While analysts on Dalal Street remain bullish on the domestic equities market, they advise investors to focus on quality stocks in 2022.
While analysts on Dalal Street remain bullish on the domestic equities market, they advise investors to focus on quality stocks in 2022. They believe that volatility will rise in the New Year as a result of foreign investor exits, profit booking, central bank normalization of liquidity and policy rates, and, most importantly, the threat of another pandemic outbreak in the United States and Europe.
“We are constructive on the market’s long-term view, based on economic and market development,” said Joseph Thomas, head of research at Emkay Wealth Management. The following are 25 equities recommended by several brokerages for 2022.
Yesha Shah, SAMCO Group’s head of equity research
Mahindra Lifespaces: Given its trustworthy brand name, the aim of 18% ROE, intensified efforts to at least triple the residential business in three years, little leverage, solid launch pipeline, and robust execution outlook, the company is well-positioned to gain from the real estate upturn.
Zensar Technologies: Zensar Technologies is on the cusp of a turnaround, with its new CEO’s strategy focusing on high growth verticals, good client mining, and significant revenue growth in Q2FY22, and margins expected to increase in FY23 as operating leverage plays out. In addition, the company is selling at acceptable prices when compared to peers with the potential for better profits.
India Affle: The company’s financial performance has been strong, and management appears to be on track to generate a 25-30% CAGR in revenue over the next five years. Its enormous concentration on emerging technologies, its 2.0 ambition to connect 10 billion or more devices, and industry tailwinds give it a massive runway for growth.
Ruchit Jain, 5paisa.com’s Lead–Research
Hero MotoCorp: The company has already had a price adjustment in recent months and has underperformed this year. However, the brokerage feels that the worst is over for the company since it has begun to raise prices on its items. The EV opportunity presented by Ather could be beneficial to the company, which is now trading at good prices.
Bharti Airtel: Bharti has announced increased tariffs for its pre-paid programs, effective November 26, 2021. The revised plans basically resulted in a 20-25% price increase. Its pre-paid 4G contracts have all witnessed a 20-22 percent increase in tariffs. With pre-paid income accounting for 82-83 percent of mobile revenue, the tariff increase might result in a 16-17 percent increase in revenue.
Gaurav Dua, Sharekhan by BNP Paribas’ head of capital market strategy
Ultratech Cement: Now that all four primary cement consumption drivers have begun to contribute significantly to cement demand, cement companies are in a prime position for long-term volume development. With industry leadership and a continuing capacity expansion program, UltraTech is expected to achieve significant traction in 2022. The government’s emphasis on infrastructure projects and the property upcycle would result in solid cement demand over the next few years.
Maruti Suzuki: The stock has been a massive underperformer in 2021, as the company’s performance has been hampered by cost inflation and a semiconductor supply problem. Given the projected improvement in semiconductor supply availability in 2022 and the continued demand climate in India for passenger vehicles, Maruti is likely to enjoy solid traction in its financials in 2022. The company’s intentions for the EV market would also include
Himatsingka Seide: The company is one of the primary benefactors of the increasing demand for Indian home textiles in international markets. Furthermore, the China+1 strategy, the European market opening up in a broader form for domestic textile enterprises, and other rising global elements are providing Himatsingka with healthy changes in the next years. At 6x FY23 earnings, the stock is pretty tempting.
Sunil Nyati, Swastika Investmart’s managing director
Action Construction equipment: The corporation is well-suited to both capital goods and infrastructure topics. It is a debt-free corporation with significant development potential.
Kajaria Ceramics: Another pack that is emerging as a leading subject over the next 2-3 years where the real estate-related theme is projected to outperform is real estate. The tiles section, where Kajaria Ceramics is the industry leader with a solid growth prognosis, would be one of the primary beneficiaries of expansion in the real estate sector.
KPIT Technologies: KPIT is one of the fastest-growing midcap IT firms that will benefit greatly from the EV theme because it is working intensively on software solutions for the EV industry.
Vinod Nair, Geojit Financial Services’ head of research
Tata Power: The company’s focus on reforming itself to be future-ready, as well as management’s capacity to drive operational excellence, ensure that the company’s growth possibilities remain intact. Tata Power is well-positioned to capitalize on possibilities in the green portfolio.
