23 Aug , 2022 By : Kanchan Joshi
Sharing its DIY SIP stock picks, domestic brokerage and research firm HDFC Securities said that its recommended stocks can be bought for a minimum horizon of 6-12 months preferably via Systematic Investment Plan (SIP) route.
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.
“Aegis Logistics' (ALL) liquids division continues to report strong performance, driven by near full utilization and we expect the strong trend to continue in the near to medium term. Capacity addition led by expansion programs will drive volume as well as profitability growth in medium to long term," the note stated.
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 fire in one of the crude distillation units at the Visakhapatnam refinery and 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.
Meanwhile, for Persistent Systems, the brokerage expects the impact of wage revision in Q2FY23 and other margin headwinds could be offset by improving utilisation, absence of visa expenses, and acquisition related cost. The company has been focusing on better realisation in new engagements and higher pricing in some renewals and new contracts.
“It has a strong balance sheet with healthy cash position which provides investment avenues in new energy technologies like hydrogen. Industrial sectors such as steel, power, sugar, F&B and chemicals have shown growth. Improved prospects of orders from steel, chemical and refinery and petrochemical sector would further provide boost to players like Thermax," the brokerage said on Thermax.
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