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CY21 will be marked with hopes of early roll-out of the Covid-19 vaccine, normalisation of activities and unperturbed growth recovery. Indian equities have entered a bull market environment. Analysts expect Nifty to reach new levels if the bull run continues. However, if markets revert to average sentiment, investors might end up making flat returns for 2021. "The bull market environment prevailing in CY21 could take Nifty50 to 14,900 levels. However, if market bullishness reverts to average sentiment, the base case fundamental value is ~13,500, which indicates flat returns for CY21. If a risk-off environment materialises, we expect NIFTY50 to touch 11,600 on the downside," says ICICI Securities.

However, analysts believe there is still plenty of opportunities, both in catch-up plays and in structural winners, to continue reaching new highs. Here are the top stock picks by brokerages. Brokerage's name is given in the bracket.

Also Read | Investing during all-time highs can be good strategy

Bharti Airtel (ICICI Sec, Axis Sec)

Bharti Airtel has jumped 25% up in the last two months. Robust earnings for the September quarter and a jump in the subscriber base aided the telecom operator's stock prices to soar. Analysts are bullish on the stock and recommend a 'Buy' rating to the share. CLSA sees a target price of 715 for Bharti Airtel stock. Motilal Oswal has set a target price of 650. Axis Securities has kept the target price at 657. ICICI Securities has set a target price of 700.

Birla Corporation (HDFC Sec Retail Research)

It has 4.2% of the market share in the Indian cement industry. The company has finalised a plan to scale up its capacity to 25 MTPA by 2025 from the current capacity of 15.6 MTPA, which provides strong visibility of future growth.

GAIL (HDFC Sec Retail Research)

GAIL is planning expansion in petrochemicals, speciality chemicals and renewables to supplement growth in its core business of natural gas marketing and transportation. Apart from this, it plans to invest more than 45,000 crore over the next five years to expand the National Gas Pipeline Grid and city gas distribution network.

HPCL (HDFC Sec Retail Research)

HPCL plans to invest more than 60,000 crore in the next five years to build and develop infrastructure, including the implementation of significant projects such as the capacity expansion at its refineries, expansion of its pipeline network, and setting up of new pipelines. Any development on divestment front for BPCL could lead to a rub-on effect on HPCL’s valuations.

Infosys (HDFC Sec Retail Research, ICICI Sec, Axis Sec)

Infosys announced large deal wins with a total contract value of $ 3.15b, which is the highest ever recorded in Q2FY21 (includes mega-deal with Vanguard); 16 large deal wins were reported in Q2FY21. The IT deal pipeline has been continuously improving despite cost-cutting and cash conservation measures by clients. The IT major recorded a growth of 3.2% in its revenues y/y on reported basis and 2.2% on constant currency, in Q2FY21, driven by strong growth in digital portfolio. Management has revised revenue guidance upwards for FY21 from 0–2% to 2–3% y/y growth in constant currency. Also, operating margin guidance increased from 21–23% to 23 –24% for FY21.

ONGC (HDFC Sec Retail Research)

The recent rise in crude oil prices and the expected uppishness therein is not fully reflected in the current valuations of ONGC. ONGC’s average Capex (standalone) per annum has been in the range of 30,000 to 32,000 crore with about 23-25% expenditure on development drilling, 23- 25% expenditure on exploration drilling, 38-40% expenditure on capital projects and the balance of 10- 12% on surveys, R&D, integration and JVs.

State Bank of India (HDFC Sec Retail Research)

SBI is almost immune to any liability-side risks at this juncture, given its expansive, granular deposit base and government’s majority holding. It is better placed to deal with asset quality worries than many other large banks because of the quality of its loan book. Asset quality worries seem to be overblown.

SBI Life (ICICI Sec)

SBI Life has a market share of 7.2% in total new business premium (NBP) during H1FY21 V/s 6.2% in H1FY20 & 24.5% market share in private sector NBP during H1FY21 V/s 21.8% in H1FY20. The company’s gross premium grew by 22% in H1 FY21 V/s H1 FY20 to 20,730 crore. It has a healthy solvency ratio of 2.45 against regulatory mandate of 1.50, low surrender ratio of 2.7% in H1FY21 and improving persistency ratio of 85.9% in the 13th month.

Sun Pharma (HDFC Sec Retail Research)

Sun Pharma is the largest Indian pharma company that commands ~8.2% market share in the Indian market. The company has made ~ 12,600 crore worth of cumulative R&D investments over the past six years (FY15-20), which bodes well. It has earned ~ $ 410mn in revenue from the global speciality business in FY20.

Relaxo Footwears (ICICI Sec, Axis Sec)

Relaxo is India’s leading footwear manufacturing company, boasting of largest capacity of 7.5 lakh pairs per day. Over the years, Relaxo has consistently posted a superior performance, depicting the fundamental strength of the company. In the current scenario, as most people are working from home, sales of sandals and flip flop have witnessed significant surge in demand. Given the dominant presence in Tier II/III cites and being the market leader in value priced segment (~18 crore pairs sold annually), Relaxo is well placed to further consolidate its market share.

United Spirits (ICICI Sec)

USL has 80 brands of Scotch, IMFL, brandy, rum, vodka and gin; of which, 11 brands sell more than a million cases annually. On the balance sheet front, the company has improved its WC position, thereby lowering net debt by 780 crore (short term debt) in H1FY21 and also, improved its CFO generation (2.5% yield). Going ahead, pick-up in consumption due to festive season and opening of on-trade channels remain key triggers for the stock, along with long term trend of home delivery of alcohol.

Balkrishna Industries (ICICI Sec)

Balkrishna Industries’ (BIL) key export markets continue to witness improving demand . In Nov’20 industry exports grew 14% YoY. is positive on the stock and maintains buy rating with a target price of 1,969 per share, over 21% up from its current market price.

Amber Enterprises (ICICI Sec, Axis Sec)

Amber Enterprises, the largest contract manufacturer of room air conditioners is one of the biggest beneficiaries of the government’s production linked incentive (PLI) schemes and import ban on finished AC in India. Amber is the key supplier to all top 10 AC brands and commands ~24% volume market share of ACs sold in India. We believe, after a washout H1FY21, the company may witness a strong recovery in H2FY21 supported by normalised inventory at the dealer level and robust pent up demand for RACs amid changing consumer lifestyle postpandemic.

Some other top picks by HDFC Securities Retail Research include, Hindustan Unilever, Bandhan Bank.

Some other top picks by ICICI Securities include: ICICI Lombard, Axis Bank, HDFC Bank, NTPC, Cipla, Ultratech, Dabur, Bajaj Auto. In midcaps – GGL, Alkem, Astral Polytechnik, Akzo Nobel; Small Caps - Greenpanel, Heritage foods, Bajaj Consumer.

Some other top picks by Axis Securities include- Colgate Palmoliv, Amber Enterprises, Ujjivan Small Finance Bank, NOCIL, Star Cement.

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