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It is critical to pick the right stocks in the event of a global downturn.
Though the Sensex and the Nifty have dropped 17.5% and mid- and small-cap shares have fallen even more in the past two weeks, the recovery in many of these shares could take a long time.
In such a situation, it would be advisable to fall back on quality companies with a proven track record.
ET asked brokerages to given their top picks on the basis of cheaper valuations, strong returns on equity (ROE) and stable revenue and profit track record.
If the broader market falls, many of these stocks could decline too, but their core strength will help them rebound faster.
Here are 10 stocks recommended by analysts for the next one year on the basis of these filters.
Bata IndiaBrokerage : EdelweissTarget Price: Rs 2,250 CMP: Rs 1,463
The largest shoe retailer with more than 1,300 retail shops in a market which is highly unorganised.
Profit growing at 20% largely due to improving margins.
Strong cash flow along with 50% core return on capital employed make it a compelling buy.
BPCLBrokerage : Emkay Global
Target Price: Rs 570 CMP: Rs 376
The disinvestment process is set in motion.
With oil prices, BPCL should attract active interest from investors.
The $20 per barrel fall in oil prices is tempting for the govt to hike autofuel excise as even Rs 4 per litre hike for FY21 potentially mirrors entire BPCL proceeds.
Eicher MotorsBrokerage : Motilal Oswal Financial Services
Target Price: Rs 24,000 CMP: Rs 17,672
Near-term uncertainty notwithstanding, Eicher is best placed for strong recovery from the second-half of FY21 led by new product platform which we expect to expand addressable market for Royal Enfield in India as well as globally.
Gujarat GasBrokerage : IIFL
Target Price: Rs 327 CMP: Rs 258
Gujarat Gas is expected to maintain its volume growth on account of structural changes (Morbi-like order in other clusters).
Benign LNG prices would drive margin and volumes.
HDFCBrokerage: Motilal Oswal Financial Services
Target Price: Rs 2,875 CMP: Rs 2,067
In these difficult times, HDFC has managed to raise liquidity at lower cost than most peers and grow its retail AUM at 15-16% YoY.
Asset quality has remained largely stable with gross NPL ratio of 1.35%.
The company is likely to gain market share from peers.
Hindustan UnileverBrokerage: Motilal Oswal Financial Services
Target Price: Rs 2,490 CMP: Rs 2,022
HUL, as a result of the positive impact of Coronavirus-linked on sales in its largest segment (skin cleansing), synergies from GSK merger, positive impact of crude price fall and price hikes for soaps are positive for the company.
ICICI BankBrokerage: IIFL
Target Price: Rs 640 CMP: Rs 447
ICICI Bank has waning asset quality concerns and profitability of subsidiaries is expected to aid earnings growth.
Inclination towards retail lending will bring stability to earnings.
Reliance IndustriesBrokerage : Sharekhan
Target Price: Rs 1,710 CMP: Rs 1,105
Reliance Industries stock price has corrected by 34% from its recent 52-week high.
Low crude oil prices benefit refiners in terms of lower fuel and higher crude discounts which would cushion weak refining margins.
Shree CementBrokerage : ICICI Securities
Target Price : Rs 24,500 CMP: Rs 21,308
Shree Cement, which remained resilient for quite some time, gave up suddenly due to a sharp decline in Nifty.
Shree Cement would be included in the Nifty.
Which is likely to provide support to the stock.
Sun PharmaBrokerage : IIFL
Target Price: Rs 500 CMP: Rs 384
Sun Pharma, the largest Indian pharma company would benefit on account of its strong footing in India and RoW markets.
Even a marginal uptick in speciality revenues would support profitability.
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