Domestic brokerage Yes Securities has made changes to its model portfolio for investors. The brokerage has added ICICI Bank and CAMS to its portfolio while removing Reliance Industries PP and Tata Consumer Products and booked profits.

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ICICI Bank has 4 percent weight in the portfolio and CAMS has 3 percent weight. Tata Consumer Products had 3.1 percent weight in the portfolio while Reliance Industries PP formed 0.7 percent of the portfolio.

Here is the rationale behind the new additions

ICICI Bank:

Yes Securities believes that the bank's current COVID provisioning buffer (1.3% of loans, apart from the cushion of 79% PCR) should be adequate to address the requirement for restructuring and residual NPL flow.

Besides regularization of credit cost, recovery in NIM (coming back to maintaining usual balance sheet liquidity), acceleration in loan growth and retention of cost reductions would drive sizeable profitability improvement in the coming years.

Core bank trades at 1.9x FY22 P/ABV, and should continue to re-rate on the back of strength in the balance sheet (low-risk portfolio in this cycle + high capitalization), it said.

CAMS:

Yes Securities expects steady market share gains for CAMS and the operating leverage to aid margin expansion. It noted that the company is diversifying its revenues.

The brokerage house believes that CAMS is a proxy on AMC’s AUM growth in India. It is cash-rich, 35%+ RoE, 65%+ dividend payout, deserves premium valuation, it said.

Here is the model portfolio of Yes Securities:

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(Edited by : Abhishek Jha)

First Published:Dec 14, 2020 2:07 PM IST