Declining COVID-cases Offer Hope; Experts Pick 10 Stocks that will Benefit from Easing Restrictions
As daily COVID cases are falling, the benchmark indices are up more than 4 percent. Indian companies post strong earnings, and foreign investors return to local stocks.
“Markets rallied on the back of better Q4FY21 earnings as well as supportive global cues. Besides, updates on the COVID-19 vaccine and peaking out of cases too are boosting sentiments,” Ajit Mishra, VP- Research, Religare Broking Ltd.
“Investors are expecting demand and growth to be on track for sectors least impacted by the pandemic, with a gradual unlocking in the coming months,” he said.
Vaccinations are expected to bring the economy back to normal as States might begin to unlock gradually. Assuming the progress, experts have suggested that it could be time to look at these 10 stocks that will benefit from the unlocking:
Exper - Ajit Mishra, VP- Research, Religare Broking Ltd
1. ICICI Bank:
ICICI Bank is well placed and has better financials, a strong balance sheet, and a large network that bodes well for growth. Besides, improving corporate governance and management’s long-term growth prospects are also positive.
2. Axis Bank:
ICICI Bank has better financials, a strong balance sheet, and a large network that bodes well for growth. Besides, improving corporate governance and management’s long-term growth prospects are also positive.
3. Natco Pharma:
Natco Pharma is a strong player in the specialty business both in the domestic and US markets. The company is making efforts for new drug launches for COVID and cancer drugs, which bodes well for the growth. Lastly, long-term growth prospects in terms of other new launches remain strong. Apart it has a strong balance sheet and decent financials, thus we are bullish on the stock.
Mahindra & Mahindra will benefit from the recovery in the tractor industry and a resilient rural economy. Further, the LCV business is also expected to do well on the back of increased adoption of the hub and spoke model.
Expert: Atish Matlawala, Sr Analyst, SSJ Finance & Securities
5. Interglobe Aviation Ltd:
Indigo is the largest airline in India with a market share of around 54 percent. Post lockdown and vaccinations, people will be able to travel freely. Indigo’s plan to replace older CEO aircraft with NEO aircraft by Dec’22 would result in fuel savings of around 15 percent resulting in margin expansion.
PVR is the largest operator of cinema screens in India with 175 hall and 835 screens across 71 cities having a seating capacity of 179K viewers. Post lockdown, the Movie business is expected to be back working at a good pace.
PVR has reached settlements with landlords for 88 percent of cinemas for complete or partial waiver/discounts for the lockdown period, thus trying to recover the cost.
7. Indian Hotels Company Limited:
IHCL is India’s best hospitality company with over 200 domestic hotels and 17 international hotels. A sharp recovery is expected with the return of tourism as Hotel business might pick too.
In the last 1 year, IHCL has been able to cut fixed costs from Rs 163 crore/month to Rs 118 crore/month through prudent corporate restructuring, this has led to the savings of Rs 135 crore in FY21.
Expert: Ankit Pareek, Research Analyst at Choice Broking.
8. Maruti Suzuki:
Maruti Suzuki has a strong presence in the domestic car market. Its market leadership, a favourable demand, and easing of supply disruption will boost earnings.
9. State Bank of India:
SBI Bank posted impressive Q4FY21 results. SBI's improvement in asset quality is a key positive factor and the impact of COVID-19 is manageable.
10. United Spirits:
United Spirits is India’s largest spirit player with a diversified product portfolio. However, United Spirits is our top pick in the liquor space as the demand-supply challenges are expected to be short-lived and recovery can be better than market expectations with unlocking.