5 Large Cap Stocks to BUY

5 best large cap stocks to buy
by Nikita Bhoota 08/07/2021

Historically, Recommended Large Cap Stocks Portfolio Performance

For FY21 we had built and recommended 5 Large cap Stocks to BUY Portfolio for investors. We are glad to announce that our recommended Portfolio has performed well wherein almost all the stocks in the portfolio have achieved the desired targets and have given strong returns throughout the last year. Below is the stock-wise performance of 5 Large cap Stocks to BUY Portfolio between the period 26 August 2020- 05 July 2021. Sensex jumped 35% in the same period.
 

Company

26-Aug-20

05-Jul-21

Gain

Infosys

951

1,579

66.0%

Power Grid

185

230

24.5%

ICICI Lombard

1,264

1,565

23.8%

SBI Life Insurance

839

1,010

20.4%

Bharti Airtel

515

524

1.7%

Source: BSE

Therefore, we recommend investors to consider booking profit in the stocks that have generated healthy returns and invest in our new large cap stocks portfolio.

Here, are out 5 large cap stocks picks based on financial performance, management, business outlook and historical trend to earn healthy returns in the long run.
 

Company

CMP (Rs)*

Target (Rs)

Upside

HDFC Bank

1,495

1,780

19.1%

ITC

204

240

17.6%

Power Grid

230

280

21.7%

Bharti Airtel

524

753

43.7%

HCL Technologies

980

1,200

22.4%

Source: BSE,5paisa Research, *CMP as on 5th July 2021.

HDFC Bank (HDFCB):

About the Company:
HDFC Bank is the largest private sector bank in India with a market share of ~9.5% in system loans as of FY20. It has a unique franchise in the banking sector with a loan portfolio of ~Rs 9.9tn (as on March 2020), strong national network of 5,416 branches spread across urban and rural markets.

Investment Rationale:
HDFCB reported a strong performance in the quarter. Healthy loan growth, strong growth in fee income, and stable margins were the key operating highlights. Asset quality improved QoQ, with GNPL ratio at 1.32% and restructured loans at 0.57%. The Bank also made further contingent provisions of Rs13bn, on a prudent basis. Total additional provisions now stand at Rs231bn or 2.0% of loans. Going forward, profitability would be supported by improving margins, higher cost efficiencies and lower credit costs. Asset quality for the Bank has held-up well, despite the COVID-impact and it still carries a high provision buffer, which keeps it well-positioned going forward. We project PAT CAGR of 24.7% over FY21-23E.

Year

Net profit (Rs Cr)

BVPS(Rs)

P/BV(x)

ROE

FY21

31,120

369.5

4.0

16.6%

FY22E

39,040

440.3

3.4

17.5%

FY23E

48,410

515.2

2.9

18.4%

Source: 5paisa Research

ITC

About the Company:
ITC has a diversified presence in FMCG, Hotels, Paperboards & Specialty Papers, Packaging, Agri-Business, and Information Technology. While ITC is a market leader in its traditional businesses of Cigarettes, Hotels, Paperboards, Packaging and Agri-Exports, it is rapidly gaining market share even in its nascent business of FMCG. ITC has a market share of 80% in Cigarettes and has iconic brands like Gold Flake and Kings Classic in the space. It operates hotels under the Welcome and Fortune brands. ITC has a high level of expertise in developing FMCG brands from scratch: e.g. Sunfeast (biscuits), Bingo (chips), Yippee (noodles), and Aashirvaad (flour).

Investment Rationale:
Cigarette volumes recovered to nearly pre-Covid levels towards the close of the year. Hotels business turned EBITDA-positive in 2HFY21 (Ebitda margin of 8.7% in 4QFY21). However, continued closure of educational institutions impacted stationery sales in FMCG business.  The company has recommended a final dividend of Rs5.75, taking the total dividend for the year to Rs10.75, which translates into a dividend pay-out of ~100% in FY21. While constraints in increasing the number of operating outlets and the limited hours of operations are posing challenges at the frontend, there are no material supply bottle-necks. The company remains well geared to swiftly respond to the changing situation on the ground. We expect revenue, EBITDA and PAT CAGR of 9.2%, 11.9% and 13.3% respectively over FY21-FY23E.
 

