Stocks to buy: Hindalco, HCL Tech, Federal Bank among four top stock picks for April by Yes Securities

The Indian stock market indices scaled new peaks on Tuesday with the benchmark Sensex crossing 75,000 level for the first time and the Nifty 50 soaring to a record high level of 22,700.

Markets began FY25 on a stronger note led by optimism over healthy corporate earnings, robust domestic economic growth and positive global cues. Analysts believe the sentiment remains upbeat on expectations of a favourable outcome from the ensuing general elections and the subsequent policy thrust.

In the month of April so far, the benchmark Nifty 50 has rallied nearly 2% so far.

Read here: Sensex crosses 75,000 for the first time; Nifty 50 hits record high of above 22,700

Yes Securities has recommended four stocks to buy in April which it believes have the potential to deliver decent returns of around 20-27% in a period of 12 months.

The brokerage’s top stock picks for April include Hindalco Industries, HCL Technologies, Pricol and Federal Bank.

Hindalco Industries | Buy | TP: ₹725

With steadfast focus on downstream businesses for Aluminium and Copper, emphasis on cost optimization projects to ensure global competitiveness, sustainably strong earnings outlook in the light of upcoming capex and a discernable bottoming of global Aluminium prices make Yes Securities bullish on Hindalco Industries.

Novelis is a key contributor to Hindalco’s earnings. Commanding more than 50% of EBITDA earnings share, Novelis profitability is largely insulated from the LME Aluminium pricing risk. Hindalco is focused on expanding its downstream businesses, which are high-margin markets in India as well as for Novelis, the broking firm noted.

It has a ‘Buy’ rating on the stock with a target price of ₹725 per share for a period of 12 months.

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HCL Technologies | Buy | TP: ₹1,854

HCL Technologies’ business mix is relatively more resilient to the adverse macro environment. Even the vertical mix is evenly distributed with individual strengths, while its service lines (cloud + IMS) have been more biased and relevant toward current enterprise spends, Yes Securities said.

Given its robust capabilities and scale in ER&D space, and continued investment to drive Digital engineering revenue with strong outsourcing opportunities should provide sustainable and predictable growth going forward, it added.

Yes Securities recommend a ‘Buy’ on HCL Technologies shares with a target price of ₹1,854 per share.

Pricol | Buy | TP: ₹508

Yes Securities believes Pricol should grow faster than the industry on the back of a premiumization trend - clusters moving from mechanical to digital, underlying two-wheeler demand rebounding after a lull, ACFMS (Actuation Control & Fluid Management Systems) segment facing tailwinds in exports and introduction of new products. 

Even excluding any impact of new products and acquisitions, the brokerage firm expects margin expansion, a net cash balance sheet and very strong growth together elevating return ratios, buttressing a possible re-rating.

It has a ‘Buy’ call on the stock with a target price of ₹508 per share.

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Federal Bank | Buy | TP: ₹190

Federal Bank’s improved visibility on the diversification of asset profile outside its core geographies, sustained market share gains on both asset and liabilities, traction in the new retail products with adequate seasoning, build-up of other non-interest revenue streams, along with a sustained diversification in operating geographies comparable to peers will trigger a re-rating in the stock, said the brokerage firm.

Federal Bank has been showcasing solid performance, with advance growth of 21% and PAT growth of 25.3% YoY. The performance is expected to continue in the foreseeable future, which could lead to a re-rating in the stock, Yes Securities added.

It has recommended a ‘Buy’ on the Federal Bank shares with a target price of ₹190 per share.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.