1. Bandhan Bank:
Analysts at the brokerage house view the MFI’s market share of over 20% in India with a high presence in North-East India as a positive. In its report the brokerage said, “It has consistently demonstrated a strong track record in growing its balance sheet/earnings (AUM grew by CAGR 44% FY10-20). As on FY20, its total customer base stood at approximately 20 million customers with a loan book of Rs 76k crore”. Further following the merger with Gruh Finance, mortgages account for 26% of the loan book.
And in the next few years, Bandhan Bank might face high competition with more players in the segment expanding their presence. The stock last traded firm at Rs. 398.9 per share on the NSE.
2. Birla Corporation:
As per HDFC securities, “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”. Besides Birla Corp enjoys a market share of 4.2% in the cement space and has a strong base in central, northern states together with West Bengal and Maharashtra. Immediate headwinds for the company are issues around its management and any slump in the price of cement that could result in lower margins as well as realisations. The stock trades at Rs. 699 apiece on the NSE.
The oil drilling and exploration company is looking to foray into petrochemicals, speciality chemicals and renewables for supplementing growth in its core business of natural gas marketing and transportation which is a positive for the firm going forward. Additionally the firm also plans to invest over Rs 45,000 crore over the next five years for augmenting the National Gas Pipeline Grid and city gas distribution network. Nonetheless, any changes in regulation brought about by PNGRB in the city gas distribution and gas transmission industry regarding marketing exclusivity would weigh on the firm. The scrip traded last at Rs. 118 apiece.
The state-run oil marketing company has a wide distribution and marketing network that includes cross-country pipelines, depots, terminals and 16,707 retail outlets. Over the period of next five years, the company plans to invest over Rs. 60000 crore for building and developing infrastructure, including capacity expansion at its refineries, expansion of its pipeline network as well as establishing new pipelines. Further the brokerage mentioned that any progress in BPCL divestment could result in a rub-off effect on the valuations of HPCL. Maintaining margins continues to be the focus for oil retailing company. The stock last quoted at Rs. 210 apiece on the NSE.
5. Hindustan Unilever:
The FMCG major has the widest distribution network. In its report brokerage firm said, “The company is debt-free and cash-rich (~Rs.5113 cr cash as of FY20) after recent acquisitions of GSK’s consumer business. We expect substantial synergy benefits to play out in the next 2-3 years,” the report said. There could be better earnings going ahead and the stock could be re-rated gradually. Nonetheless, price fluctuations and volatility in price of commodities such as tea, palm and crude can temporarily impact the company’s margins.