Year

Net Sales (Rs Cr)

OPM (%)

APAT (Rs Cr)

EPS(Rs)

PE (x)

FY21

49,273

34.5

13,383

10.9

18.8

FY22E

54,545

36.6

16,092

13.1

15.6

FY23E

58,760

36.3

17,175

14.0

14.6

Source: 5paisa Research

Power Grid

About the Company:
PGCIL is India’s Central Transmission Utility (CTU) owned by the Government of India (57.9% stake). PGCIL owns and operates one of the largest transmission networks spanning 125,000 circuit kilometres, second only to the Grid Corporation of China. As at end FY16, PGCIL had an inter-state power transmission capacity of 59GW. Currently, it carries >40% of India’s total generated electricity. Further, PGCIL has two other operating businesses − telecom and consulting − which contribute less than 5% to its revenue and profit.

Investment Rationale:
PGCIL’s 4QFY21 standalone PAT was up 10% YoY, as it completed Rs70bn worth of projects. The management says 1) the aggregate projects pipeline is now Rs410bn and would be completed in the next 2-3 years; 2) Company expects the project pipeline to improve, as several large projects, such as Leh-Ladakh, are likely to be awarded on nomination basis; also, lines required to evacuate RE power from Gujarat and Rajasthan, etc are likely to be shortly tendered out; 3) standalone capitalisation for FY22 is likely to be ~Rs100bn,of which ~Rs60bn entails TBCB projects; 4) Rs50bn worth of TBCB projects are likely to get transferred to InvIT, in the next 12-18 months; 5) debtor days at >45 have significantly come off QoQ (Rs18bn vs. Rs60bn), as states have availed loans under the Atmanirbhar scheme. We expect revenue, EBITDA and PAT CAGR of 5.6%, 4.5% and 8.2% respectively over FY21-FY23E. Valuations are cheap, in the context of improving growth outlook + dividend yield. Thus, we have a buy rating on the stock.
 

Year

Net Sales (Rs Cr)

OPM (%)

Attributable PAT (Rs Cr)

EPS (Rs)

PE (x)

FY21

38,064

87.9

11,935

22.8

10.1

FY22E

40,799

86.4

13,522

25.8

8.9

FY23E

42,454

86.0

13,965

26.7

8.6

Source: 5paisa Research

Bharti Airtel:

About the Company:
Bharti Airtel is a diversified telecom service provider offering wireless, fixed line, enterprise and DTH services. It is India's largest mobile operator with 34% revenue market share as of 3QFY21. It owns 41.7% stake in Indus Tower, one of the largest towercos in India.

Investment Rationale:
On the earnings call, Bharti management stated that 4Q mobile RMS climbed to an all-time high, although April and May have seen some lockdown-related weakness. Bharti seeks extracting a higher share of wallet from India’s 50m high-income households through its bundled plans offering post-paid, DTH and home BB services. On the enterprise front, Bharti increased its RMS to 31% from 23% in 2 years. Consumption spending weakness, a more aggressive JIO, and likely absence of significant price hikes in the next few months are near-term headwinds, but Bharti would benefit from improved industry structure in the medium term.
 

Year

Net Sales (Rs Cr)

OPM (%)

PAT (Rs Cr)

EV/EBITA (x)

FY21

1,00,615

45.1

-15,100

10.8

FY22E

1,12,900

48.8

3,700

9.0

FY23E

1,34,300

50.9

11,700

7.3

Source: 5paisa Research

HCL Technologies

About the Company:
HCL Technologies Limited is engaged in providing a range of software development services, business process outsourcing services and information technology (IT) infrastructure services. The Company's segments include software services, infrastructure management services and business process outsourcing services.

