Domestic brokerage and research firm Samco Securities has recommended top five stocks as its picks which are Hindustan Unilever (HUL), Housing Development Finance Corporation (HDFC), Computer Age Management Services (CAMS), Dr Lal PathLabs and Affle (India) on the occasion of Dusshera.
Samco Securities’ top stock picks –
HUL: The brokerage said that with increased focus on premium products, host of initiatives in the e-commerce market, recovery in the discretionary category, premiumization, synergies from GSK Consumer Healthcare and leverage in its digitalization capabilities, HUL is ensuring that it remains competitive in the current dynamic environment.
“It is confident of consistent double-digit EPS growth over the coming decade. Given its leadership position, HUL is slated to capitalize on long-term growth in the FMCG industry in India and we maintain a positive outlook on it,” it added.
HDFC: The brokerage said that with HDFC’s nearly stable asset quality performance during a period when other rivals in the housing and asset financing sectors reported a large spike in stressed loans, the company has surprised the market.
“HDFC is well-positioned to acquire a profitable market share as demand for home loans continue to remain buoyant. Disbursements have also picked up pace with the nation-wide unlocking. In addition to this, the industry is in a sweet spot with interest rates at historical lows, robust housing demand and improving collection efficiency. The stock thus remains one of the best picks in this space,” Samco Securities added.
CAMS: Computer Age Management Services is the market leader with a share of over 70% of total Mutual Fund AUM in a duopoly RTA market. The company also has a strong and consistent financial track record of compounding sales and profit growth by 8% and 13% respectively over the last 10 years.
Additionally, India has one of the lowest MF penetrations globally with an AUM-GDP ratio of 12% vs world average of 65%, this itself offers long-term growth potential for the overall MF and in-turn for the RTA industry. CAMS has been an attractive opportunity for investors since its listing and continues to be one, the brokerage added.
Dr Lal Path Labs: Dr Lal Path Labs is engaged in providing diagnostic and related healthcare tests and services nationally and internationally. Along with the pandemic induced increased test volumes, the companies’ persistent focus of service parameters and timely turnarounds have aided in achieving resilient growth.
“With the diagnostic industry poised for growth, we believe premium and organised players like Dr. Lal Path Labs are set to gain market share and thus is an attractive investment bet,” Samco said.
Affle (India): Affle is a leading adtech company with proprietary consumer intelligence platform helping its customers to drive user acquisitions and improve user engagements through relevant mobile advertising.
The management of the company expects the operating margin to be sustainable in the forthcoming quarters and aims to deliver at least 25-30% revenue CAGR over the medium term. Samco said it remains positive on Affle given its strong balance sheet, positive cash flow conversions, increased platform usage and a long growth runway.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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