4 Stocks HDFC Securities Has A Bullish Stance With Good Upside Potential

Indian markets are expected to maintain their bullish stance this week, though all eyes would be on the US Federal Reserve for more cues on interest rate hikes. The Sensex has crossed the 61,000 points mark once again and investors foresee the possibility of further upside going forward. Here are

4 stocks that have been recommended by HDFC Securities as a buy

SBI Cards and Payments

According to HDFC Securities, SBI Cards' earnings were marginally below its own estimates due to higher-than-expected credit costs, partially offset by healthy traction in fee income. While the QoQ receivables mix remained steady with Revolve/EMI loans at 24%/37%, NIMs declined 10 basis points QoQ (11.5%) and are close to bottoming out with renewed management focus on raising the share of instalment loans.

"Business momentum remained strong in terms of card acquisitions (+22% YoY) as well as retail per-card spends (+11% YoY). Asset quality witnessed marginal deterioration with GSIII at 2.4% and credit costs at 6.3% (20bps one-off impact from change in ECL estimates). We marginally reduce our FY24/FY25 earnings estimates to factor in lower revolve share, partly offset by lower credit costs and maintain BUY with a revised target price of Rs 960 (implied 25x FY25 EPS). We remain bullish on the overall credit card opportunity and the ability of SBI Card to deliver consistently superior profitability (5%+ RoA, 25%+ RoE)," the brokerage has said.

Star Health Insurance

On this stock, HDFC Securities says that it is the largest standalone health insurer (FY23 retail GDPI market share of 34%). "Our thesis on Star Health is anchored in a very strong distribution network, retail-dominated business mix and best-in-class opex ratios. We expect Star Health to deliver revenue/APAT CAGR of 22/41% over FY23-25E and RoEs in the range of 17/18% for FY24E/25E and maintain BUY with an unchanged target price of Rs 795 (DCF derived multiple at 38x Mar-25E P/E and 6x Mar-25E P/ABV)," the brokerage has said.

IndiaMART InterMESH

According to HDFC Securities, IndiaMART posted a strong 4Q with better-than expected revenue growth (+6.9% QoQ) and impressive cash collections (+31% YoY). "The growth was led by strong supplier addition (~9K) and improving realisations (+2.3% QoQ). The company invested in a sales engine in FY23, which has moderated margins but accelerated growth. The strong cash collections provide visibility for >25% YoY growth in FY24E. . We maintain our EPS estimates and have a BUY rating with a DCF-based target price of Rs 5,960 (~34x Dec-24E EV/EBITDA), supported by revenue CAGR of 24% over FY23-25E," the brokerage has said. The last of the stocks where HDFC Sec has a "buy" call is the stock of Ultratech Cement, where the company has an unchanged target price of Rs 8,670.

Disclaimer
Please be informed that the stocks mentioned above are not our recommendations to buy, sell or hold. These have been picked from the brokerage report of HDFC Securities. Greynium Information Technologies Pvt Ltd and the author are not liable for any losses caused based on the article.