Budget 2022 picks

With the run up to the budget we are a little cautious in our stock selection for our subscribers. Based on our analysis and the data available in public domain we are betting on these stocks with an expectation of supportive budget for these sectors.

SectorBankingCurrent
Price
Target
Price
Time
Frame
Summary of research
1SBIN5387756 to 12 monthsIndia’s digital lending stood at US$ 75 billion in FY18 and is estimated to reach US$ 1 trillion by FY23 driven by the five-fold increase in the digital disbursements. By 2025, India’s fintech market is expected to reach Rs. 6.2 trillion (US$ 83.48 billion). With the budgets focus to increase banking to the unbanked and deeper penetration in the rural sector , the top banks are well placed to benefit from this. Banks like SBI & Bank of baroda are having a large customer based a 1% increase in their fee based incomes with 0.50% reduction in NPA progressively will impact the bottom line significantly and the banks will command premium valuation based on their forward looking earnings
2Bank of Baroda1081566 to 12 months
SectorMetalsCurrent PriceTarget PriceTime FrameSummary of research
1Nalco1081706 to 12 monthsStrategic investments by government and private companies in EV segment will be fuelling the demand for cobalt and copper. NALCO is invested in overseas company to procure cobalt and with its network here in India and backing by govt it may turn out to be a winner with announcements in support of the EV sector as well as overall battery making plans
2Hind Copper1242006 to 12 months
3NMDC1392206 to 12 monthsWith a Trailing twelve month sales > 137% NMDC is poised to breakout the barrier of 150 and move ahead. Stock is available at a P/E at 3 with a operational growth of 240%. NMDC is diversified in various sub business and is well placed to move ahead.
4Hindalco4896206 to 12 monthsHindalco is a large diversified metal and chemicals player. Hindalco is again a major aluminium and copper player and is aggressively increasing chemical business too.
SectorFertiliserCurrent PriceTarget PriceTime FrameSummary of research
1GSFC1292056 to 12 monthsOne of the largest player in important chemical and fertiliser supply for agricultural processes. Stock is below its book value and the budget announcements should improve the bottom line and EPS and equivalently the price based on the Forward P/E.
2Deepak Nitrite223229006 to 12 monthsWith the highest ever trailing twelve months operating profit and net profit the stock is ready for a re-rating. Company has a market cap of 30k crores against an annual sales of 7000 crore. Though expensive on book value basis , the brand pedigree and is a leading manufacturer of organic, inorganic & specialty chemicals. Its also involved in making explosives, paints, cosmetics, polymers, optical brighteners, etc.

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