Stocks to buy in 2021: ICICI Bank, HDFC, among 9 shares that may rally over 55% on economic recovery

The brokerage firm believes that the market will run up ahead of, and in anticipation of, an ensuing economic recovery. Image: Reuters

Indian share markets posted an incredible recovery in 2020, surpassing the previous lifetime highs. In today’s session, the broader Nifty 50 index and BSE Sensex ended at fresh record closing highs. The calendar year 2020 was the fifth consecutive year when BSE Sensex and NSE Nifty closed in the green. Domestic research and brokerage firm YES Securities sees up to 56 per cent rally in nine financial, chemical, realty stocks in the new year 2021. The brokerage firm believes that the market will run up ahead of, and in anticipation of ensuing economic recovery. From a market standpoint, it expects 2021 could well be akin to the year 2003.

Sobha Ltd: As the property prices have largely remained flat or improved at a low single digit growth rate over past 7‐8 years for most markets, any upsurge in demand may translate into better pricing going forward for Sobha. Yes Securities has given a buy rating to the stock with a 56 per cent rally in the stock price. It has pegged a one-year target price of Rs 640 per share.

Deepak Nitrite: It will take Deepak Nitrite to jump 46 per cent to peg the target price of Rs 1,033 per share. The brokerage firm is positive on the stock due to its import‐ substitute capabilities for domestic players, alternative to Chinese players for other global manufacturers, diversified and de‐risked business model, and improved operational and financial performance on account of ongoing and upcoming CAPEX.

PNC Infratech: An upside of 40 per cent will be required to hit the 12-month price target of Rs 246 apiece. Analysts believe that with monsoon largely behind and better labor availability, execution pace is set to see sharp improvement during H2 FY21.

TCI Express: Yes Securities sees 35 per cent rally in TCI Express with a target price of Rs 980. According to the brokerage, the cost-cutting measures, price hikes, opening of owned sorting centres at select locations would ensure improvement in operating margin performance.

CreditAccess Grameen: With a buy rating, CreditAccess Grameen will require a 33 per cent jump to touch Rs 1020 target price. According to the Yes Securities, the stock trades at 2.6x FY22 P/ABV (palatable for a best‐in‐class MFI) and it has not moved much in recent months. “We see scope for further re‐rating as the investor focus shifts to FY22 delivery,” it said.

HDFC: Housing Development Finance Corporation may rally 30 per cent in the new year to Rs 3,420 apiece. Research firm said that value creation by the banking, insurance and asset management subsidiaries and associates will continue as growth and profitability prospects are improving and they are trading within their historic valuation band.

ICICI Bank: The research analyst at YES Securities sees 29 per cent gain in the stock price. It may witness sharp growth uptick from FY22. Post the Rs 150 billion equity capital raise, CET‐1 ratio of the bank stands increased to 15% plus. Augmented capital base positions ICICI Bank strongly for pursuing growth.

Kansai Nerolac Paints: The stock may rally 25 per cent to Rs 785 in the year 2021. The brokerage firm is positive on Kansai largely backed by expected improvements in structural drivers such as shift towards organized sector, housing push in semi‐urban and rural areas, shorter painting cycles, governments focus on increasing rural income and increased consumer awareness in rural areas.

Gillette India: YES Securities sees 24 per cent upside in the stock price. It expects revenue and cost pressure in the short term owing to reduced consumption in the grooming segment. “Given quality play and healthy return ratios (expects 30% by FY23E), the stock is currently trading at a reasonable valuation of 54x FY23E P/E,” the firm added.

(The stock recommendations in this story are by the respective research and brokerage firm. Financial Express Online does not bear any responsibility for their investment advice. Please consult your investment advisor before investing.)