CapitalVia Global Research’s head of research, Gaurav Garg
Escorts: The company has a yearly capacity of 120,000 tractors. Escorts are present in a number of product categories, including tractors, agro-machinery, construction equipment, and railway equipment. Although the company’s sales and profits are driven by its agricultural equipment sector, the company’s presence in other industries provides prospects for advancement.
Relaxo: It is a leading player in India’s non-leather footwear business, with its owners having worked in the industry for over three decades. It operates nine units in three locations, with an annual production capacity of moreover 20 crore pairs. Over the last ten years, the company has experienced outstanding revenue and profit growth of 13% and 27%, respectively. It has good return ratios and a low debt-to-equity ratio.
Deepak Nitrite: At the moment, the Indian specialty chemicals sector is one of the fastest-growing in the world (second only to China), with an annual average growth rate of 13% over the previous five years totaling $25 billion, and it is expected to profit in the future from both macro and micro factors. It has a wide customer base and serves over 900 clients in over 40 countries.
Deepak Jasani, HDFC Securities’ Head of Retail Research
Aditya Birla Capital: Aditya Birla Capital is the holding company for all of the Aditya Birla group’s financial services businesses, with the goal of becoming an end-to-end financial services provider. Over the next three years, it will continue its credible makeover path to bring consolidated return ratios closer to franchise potential.
Hindustan Zinc: Hindustan Zinc is one of the world’s largest and India’s only integrated zinc-lead-silver producers. The company’s high operating efficiency is driven by fully integrated operations (with a captive power plant capacity of 485.5 megawatts) and low-cost, high-grade zinc reserves, as well as access to the majority of lead-zinc deposits in Rajasthan through long-term agreements with the Government of India, so the company should remain a low-cost zinc producer in the medium term.
State Bank of India: Given its broad, granular deposit base and the government’s controlling stake, SBI is essentially immune to any liability-side issues at this time. Because of the soundness of its loan books, it is better positioned than many other large banks to alleviate asset quality concerns. Furthermore, adequate provision coverage will reduce the need for incremental loan loss provisions.
Mitul Shah, Reliance Securities’ head of research-institutional desk
Finolex Industries: The government’s emphasis on the Jal Jeevan Mission, greater agricultural credit, and higher allocation for the rural infrastructure development fund bode well for local PVC pipe makers. Given the company’s strong position in the Agri pipe industry, proven track record, and creative skills, Reliance Securities is optimistic about its development possibilities.
Gujarat Gas: With a rising emphasis on gas over other alternative fuels and the relative pricing advantage of gas over other fuels, the brokerage forecasts a 16% volume CAGR between FY21 and FY24E. The business has kept PNG industrial costs lower than LPG/propane, reducing the likelihood of PNG industrial clients migrating to alternative fuels.
Ashok Leyland: Ashok Leyland’s domestic volume is expected to increase by 24% in FY22. A strong CV upcycles, the resurgence of the bus market, and an emphasis on EVs would all contribute to the company’s healthy revenues and profitability.
Ventura Securities’ Head of Research, Vinit Bolinjkar
Adani Ports & SEZ: Due to policy initiatives such as the Sagarmala Pariyojana, Dedicated Freight Corridors, direct-port-delivery/direct-port-entry, and expressway network, India’s EXIM volume, which has grown at a CAGR of 4.3 percent over the last decade, is expected to grow at a CAGR of more than 6.0 percent in the current decade. With a network of 13 ports and the ability to deliver end-to-end logistics solutions to its clients, Adani Ports & SEZ is well-positioned to gain from the increase in India’s EXIM trade.
Godrej Properties: Low-interest rates, strong financial savings, and affordable real estate prices are likely to boost demand in the real estate market, which has been sluggish since 2016. Godrej Properties is one of the largest and most efficient companies in the real estate business, thus we expect it to perform well in the upcycle.
Religare Broking’s Ajit Mishra, VP-Research
Polycab: Polycab is a significant participant in the fast-growing wires and cables industry with a strong brand positioning. It has a large distribution network and a diverse product line. It is one of the most backward-compatible cable and wire producers.
Ramco Cements: Ramco Cements is India’s fifth-largest cement producer. Religare Broking sees Ramco Cements as a buy due to its strong brand identity, dominant position in South India, and diverse product portfolio. Furthermore, its emphasis on expanding capacity, raising utilization levels, and cost-cutting activities would aid in enhancing profitability.