Mutual fund investments are considered the safest among those that fetch high returns. They also offer investors a lot of options to choose from on the basis of their market capitalisation, sector allocation, and value. A company’s stock can be large-, mid-, or small-cap, based on market capitalisation. Thus, a retail investor can invest in a basket of stocks created by a mutual fund, and minimise his/her risk exposure in comparison to directly investing in the stock market.
So, for investors who are planning to invest in stocks via SIP, domestic brokerage and research firm HDFC Securities has shared its top picks that can be bought for a minimum horizon of 6-12 months preferably.
The brokerage house has recommended twelve stocks as its top picks which are Aegis Logistics, Bajaj Auto, Bharti Airtel, Central Depository Services Ltd (CDSL), Hindustan Petroleum Corporation Limited (HPCL), Hindalco Industries, ICICI Bank, ITC, Persistent Systems, Reliance Industries (RIL), State Bank of India (SBI), and Thermax.
Bajaj Auto is India’s No.1 motorcycle exporter with two out of three bikes exported from India carrying a Bajaj badge. BAL would continue to focus on developing capabilities to emerge as a preferred brand in EVs and not push for volumes. “BAL has doubled its electric scooter Chetak sales in Q1 on a low base and hopes to double it in Q2, with a presence in 27 cities (to be ramped up to 100 cities gradually). However, higher competition in premium segment, stress in export geographies and forex volatility remain key risks for the company," HDFC Securities said in its note.
Bharti Airtel enjoys industry-leading Average revenue per user (ARPU) of Rs 183 with a 25 per cent gain in one year and the company expects another tariff hike in 2022, if not in the next three to four months. HDFC Securities, said: “The company also expects to see ARPU at Rs 200 and ARPU continued to be the best in the industry as Q1FY23 ARPU came in at Rs 183 vs. Rs 178 in Q4FY22, Rs 163 in Q3FY22, Rs 153 in Q2FY22, and Rs 146 in Q1FY22 on a comparable basis."
ITC has been of the Nifty’s top performers in the calendar year 2022 so far driven by strong performance across all its segments despite inflationary pressures and demand slowdown coupled with supportive valuations. “In Q1FY23, ITC yet delivered yet another quarter of robust growth with splendid growth in cigarette volumes (28 per cent) which surpassed pre‐Covid levels and now seems on a growth trajectory, with strong 19.5 per cent growth in FMCG business on a base of 10 per cent with stable margins, hotels business registered highest ever sales and profit and above expected growth in both the Agri (83 per cent growth) and paperboards (43% growth) businesses on a high base. We believe this sort of consistency across segments with some visible relief on the cigarette taxation front can drive a further re‐rating on the valuations front," the brokerage house said.
Hindalco is expanding both downstream and upstream to raise its aluminium capacity as well as the share of value add products, which will eventually reflect in an improved EBITDA margin. The positive demand outlook on Novelis’ key end market segments (cans and auto) and the upward revision to EBITDA/t guidance in this quarter do provide comfort on future cash flow generation, as per HDFC Securities.
“HPCL has reported refinery utilisation levels of above 100% over the past few years. The capacity utilisation declined in FY22 due to a fire in one of the crude distillation units at the Visakhapatnam refinery and the shutdown of the Mumbai refinery for capacity expansion. Going forward, with the completion of the Visakhapatnam capacity expansion and residue upgradation project, the scale and cash flows are expected to improve," it said.
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