Stocks That Rock: From TCS To Nestle India; Top Picks By Yes Securities For October

Due to rising oil prices, geopolitical uncertainties, and China's bullishness, investors hurried to liquidate their holdings. The market has been volatile since Iran's attack on Israel was reported. The Nifty50 and Sensex both fell by around 4.50%, ending the week at 25,014.60 and 81,688.45, respectively. Yes Securities has placed buy calls on four stocks, designating them as its top recommendations for October, in light of the fact that the market's perspective will be influenced by the primary domestic and global economic events in the upcoming sessions.

Cholamandalam Investment and Finance Company Limited (CIFC)

CMP: Rs 1,494.95, Target: Rs 1820, Period: 12 Months

"CIFC is confident of achieving a 25-30% growth for the next 3 years with 1) diversified vehicle finance (VF) portfolio and strong positioning in VF market, 2) continuance of robust growth in LAP, 3) sustaining traction in home loans (entry in new Tier 3 & 4 markets). NIM would improve over the coming quarters with stabilization of CoF and improvement in portfolio yield. In VF business, the marginal yield is 40-50 bps better than the book yield. In longer term, fixed-rate nature of VF portfolio, product level composition change in AUM and moderation in funding cost should improve NIM," said Yes Securities in a note.

"With productivity benefits starting to manifest in new business and scope for improving distribution / resource productivity in HL and LAP, we expect the opex/asset ratio to come-off. CIFCL has a promising outlook, driven by its strategic focus on expanding product offerings and its branch network, particularly in rural areas. The company aims to boost market share by targeting larger loan segments while maintaining strong asset quality and risk management. Management expects improvements in NIMs and lower credit costs, which should enhance profitability. Additionally, CIFCL's investment in technology and operational efficiency positions it well to adapt to market changes and capture growth opportunities, making it appealing for investors," the brokerage further added.

Tata Consultancy Services

CMP: Rs 4,251.90, Target: Rs 5292, Period: 12 Months

According to Yes Securities, TCS is well positioned to benefit from several global tailwinds that support its growth trajectory, one major factor being the FED's start of rate cut cycle, which could essentially boost client spending in key markets like US. Additionally global IT consulting giant Accenture's recent report highlights a growing demand for cloud services, data analytics and cybersecurity, trends that align well with TCS's strategic focus areas.

"TCS's comprehensive service capabilities and deep industry knowledge have enabled the company to secure large and strategic deals, with a total contract value (TCV) of $8.3 billion in the recent quarter gone by. This robust performance, coupled with a commitment to investing in workforce development and strengthening ecosystem partnerships, positions TCS well for sustained growth in the coming quarters, as clients increasingly rely on technology to enhance their competitive advantage and operational efficiency, making this IT giant a compelling BUY," the research analysts of Yes Securities said in a note.

Emcure Pharmaceuticals Ltd

CMP: Rs 1,429, Target: Rs 1900, Period: 12 Months

Emcure aims to strengthen its position by 1) enhancing the penetration of its key brands through an expanded prescriber base, 2) developing additional strong and recognized brands in targeted therapeutic areas, 3) launching innovative products to meet unmet patient needs in these areas, and 4) increasing market share by introducing new products and leveraging its leadership to penetrate these therapeutic sectors, according to Yes Securities.

"Goin forward Emcure is well poised to capitalize on its leading position in the Indian gynecology market and launch newer extensions of existing brands. The addition to its field force, will help them accelerate their growth aspirations. Moreover, the recent in-licensing deal with Sanofi would add to its domestic sales. The Mantra deal will provide an impetus to Emcure's international business. With already having made investments for production lines and new capacities, we expect Emcure to generate significant FCF going forward and with a healthy growth, robust margins, low working capital requirements and low capex, we can expect return ratios to remain strong in the future, making Emcure a compelling BUY," the brokerage further added.

Nestle India Ltd

CMP: Rs 2,612, Target: Rs 3237, Period: 12 Months

"FMCG companies had been grappling with a rural slowdown for several quarters, significantly affecting their overall volume growth. However, rural growth is poised for a rebound in the upcoming quarters due to favorable monsoons, increased government spending & an uptick in urban remittances, all of which are expected to bolster rural recovery. This coupled with Nestlè's endeavor to expand in rural areas will benefit the company further in delivering marketleading growth, making it a compelling BUY," said the research analysts of Yes Securities in a report.

Nestlè reported sales of Rs 4,814 crore in Q1FY25, up 3.3% from Rs 4,658.5 crore in the same quarter last year. EBITDA improved by 4.1% YoY to Rs 1103 Cr, while PAT came in at Rs 746.6 Cr. The food sector makes up the largest portion of Nestlé's revenue mix at 55%. Beverages make up 18%, milk products and nutrition make up 25%, and confectionery makes up around 5%. Nestle India established more than 800 new distribution touchpoints during the quarter, including wholesale hubs, re-distributors, and cash distributors.

Disclaimer

The recommendations made above are by market analysts and are not advised by either the author, nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.