While retaining their bullish view on the domestic equity market, analysts on Dalal Street are advising investors to focus on quality stocks in 2022. They feel that the level of volatility is likely to be higher in the New Year with exit by foreign investors, profit booking, normalisation of liquidity and policy rates by central banks, and above all the threat of another wave of the pandemic across the US and Europe.    

Joseph Thomas, head of research, Emkay Wealth Management said, “We are constructive on the long-term perspective of the market, based on the economic and market development.” Here are 25 stocks suggested by various brokerages for 2022.

Yesha Shah, head of equity research, SAMCO Group

Mahindra Lifespaces: The company is well-positioned to benefit from the real estate upturn given its trustworthy brand name, target to achieve 18 per cent ROE, increased efforts to at least triple the residential business in 3 years, minimal leverage, healthy launch pipeline and robust execution outlook.

Zensar Technologies: Zensar Technologies is on the verge of a turnaround with its new CEO’s strategy focused on high growth verticals, healthy client mining leading to strong revenue growth seen in Q2FY22 and with margins set to improve in FY23 as operating leverage plays out. The company is also trading at reasonable valuations as compared to peers offering the potential of higher returns.

Affle India: The company’s financial performance has been resilient and the management looks confident of delivering 25-30 per cent CAGR in revenue over the next five years. Its immense focus on innovative technologies, its 2.0 strategy to connect 10 billion plus devices along with industry tailwinds provides it a huge runway for growth.

Ruchit Jain, Lead–Research, 5paisa.com

Hero MotoCorp: The stock has already seen a price-wise correction in the last few months and in fact has underperformed this year. However, the brokerage believes that the worst is behind for the company as it has started taking price hikes for its products. The EV opportunity through Ather could play out well for the stock and it is currently trading at attractive valuations.

Bharti Airtel: Bharti has announced revised prices for its pre-paid plans which has come into effect from November 26, 2021. The new plans effectively translated into a 20-25 per cent price hike. Its pre-paid 4G plans have uniformly seen a 20-22 per cent tariff hike across the board. With pre-paid revenue forming 82-83 per cent of mobile revenue, the tariff hike could result in a 16-17 per cent revenue boost.

Gaurav Dua, head-capital market strategy, Sharekhan by BNP Paribas

Ultratech Cement: As all four key consumption drivers of cement have started contributing significantly to cement demand, cement companies are at the sweet spot for sustainable volume growth. UltraTech, with leadership status in the industry and an ongoing capacity expansion programme, is likely to see healthy traction in 2022. The government’s focus on infra projects and property upcycle would lead to healthy demand for cement over the next few years.

Maruti Suzuki: Stock has been a gross underperformer in 2021, as the performance of the company was marred by cost inflation and supply shortage of semiconductors. Given the likely improvement in the availability of supply of semiconductors in 2022 and the sustained demand environment for passenger vehicles in India, Maruti is likely to see healthy traction in its financials in 2022. The company’s plans on the EV segment would also take shape and lead to the re-rating of the stock.

Himatsingka Seide: The company is one of the key beneficiaries of the rising demand for Indian home textiles in export markets. Further, the China+1 strategy, European market opening up in wider form for domestic textile companies, and other emerging global factors are offering healthy opportunities for Himatsingka in the coming years. Stock valuation at 6x FY23 earnings is quite appealing.

Sunil Nyati, managing director, Swastika Investmart

Action Construction equipment: The company is a perfect player for both capital goods and infrastructure themes. It is a debt-free company with strong growth prospects.  

Kajaria Ceramics: Real estate is another pack that is emerging as a leading theme for the next 2-3 years where the real estate-related theme is likely to outperform. The tiles segment is going to be one of the key beneficiaries of growth in the real estate sector where Kajaria Ceramics is the industry leader with a strong growth outlook and almost no debt on the book. Tiles exports from China to the USA have become almost zero due to heavy duties and the Indian tiles industry is getting major benefits from it.

KPIT Technologies: KPIT is one of the fastest-growing midcap IT companies which is going to be a key beneficiary of the EV theme as it is working aggressively towards software solutions for the EV industry.

Vinod Nair, head of research, Geojit Financial Services

Tata Power: The company’s focus towards transforming itself to be future-ready and the management’s ability to drive operational excellence keep the growth prospects intact. Tata power is well placed to capture the opportunities across the green portfolio.

