Max Healthcare, Maruti Suzuki, HDFC Life, Among IDBI Capital's Top Diwali Picks
In Samvat 2077 - the Hindu New Year that began on November 14 last year, equity markets witnessed a historical journey as it touched new lifetime highs with Nifty/Sensex surpassing the 18k/60k mark respectively, for the very first time. The upmove was mostly driven by the containment of COVID-19 cases, swift economic revival in the aftermath of the second wave, significant pick up in the pace of vaccinations, and certain government schemes for stressed sectors.
Market analysts say that investors remain bullish as corporate earnings are expected to remain robust while domestic and foreign investors continue to push money in markets.
Here are the top Diwali stock picks from IDBI Capital Markets and Securities:
Max Healthcare Institute (MHI)
Target Price: Rs 475
''MHI is the second largest healthcare provider amongst the listed players in India. It operates 17 healthcare facilities with a total capacity of around 3,400 beds.
Besides the core hospital business, MHI has also launched two related businesses that are run as separate business units (SBUs), Max@Home which provides preventive and pre/post-hospitalization care at home, and MaxLab which offers diagnostics services that are currently in nascent stages of development. It primarily operates assets in metro cities such as Delhi NCR and Mumbai
Valuation: The stock is trading at a PER of 33x FY23 Bloomberg EPS estimates which looks attractive,'' IDBI Capital said in a report.
Maruti Suzuki India Limited (MSIL)
Target Price: Rs 10,100
Maruti Suzuki is the market leader in the passenger vehicle segment in India.
''Over the last 12 months, MSIL has faced barrage of bad news including Covid -19 lockdown, unprecedented rise in commodity prices, bumper to bumper insurance and semiconductor chip shortages etc. We anticipate majority of these events are temporary in nature and may not last beyond 12 months.,'' said IDBI Capital.
''Although MSIL has witnessed tepid volume growth over FY12-21, it has tripled its distribution outlet from 1100 to 3200+ and has well established itself to serve upcoming 4W demand in India. MSIL's rural sales grew by 9.6 per cent CAGR and its contribution has gone up from 22 per cent to 38 per cent of its volumes over FY12-21,'' it added.
''We remain super bullish on MSIL's growth prospects. Over FY22-24E, we expect MSIL to report 20.1 per cent volume CAGR and 46.7 per cent PAT CAGR. At Rs 7,201, the stock quotes at PER of 20.6x FY24E. We recommend BUY and upgrade our price target from Rs 8,585 to Rs 10,405,'' IDBI Capital said in its report.
HDFC Life Insurance
Target Price: Rs 980
HDFC Life Insurance Company Limited - a joint venture between HDFC Limited and Standard Life Aberdeen, provides insurance services. The issuer offers protection for life, health, properties, and automobile, amongst others.
''The acquisition of Exide Life would enable HDFC Life to increase its market share to 16.5 per cent (15.1 per cent for FY21), as per the total new business APE. This would make HDFC Life the second-largest life insurer, enabling it to narrow the gap with private sector leader SBI Life Insurance which had an Individual APE market share of 22.6 per cent as of FY21,'' said IDBI Capital.
''In Q1FY22, company's new business grew by 40.2 per cent YoY to Rs. 408cr and VNB margin expanded to 26.2 per cent from 24.3 per cent in Q1FY21,'' it added.
HDFC Life's improving product portfolio, strong channel building coupled with customer-centric business approach would continue to drive growth. COVID-related claims and growth in protection are the key trigger points to be noted. However, keeping company's agile nature to capture growth opportunities through innovation and better servicing capabilities, make it a Buy,'' IDBI Capital said in its report.
