Home / Markets / Stock Markets /  HDFC Securities' top picks: 2 stocks to buy over next two quarters

Sharing its top picks, domestic brokerage and research firm HDFC Securities has recommended two stocks that investors can look to buy, which are from Auto Ancillaries and BFSI – NBFC sectors with the time horizon of over two quarters. The two stocks are Rico Auto Industries Ltd and Spandana Sphoorty Financial Ltd.

HDFC Securities' top stock picks over the next two quarters -

Rico Auto Industries: Rico Auto had witnessed subdued sales between FY19 and FY21 due to Automobile industry going through a dull phase. First signs of uptick are visible in FY22 for Rico and the industry. Going forward the visibility of revenues has improved and Rico is expected to benefit out of this, the note stated.

“We believe investors can buy the stock in 41-43 band and add on dips to 37-38 band for a base case fair value of 45.5 and bull case fair value of 48.5 over the next 2 quarters," recommended the brokerage.

Rico is an established player in the auto ancillaries industry, with a track record of over three decades. It enjoys a strong market position in its key product segments: high-pressure aluminium and ferrous die cast components, it added.

Spandana Sphoorty Financial: “We expect advances of the company to increase at 17% CAGR over FY22E-FY24E after a decline of ~15% in FY22. Return ratios are likely to improve post FY22 as the company cleans up its balance sheet and focusses on growing its book and improving its yield," said HDFC Securities.

We have valued the company at 0.8x FY24E ABV for a base case target of 426 and 0.9x FY24E ABV for a bull case target of 480 over 2 quarters. Investors can buy the stock on dips in 370-380 band and add further on dips in 334-340 band," it suggested.

Founded in 1998 Spandana Sphoorty Financial Ltd. (SSFL) is a rural focused NBFC-MFI in India. The company offers income generation loans under the joint liability group model.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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