Gaurav Garg, head of research, CapitalVia Global Research

Escorts: The firm has a capacity of 120,000 tractors each year. Escorts has a presence in a variety of product segments, including tractors, agro-machinery, construction equipment, and railway equipment. Although the company’s sales and profitability are driven by its agro equipment sector, the company’s position in other areas gives expansion opportunities.

Relaxo: It is one of the leading participants in India’s non-leather footwear sector, with its proprietors having worked in the footwear industry for over three decades. It has nine plants spread across three cities, with an annual production capacity of more than 20 crore pairs. Over the last ten years, the firm has had impressive revenue and profit growth of 13 per cent and 27 per cent, respectively. It has excellent return ratios with a low debt to equity ratio.

Deepak Nitrite: At present, the Indian specialty chemicals sector is currently one of the fastest-growing in the world (second only to China), with an annual average growth of 13 per cent over the previous five years totalling $25 billion and is projected to profit in the future from both macro and micro causes. It has a large customer base serving over 900 clients in over 40 countries and has good competitive positioning in most of its product categories.

Deepak Jasani, Head of Retail Research, HDFC Securities

Aditya Birla Capital: The company is the holding company of all the financial services businesses of the Aditya Birla group and aims to be an end-to-end financial services provider. It continues its credible makeover journey to drive consolidated return ratios closer to franchise potential over the next three years.

Hindustan Zinc: Hindustan Zinc is one of the world’s largest and India’s only integrated manufacturers of zinc-lead and silver. The high operating efficiency of the company is driven by fully integrated operations (with a captive power plant capacity of 485.5 megawatts) and low-cost, high-grade zinc reserves and with access to the bulk of lead-zinc deposits in Rajasthan through long-term agreements with the Government of India, hence the company should sustain as a low-cost producer of zinc over the medium term.

State Bank of India: SBI is almost immune to any liability-side risks at this juncture, given its expansive, granular deposit base and government’s majority holding. It is better placed to curtail asset quality worries than many other large banks because of its quality of loan books. Moreover, ample provision coverage will curtail incremental loan loss provisions.

Mitul Shah, head of research-institutional desk, Reliance Securities

Finolex Industries: The government’s thrust on Jal Jeevan Mission, enhancement of agricultural credit and increased allocation for rural infra development fund augur well for the domestic PVC pipe manufacturers. Reliance Securities is positive on the company’s growth prospects, given its leadership position in the agri pipe segment, proven track record and innovative capabilities.

Gujarat Gas: With an increasing focus on gas over other alternate fuels and relative price advantage of gas over alternate fuels, the brokerage estimates 16 per cent volume CAGR over FY21-FY24E. The company has maintained PNG industrial prices at a discount to LPG/propane, which has lowered the chances of PNG industrial customers switching to alternate fuels.

Ashok Leyland: Ashok Leyland’s domestic volume to witness a growth of 24 per cent in FY22. Strong CV upcycle, the revival of bus segment and EV focus would drive healthy revenues and profitability of the company.

Vinit Bolinjkar, Head of Research, Ventura Securities

Adani Ports & SEZ: India’s EXIM volume, which has been growing at a CAGR of 4.3 per cent over the last decade, is expected to grow at a CAGR of more than 6.0 per cent in the current decade due to policy initiatives in the form of Sagarmala Pariyojana, Dedicated Freight Corridors, direct-port-delivery/direct-port-entry and expressway network. Adani Ports & SEZ with its portfolio of 13 ports and its ability to provide end-to-end logistics solutions to its clients are well-positioned to benefit from the surge in India’s EXIM trade.

Godrej Properties: Affordable real estate prices, high financial savings and lower interest rates are expected to improve demand in the real estate sector, which remained muted since 2016. Godrej properties are one of the biggest and efficient players in the real estate sector, therefore, we are expecting it to perform well in upcycle.

Ajit Mishra, VP-research, Religare Broking

Polycab: The company is a strong player in the fast-growing wires and cables segment and enjoys strong brand positioning. It has an expansive distribution network and a strong product portfolio. It is one of the most backward-integrated cables and wire manufacturers.

Ramco Cements: The company is the fifth-largest cement producer in India. Religare Broking has a positive outlook on Ramco Cements given its strong brand name, leadership position in South India and strong product portfolio. In addition, its focus on expanding capacity, increasing utilisation levels and cost-saving initiatives would further help in improving profitability.

(Disclaimer: Stocks recommendations by brokerages are their own and not those of the website or its management. BusinessToday.in advises market participants to check with certified experts before taking any buy, sell or hold decisions.)

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