With a few more days left to Diwali, we can see the stock market reaching pre-covid levels. The year 2020 witnessed unparalleled disruptions led by the outbreak of Covid-19, which was followed by locking down of economies, thus bringing the entire value chain and economy to a grinding halt. “An average of two months was lost due to lockdown, impacting the overall performance of companies in Q1FY21. However, beginning Q2FY21, gradual recovery was seen across sectors led by lockdown lifting, pent-up demand and resumption of industrial activities,” says ICICI Securities.
Given the scenario, the brokerage house sees value emerging across the market cap spectrum with the key filter being quality. “We continue to advise investors to utilise equities as a key asset class for long term wealth generation by investing into quality companies with strong earnings growth and visibility, stable cash flows, RoE and RoCE,” says the brokerage house.
Here are the top five stock picks for Muhurat trading by ICICI Securities:
Zydus Wellness (ZWL)
Buying Range: 1740-1790, Target: ₹2,300, potential upside: 30%
Zydus Wellness operates in the niche wellness & health product segments with brands like Sugar Free (sugar substitute) and Nutralite (health foods). Its third brand, Everyuth, is focused towards skin care products. The company acquired Heinz India’s consumer business, subsidiary of Kraft Heinz, in January 2019. With this, Zydus’ product portfolio widened to Glucon-D, Complan, Nycil and Sampriti.
SBI Life Insurance (SBILIF)
Buying Range: 780-810, Target: ₹1,000, potential upside: 27%
SBI Life Insurance is one of the largest private life insurance players with ~20% market share. Continued focus on business growth and improvement in product mix has remained the core strength. In terms of business growth, SBI Life has reported highest NBP growth among top private insurers at ~27% CAGR in the last four years, thereby increasing its market share.
Ramco Cements (RAMCEM)
Buying Range: 790-840, Target: ₹1,000, potential upside: 21%
The Ramco Cements is one of the most efficient player in South India with total capacity of 18.5 MT (including 2 MT in east). With a strong business profile and healthy market share, the company’s volumes have grown faster than the respective regional growth in the past three years.
Mahindra Logistics (MAHLO)
Buying Range: 355-375, Target: ₹430, potential upside: 18%
Mahindra Logistics is among the largest 3PL players in the country. The company operates an asset light business with investment in assets being done by ~ 1500 business partners. The 3PL industry is expected to grow higher than logistics industry amid a change in perspective of manufacturers whereby higher proportion of logistics operation is being outsourced to specialised 3PL players like MLL. Mahindra Logistics has seen a sharp recovery in Q2FY21 that has enabled it to reach pre-Covid levels before peers.
Cipla Ltd (CIPLA)
Buying Range: 760-785, Target: ₹900, potential upside: 16%
A prominent Indian pharma company catering to 80+ markets with a global portfolio of 1500+ products. With 46 manufacturing facilities spread globally, Cipla has a gamut of therapeutic offerings ranging from simple anti-infectives to complex oncology products. With ~5% market share, Cipla is the third largest player in domestic formulations market. Domestic formulations comprise ~39% of FY20 revenues.