Here are top 10 stock picks by Angel Broking for July 2020

SUMMARY

Markets have staged a smart recovery since April with the Nifty rallying by almost 40 percent from its lows of 7,511 on March 24, 2020. The market was supported by a global risk on rally as central banks and government have responded with unprecedented monetary and fiscal stimuli in order to contain the economic damage due to the COVID-19 crisis. Stimulus package along with opening up of the Indian economy from June has led to increase in economic activities which has helped market sentiments. While Angel Broking remains positive on the markets from a longer term perspective, they feel that investors should be judicious in their stock selection and focus on companies with high quality business franchises which have strong revenue visibility going forward. Here's a list of top 10 stocks to buy in month of July, according to Jyoti Roy, DVP Equity Strategist, Angel Broking:

By CNBCTV18.com ContributorJul 6, 2020 10:12:28 AM IST (Updated)

Bharti Airtel (Target Rs 672) : Bharti has posted strong ARPU growth in Q4FY2020 driven by tariff hikes of ~35 percent in Nov’19 by all telecom operators. Company is expected to maintain strong growth trajectory in FY2021 driven by ARPU growth and market share gains. Any further tariff hikes by telecom companies in FY2021 could be a major positive for the stock given that tariffs are still very low.

Colgate Palmolive (Target Rs 1620): Colgate Palmolive is the market leader in the dental care segment with over 50 percent market share and strong brand recall. We believe that the company should ultimately be able to see sharper market share gain in the toothpaste segment on the back of higher ad-spend and re-launch of Colgate Strong Teeth.

Coromandel International (Target Rs 836): Coromandel International is India’s second largest Phosphatic fertilizer player and engaged in the business of Fertilizers, Specialty Nutrients, Crop Protection and Retail. Covid-19 impact on company business has been minimal as it falls under essential service. IMD forecasts of normal monsoon bode well for its business given that sowing is up by 13 percent in its addressable market. Enhanced sowing during the ongoing rabi season in the south is generating good demand for agri inputs.

Escorts Ltd. (Target Rs 1,150): Escorts is a prominent tractor player domestically with market share in excess of 11 percent. With rural India relatively less impacted due to COVID-19, record food-grain procurement by government agencies as well as expectation of normal monsoon 2020, we expect the tractor industry to outperform the larger automobile space in FY21E with Escorts a key beneficiary.

HDFC Ltd. (Target Rs 2000): HDFC Ltd is poised to gain market share from other players given that it is able to raise fund at competitive rate owing to strong operating metrics, experienced Management and industry’s best credit rating. HDFC Ltd is trading (Core Banking Business – 1.42x FY22ABV) at a significant discount to historical average valuations and offers favorable risk reward from current levels.

Hero Motocorp (Target Rs 2,840): Hero Moto Corp is India’s leading Motorcycle manufacturer with an overall market share of 54 percent. In FY2020 the company kept its market share intact. Entry level motorcycles in rural India are expected to post a faster rebound in sales post Covid -19 given good monsoon and shift from public transportation to personal vehicles.

PI Industries (Target Rs 1889): PI Industries is a leading player in providing Custom synthesis and manufacturing solutions (CSM) to global agrochemical players. The CSM business accounted for 66 percent of the company’s revenues in FY19 and is expected to be the key growth driver for the company in future. Company has posted a decent set of numbers for Q4FY2020 despite covid-19 related supply chain issues and has also given a 20 percent+ revenue growth guidance for FY2021.

IPCA Labs (Target Rs 1900): Company derives 54 percent of its revenues from domestic generic and API business. Generics and API continues to provide revenue growth for Ipca. We expect the company to outperform the Indian Pharmaceutical market (IPM) by 8 percent-10 percent p.a over next few years.

Reliance Industries (Target Rs 1937): RIL has built up a dominant presence in Refining, Petrochemicals, Telecom and Retail businesses. JIO Platforms which houses the telecom business has attracted investments from marquee investors like Facebook, Silver Lake Partners, General Atlantic, KKR, etc. of Rs 1.15 lakh crore. Investments by such marquee names in Jio platforms has not only helped the company to become debt free but also reaffirms our confidence in the management’s ability to transform the company from a brick and mortar to a digital play.

Swaraj Engines (Target Rs 1698): Swaraj Engines is engaged in the business of manufacturing diesel engines and hi-tech engine components.Diesel Engines manufactured by the company are specifically designed for tractor applicationwith the company being the key supplier of tractor engines to M&M. We expect strong demand for tractoRs going forward due to robust Rabi crop production, hike in MSP and a normal monsoon which will be beneficial for Swaraj Engines. At current levels Swaraj Engines is available at a significant discount to historical valuations.