Pick Of Picks: Tata Motors, RIL, SBI Among Top Stocks For 'Pivotal' Samvat 2081

As Samvat 2080 closes against a backdrop of geopolitical turmoil and monetary policy uncertainties, the Hindu new year is poised to be a pivotal one for the global economy.

Top brokerages continue to bet on big names even after the market has seen a decent rally throughout the year, apart from the October correction.

Tata Motors Ltd., State Bank of India Ltd., Reliance Industries Ltd., and PNB Housing Finance are among the top picks by brokerages for Samvat 2081—based on the number of times they were the top calls by different analysts.

National Aluminium Co., Lemon Tree Ltd. and KPIT Technologies Ltd. were the other companies that saw repetition by domestic brokerage houses.

This pick of picks is based on investment picks for the upcoming year by eight individual brokerages that NDTV Profit analysed. However, it is important to note that the picks by these brokerages were very diverse, with Tata Motors being the only stock to be picked by three brokerages.

The automaker was among the top picks by IDBI Capital, Sharekhan, and PL Capital.

ICBI Capital sees positive factors from robust commercial vehicle performance, a boost for Jaguar Land Rover with a shift towards luxury, electric vehicle expansion, and a positive outlook and growth strategy.

PL Capital expects gains as the Relative Strength Index has almost arrived near the oversold zone. The risk-reward ratio is favorable, and the technical chart appears highly attractive, according to the statement.

Sharekhan is positive given the continued improvement in JLR, personal vehicles, and commercial businesses. New product launches, a shift in demand toward the SUV segment, and a healthy operational profit margin for JLR are also key positive triggers.

The state-owned lender was among the top picks by HDFC Securities and Sharekhan.

With resilient economic activity, credit demand has remained strong during the previous fiscal, HDFC Securities said. The management has guided credit costs to be under 0.5%, and the recent change in the RBI's stance and the expected rate cut could pose an upside risk to credit growth expectations, it said.

SBI is an attractive play in the fast-growing Indian economy, with a healthy balance sheet and strong liability franchise, Sharekhan said. The bank has significantly improved its operating metrics and has been outperforming on some key matrices with its private peers.

Credit growth is expected to be broad-based, driven by retail, SME, and corporate segments, it said.

The Ambani-led India's largest company by market capitalisation was among the top picks by HDFC Securities and Sharekhan.

The conglomerate's digital services subsidiary, Reliance Jio, is poised to benefit from the most number of wireless subscribers over the recent tariff hike, HDFC Securities said.

Reliance Retail's international expansion plans and significant investments in the exploration and production business are among the key triggers for HDFC Securities.

The company's stable gross revenue, ability to navigate difficult market dynamics, and commitment to sustainability are few positive triggers, according to Sharekhan.

PNB Housing Finance was among the top picks by HDFC Securities and Systemix Group.

The lender has been working to focus and grow its retail book while strategically reducing the mix of corporate loans in its portfolio, HDFC Securities said. 

Active steps to ramp up collection, do write-offs, and speed up resolutions, specifically in its corporate book, are also key positives, it said. The financier expects write-backs to continue for the next three-four quarters, the brokerage said.  

The lender aims to grow its retail loan book to over Rs 1 lakh crore by fiscal 2027, and its plans to open 50 new branches annually are key triggers for Systemix Group. "Company's pre-provision operating profit is projected to grow at an 18% CAGR from fiscal 2014 to 2026, with operational expenses expected to stay at or below 1% of AUM."

Samvat 2081 is set to be a pivotal year for the global economy, Axis Capital said in a report.

The new Samvat begins amid a global rate cut cycle along with a change in policy stance from the Reserve Bank of India, signalling that a rate cut could be expected within the next six-nine months, Axis Capital said.

"For Samvat 2081, we anticipate one to two rate cuts from the RBI, contingent upon inflation trends and the broader growth dynamics." Positive rainfall and reservoir levels are expected to benefit the rural economy, enhancing the prospects of a strong second crop this year, it said.

The market is expected to remain stable in the new year with some volatility due to state elections in India and ongoing global geopolitical risks, according to Aditya Birla Capital.

"However, the overall outlook for the market remains optimistic." The small and mid-cap stocks are trading at a record premium, and so "caution is advised."

The long-term outlook remains positive, with SMIDs offering exposure to high-growth themes like artificial intelligence, digital transformation, electronics manufacturing services, electric vehicles, data centres, green energy, solar power, and semiconductors, among others, the brokerage said.