are also priced in by the brokerage.
Sun Pharma | Rs 1,406 CMP
In recent months, the stock has rallied 24%, surpassing benchmark Nity 50’s 11% gain. Given its stable performance, sustained growth, and specialty portfolio expansion, several brokerages have named Sun Pharma a top large-cap option.
Prabhudas Lilladher rates the stock ‘buy’ and sets a Rs 1,640 objective. In recent years, the pharma major’s dependence on US generics has diminished, and its growth is increasingly focused on specialty, rest of the globe, and local pharma with excellent growth visibility, according to the brokerage. The acquisition of Concert Pharma and other pipeline advancements give its specialty pipeline visibility beyond FY25.
SBI Life Insurance | CMP: Rs 1,432
Emkay Global Financial maintained a ‘buy’ rating on SBI Life with a Rs 1,750 target price. SBI Life management expects medium-term growth above the industry average and VNB margins around 28% for FY24, depending on product mix.
ICICI Securities also maintained a ‘buy’ rating and a Rs 1,750 target. “On the basis of management guidance as well as product pipeline, the company is likely to show better margin resilience around 28 percent levels despite EOM regulations,” the broker added.
In the previous three months, SBI Life stock has risen 7%, while the Sensex has gained 12%.
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