Investment Rationale:
HCLT reported 4QFY21 USD revenue growth of 2.5% cc QoQ, within its guidance range, due to seasonal decline in Products (-4.9% QoQ), though IT services was strong (+4.4% QoQ). For FY22, HCLT has guided to minimum double-digit revenue growth. Robust net new-deal wins of USD3.1bn in 4Q (49% YoY) and USD7.3bn in FY21 (18% YoY) along with an all-time high pipeline provide comfort on growth visibility. It has guided for FY22 margins in the 19-21% range, incl. ~100bps investments, normal wage hike cycle, and recovery in travel and SG&A costs. It declared dividend of Rs16/sh in 4Q and has raised its quarterly pay-out to Rs6/sh (from Rs4). We expect revenue, EBITDA and PAT CAGR of 11.7%, 8.2% and 13.8% respectively over FY21-FY23E.
 

Year

Net Sales (Rs Cr)

OPM (%)

PAT (Rs Cr)

EPS (Rs)

PE (x)

FY21

75,371

26.6

12,532

46.2

21.2

FY22E

85,436

25.1

14,048

51.8

18.9

FY23E

94,042

25.0

16,219

59.8

16.4

Source: 5paisa Research

Next Article

Vodafone Idea joins 5G race

Vodafone Idea joins 5G race
by Nikita Bhoota 08/07/2021

One of the major telecom players Vodafone Idea (Vi) has mostly stayed silent when it comes to 5G services whereas its competitors Jio and Airtel have been talking about how they are going to bring and roll out 5G services in India. 

But Vi is also not going to stay behind Reliance Jio and Bharti Airtel when it comes to 5G. Vodafone Idea is in race and has already started testing 5G networks. This was recently announced by the Managing Director (MD) of the telco, Ravinder Takkar. Vi started conducting its 5G trials in several cities and states of the country with the help of two foreign telecom equipment vendors.

Also Read: Highlights of Reliance AGM - 2021

The European telecom vendors in the market, including Nokia and Ericsson, are helping Vodafone Idea with conducting its 5G trials. As per the management, the trials are currently taking place in two different states. The third-largest telecom operator is testing its 5G networks in Gandhinagar, Gujarat and Pune, Maharashtra.

The Department of Telecommunications (DoT) had assigned Vodafone Idea and the other operators in the country spectrum for testing their 5G solutions and networks. Both the telecom giants Bharti Airtel and Reliance Jio have already started their 5G trials. Jio is testing its 5G networks in Mumbai, whereas Airtel is testing 5G in Gurgaon.

Recently, the Department of Telecommunication allotted a spectrum to MTNL to conduct trials in Delhi. It will conduct trials in partnership with C-DoT," the media reports said.   

On the contrary, the state-run telecom operator BSNL is not conducting 5G trials in the country as it is focussing on 4G services.

According to the monthly subscriber data by the Telecom Regulatory Authority of India (TRAI), the total number of telephone subscribers in India improved to 120.1 crore at the end of March 2021, a monthly growth rate of 1.12 percent.

About the Company:
Vodafone Idea Ltd is an India-based telecom service provider. The Company provides pan India Voice and Data services across second generation (2G), third generation (3G) and fourth generation (4G) platform.

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.

Next Article

Result Expectation of Top IT Companies TCS, HCL Technologies and Infosys

Q1 Results expectations IT sector
by Nikita Bhoota 08/07/2021

The top 3 Indian IT companies — TCS, Infosys, and HCL Technologies — are anticipated to post a healthy set of numbers in the first quarter of FY22 earnings. Analysts believe that Nifty IT companies will continue reporting strong momentum with quicker hiring, faster revenue/earnings growth, and higher cash flow conversion.

