According to an article in NDTV Profit, Saurabh Mukherjea of Ambit Capital has come out with a list of seven stocks that investors should start tracking more closely. He states that these stellar franchises should offer good entry points after another 15 per cent or so fall in the share prices of these stocks.
(1) HDFC Bank: The bank is well positioned on asset quality due to lower exposure to stressed sectors and can protect its margins better due to its higher share of assets earning fixed interest rates.
(2) Bajaj Auto: Bajaj’s well-diversified business model coupled with favourable currency movements/commodity prices could help offset the impact of any domestic motorcycle industry volume downgrade at the net earnings level.
(3) Marico continues to evolve around: (a) product innovation in the non-Saffola/Parachute coconut oil portfolio; (b) direct distribution expansion; (c) hiring & retaining high-quality talent; (d) use IT and data analytics; and (e) cost management. These initiatives are likely to help it deliver higher sales and profitability.
(4) TVS Motor has an opportunity to: (a) gain market share in domestic motorcycles and (b) benefit from a strong/growing franchise in two-wheeler/three-wheeler exports. The BMW tie-up remains a strong long-term catalyst which will add longevity to the franchise.
(5) Havells: A muted demand environment could marginalise new entrants and Havells could gain some lost market share, capitalising on brand and reach.
(6) AIA Engineering has corrected to reasonable valuations, which is not that expensive for a company operating in an oligopolistic market with cost leadership and on its path to becoming a scale leader; high potential opportunity provides strong sustainability to earnings.
(7) Supreme Industries: Post the recent stock price correction, Supreme is trading at inexpensive valuations for a high-quality franchise built around unmatched manufacturing, distribution architecture and continued product innovation in the plastic pipe/packaging industry.
(Note: Ambit currently has a “sell” on all these stocks currently)