With the market in correction mode, investors are looking at large-cap stocks which offer a degree of safety compared to mid and smallcaps, which are likely to see more pain going ahead. Macquarie has listed its top large-cap ideas which include Cement, Asian Paints, HDFC Bank, , Bharti Airtel and Hindustan Petroleum Corporation. ET looks at why Macquarie is bullish on these large caps.
UltraTech Cement
CMP: Rs 7,335.75
Rating: Outperform
Target Price: Rs 9,147
It is bullish on the automaker because of cyclical recovery in commercial vehicles and the passenger vehicles segment is also seeing strong traction with new launches and improvement in demand. Tata Motors’ subsidiary JLR is seeing improvement in volumes and margin visibility, said Macquarie
Tata Motors
CMP: Rs 470
Rating: Outperform
Target Price: Rs 567
Macquarie is bullish on the automaker because of cyclical recovery in commercial vehicles and passenger vehicle segment also seeing strong traction with new launches and improvement in demand. Tata Motors’ subsidiary JLR is seeing improvement in volumes and margin visibility, said Macquarie.
Asian Paints
CMP: Rs 3,241.70
Rating: Outperform
Target Price: Rs 3,900
According to Macquarie, the recent price hikes and moderation in input costs suggest that the margin pressures are transient for Asian Paints. The competitive intensity is not a concern and market share gain is likely to sustain, said Macquarie.
Hindustan Petroleum Corp
CMP: Rs 287.45
Rating: Outperform
Target Price: Rs 515
At 6.2 times FY22 price to earnings, HPCL is cheap but what makes the investment case attractive is the bottom-up growth story, said Macquarie. It sees 70% plus earnings growth driven by expansion in refining over the last four years, petchems capacity commissioning at Bhatinda and improvement in product mix among other factors.
Bharti Airtel
CMP: Rs 666.20
Rating: Outperform
Target Price: Rs 860.80
Macquarie continues to prefer pure-play Bharti Airtel over Jio for India’s digitisation exposure. It sees Bharti’s EBIT (earnings before interest and taxes) margin rise to around 30% by FY23 from around 15% in FY21.
HDFC Bank
CMP: Rs 1,472.90
Rating: Outperform
Target Price: Rs 2,005
HDFC Bank has by far the most diversified distribution franchise, which has enabled the lender to deliver 2-3 times the system loan growth despite challenging times, said Macquarie. The tech issues are temporary and it has top notch asset quality, said the brokerage. Withdrawal of RBI embargo on new digital banking initiatives will be a catalyst going ahead, said Macquarie.
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