Tata Consultancy Services (TCS):
TCS is set to announce the April-June quarter earnings of the current fiscal today i.e. 08, July 2021. The street experts expect constant currency growth of 3 percent sequentially, and 30bps of cross-currency tailwinds. In spite of the FY22 wage increments being rolled out from April 2021, EBIT margin decline is expected to be limited to 110bps, due to slight INR depreciation and growth leverage. The major things to watch out for are large deal TCV, outlook on client spending trends and pricing trends, and levers to defend or improve margins in the backdrop of certain supply-side concerns. 

Actual Result:
TCS reported 18.5% growth in total sales revenues for the Jun-21 quarter on consolidated basis at Rs45,411cr.
 

TCS Financial highlights

Rs in Crore Jun-21 Jun-20 YOY Mar-21 QOQ
Total Income (Rs cr) ₹ 45,411 ₹ 38,322 18.50% ₹ 43,705 3.90%
Operating Profit (Rs cr) ₹ 11,588 ₹ 9,048 28.07% ₹ 11,734 -1.24%
Net Profit (Rs cr) ₹ 9,008 ₹ 7,008 28.54% ₹ 9,246 -2.57%

Source: IIFL

Infosys: 
Infosys will announce its first-quarter earnings of the current fiscal next week on July 14. Analysts expect strong revenue growth on the ramp of large deals and higher billing days. Analysts community expect Infosys to raise its current revenue growth guidance only after 2QFY22. 

Also Read: Infosys AGM 2021

HCL Technologies (HCL Tech): 
Analysts expect HCL Tech to quantify its double-digit revenue growth outlook. The street experts see weak sequential revenue growth. Investors are likely to focus on the outlook on CY21 client spending/IT budget trends, update on revenue and margin outlook for FY22, and measures to defend/protect margins in the backdrop of supply-side pressures. Analysts anticipate ramp-ups on deals won in 4QFY21 in 2Q/3QFY22 and better clarity on guidance.

Check: 5 Large Cap Stocks to BUY

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.

Next Article

G R Infraprojects IPO subscription Details - Day 2

G R Infraprojects IPO subscription Day 2
IPO
by Nikita Bhoota 08/07/2021

G R Infraprojects IPO has been subscribed 2.28 times today on July 7, the first day of bidding. Investors have put in bids for 1.85 crore equity shares vs. offer size of 81.23 lakh shares.

Retail investors are at the leading the race, putting in bids 3.25 times their reserved portion, the subscription data available on exchanges showed.

The portion set aside for non-institutional investors has subscribed 2.68 times and that of employees 24 percent, whereas qualified institutional buyers have put in bids for 49 percent of their reserved portion.

GR Infraprojects will raise Rs 963.3 crore through its public issue comprising a complete offer for sale by existing shareholders. Of which, Rs 283 crore has already been raised from anchor investors at a higher end of the price band of Rs 828-837 per share.

G R Infraprojects IPO - Subscription Status

Category

Subscription Status
Qualified Institutional (QIB) 2.78 Times
Non-Institutional (NII) 6.31 Times
Retail Individual 7.49 Times
Employee 0.75 Times
Total 5.75 Times

 

Also Check: G R Infraprojects IPO subscription Status - Day 1


About the Company:

G R Infraprojects Limited is an integrated road engineering, procurement and construction (“EPC”) company with experience in design and construction of various roads/highways projects across 15 States in India and having recently diversified into projects in the railway sector. The company was incorporated in December 1995. The company’s principal business operations are broadly divided into three categories:
(i) civil construction activities
(ii) development of roads, highways on a Build Operate Transfer (“BOT”) basis, including under annuity and Hybrid Annuity Model (“HAM”); and
(iii) manufacturing activities, under which they process bitumen, manufacture thermoplastic road-marking paint, electric poles and road signage and fabricate and galvanize metal crash barriers.

The Company has executed over 100 projects since 2006.

Next Article

Clean Science and Technology IPO Subscription Details - Day 2

Clean Science and Technology IPO Subscription Details - Day 2
IPO
by Nikita Bhoota 08/07/2021

Clean Science and Technology has been subscribed 4.28 times today on July 8, the second day of bidding.

Investors have put in bids for 5.26 crore equity shares vs. the offer size of 1.23 crore equity shares, the subscription data available on the exchanges showed.

The portion kept aside for qualified institutional buyers has subscribed 2.12 times, while non-institutional investors have put in bids 4.51 times their reserved portion, and retail bidders 5.42 times their reserved portion.

The Rs 1,546.6-crore public issue, a complete offer for sale, will close for subscription on July 9, 2021. The price band for the offer has been fixed at Rs 880-900 per equity share.
 

Clean Science & Technology IPO - subscription Status

Category Subscription Status
Qualified Institutional (QIB) 2.12 Times
Non-Institutional (NII) 4.51 Times
Retail Individual 5.42 Times
Total 4.28 Times

 

Also Check: Clean science and Technology IPO subscription Status - Day 1

 

About the Company:

Clean Science and Technology Limited manufactures functionally critical specialty chemicals such as Performance Chemicals, Pharmaceutical Intermediates, and FMCG Chemicals. The company was incorporated in 2003, and within 17 years of incorporation the company has grown to be the largest manufacturer globally of MEHQ, BHA, Anisole and 4-MAP, in terms of installed manufacturing capacities as of March 31, 2021. The company is among the few companies globally which is focused entirely on developing newer technologies using in-house catalytic processes that are eco-friendly and cost competitive. This has enabled the company to emerge as the largest manufacturer globally of certain specialty chemicals in terms of installed manufacturing capacities as of March 31, 2021. Some of these technologies have been developed and commercialized for the first time globally.

Next Article

TCS Share Q1 Results

TCS Share Q1 Results
by Nikita Bhoota 09/07/2021
  • TCS reported 18.5% growth in total sales revenues for the Jun-21 quarter on consolidated basis at Rs45,411cr. 
  • On a sequential basis, the revenues were higher 3.9% compared to Rs43,705cr in the Mar-21 quarter. 
  • TCS witnessed growth in all its principal verticals including BFSI, manufacturing, retail, CMT and life sciences.
  • EBIT margins at 25.5% contracting 130bps QoQ due to the annual wage hikes and visa costs. Management indicated margins are largely sustainable YoY. Hiring was at an all-time high of 20.4k on the back of 19.4k hires in 4Q, as TCS crossed the 500k headcount mark. Attrition rose by 140bps to 8.6% LTM
  • Management is confident of delivering double-digit revenue growth and sustaining margins in FY22, supported by ramp up of deals and broad-based improvement in IT spending. 
  • Deal wins were strong at US$8.1bn (+16% YoY TTM), with a healthy mix of small and large deals.

 

Revenues by verticals - FY21

Verticals

Contribution

BFSI

31.70%

Regional Markets & Others

19.20%

Retail

14.40%

Lifescience

9.70%

Mfg.

9.60%

Tech

8.70%

Telecom

6.70%

 

Revenues by geographies - FY21

Geographies

Contribution

America

51.40%

UK/Europe

31.90%

APAC

9.60%

India

5.20%

MEA

2.00%

 

Also Check : Result Expectation of Top IT Companies

 

About the Company:
With 500,000+ employees and FY21 revenues of US$22.2bn, TCS is India’s largest IT services vendor. Though application services remain the primary services offering, the company has attained credible size in other service offerings such as infrastructure services, BPO and testing services. BFSI continues to be TCS’ most important vertical (30% of revenues). Telecom, manufacturing and retail are the other large verticals. The US continues to be the most important geography; however, the company is increasing its presence in Europe/UK. 

Disclaimer: The above report is compiled from information available on the public platforms. These are not buy or sell recommendations.