From Bharti Airtel to RIL: Here are top picks by HDFC Securities for the next 6-12 months

Aegis Logistics: Aegis Logistics Ltd (ALL) is a leading provider of logistics and supply chain services to the Indian oil, gas and chemical industry. The company provides services such as sourcing of products, storage, and distribution for oil, gas, and chemicals. It has a market cap of ₹7,366 crore. It posted a 124 percent YoY rise in its net profit in FY21 at, however, its sales fell 46 percent YoY in the same period. Capacity addition led by expansion programs will drive volume as well as profitability growth in the medium to long term, noted HDFC. Apart from this, Japanese trading company Itochu has a 40 percent stake in Haldia LPG terminal, which highlights investor confidence in the LPG potential of the region, it added.

Bharti Airtel: Bharti Airtel is a global communications solutions provider with over 48.4 crore customers in 17 countries across South Asia and Africa. Airtel is India’s largest integrated communications solutions provider and the second-largest mobile operator in Africa. Airtel’s. It has a market cap of ₹3,96,744 crore. The company's net profit declined over 200 percent in FY21 (YoY), however, its sales rose around 19 percent in the same period. The recent tariff hike should improve ARPU further and increase cash flow generation over the medium term, said the brokerage.

CDSL: Central Depository Services Ltd (CDSL) is one of two depositories in India and the only one to be listed. It facilitates the holding and transacting in securities in the electronic form and facilitates the settlement of trades on stock exchanges. It has a market cap of ₹13,278 crore. The company's net profit surged around 90 percent in FY21 (YoY), meanwhile, its sales also rose around 53 percent in the same period. The company has ventured into a new business like KYC/C-KYC for its investors through its subsidiary – CDSL Ventures (CVL), holding of insurance policies in electronic form through CDSL Insurance, GST Suvidha provider, etc., which will not only bring diversified revenue but some of them hold a promising future, said HDFC.

HPCL: Hindustan Petroleum Corporation Ltd (HPCL) has a dominant market position as one of India's top-three oil marketing companies with consistent market share gains in the auto fuel segment despite rising private competition. It has a market cap of ₹38,592 crore. The company posted a 200 percent rise in its net profit in FY21 (YoY), however, its sales fell around 13 percent in the same period. Strong gross refining margins and expected inventory gains arising from increasing oil prices could offset the moderate marketing margins of Indian oil marketing companies, said the brokerage.

ICICI Bank: ICICI Bank is the second-largest private sector bank in India. Over the years it has consistently focused on de-risking its loan book by reducing its corporate portfolio and focusing on high margin less risky retail segment, noted HDFC. It has a market cap of ₹5,03,350 crore. The company's net profit was up 36 percent in FY21 (YoY), meanwhile, its sales also rose 7 percent in the same period. The bank is well-positioned to structurally report superior return on assets and a substantial decline in gross non-performing assets, improvement in cost of funds and change in loan mix augurs well for future growth, stated HDFC.

ITC: Apart from having a near-monopoly in its traditional business of cigarettes, ITC is the country's leading FMCG marketer, the leader in the Indian paperboard and packaging industry, a pioneer in farmer empowerment, a pre-eminent hotelier in India and a specialized global digital solutions provider through its wholly-owned subsidiary, ITC Infotech. It has a market cap of ₹3,20,098 crore. The company's reported a 15 percent fall in its net profit in FY21 (YoY), however, its sales were flat during that same period. HDFC noted that ITC's Hotels segment is expected to register strong revenue growth and margin recovery, as leisure and business travel continue to improve the occupancy rate with lockdowns being lifted across the country. Furthermore, revival in the end-user industries and exports are expected to drive paperboard sales going ahead. However, FMCG Others is expected to see near-term challenges on account of rural slowdown and inflation in key raw material prices, it added.

ONGC: Oil & Natural Gas Corporation Ltd. (ONGC) is India’s largest oil and gas producer with a share of nearly 73 percent of India’s total production of crude oil and 79 percent of natural gas (including share of joint ventures). It has a market cap of ₹2,04,115 crore. The company's net profit declined around 3 percent in FY21 (YoY), and its sales also fell around 15 percent in the same period. As per HDFC, any value unlocking from subsidiaries and other investments & lower holding company discount on investments can be positive for the stock. The company also has excellent financial flexibility arising from its moderate gearing, large liquid investments, its significant sovereign ownership and strategic importance, it added.

Reliance Industries: Reliance is one of India's largest private sector companies, with diverse interests, including petrochemicals, oil refining, and upstream oil and gas exploration and production. RIL has also established its presence in the consumer-facing business space by providing retail and digital services. It has a market cap of ₹1,822,243 crore. The company posted an over 300 percent rise in its net profit in FY21 (YoY), however, its sales fell 22 percent in the same period. Reliance has an advantage in refining arises from its global-scale capacity as the largest single-site refinery in the world, broad product portfolio, and highly integrated operations said the brokerage.

SBI: SBI is the largest Public Sector Bank with over 22,000 branches and stands to gain from improvement in business sentiment. It has a market cap of ₹4,28,068 crore. The company's net profit rose 31 percent in FY21 (YoY), and its sales were up 3 percent in the same period. Unlike other PSU banks, SBI has not lost a share in loans or low-cost deposits over the past decade, noted HDFC. SBI’s large and granular deposit base is backed by low-cost CASA and this gives it access to low-cost funds which is its biggest competitive advantage, it added. Revival in economic activity, improving utilisation of corporate credit limits, and expected recovery in private capex are likely to augment portfolio growth, HDFC further stated.

Thermax: Thermax Ltd offers integrated solutions in the areas of energy and environment – heating, cooling, power, water & waste management, air pollution control and chemicals. It operates in three key segments energy, environment and chemicals. It has a market cap of ₹25,615 crore. The company's posted a 15 percent rise in its net profit in FY21 (YoY), however, its sales fell over 16 percent during this same period. Thermax is expected to benefit from India’s transitioning to green energy setting up ambitious targets for 2030 in the renewable energy space, HDFC said. Thermax remains confident of the chemical business opportunity, it added. HDFC further noted that Thermax has a strong balance sheet with a healthy cash position which provides investment avenues in new energy technologies like hydrogen.

TVS Motor: TVS Motor Company Ltd. (TVS) is the 3rd largest two-wheeler company in India with an annual sale of more than 30 lakh units and annual 2-wheelers (2W) and 3-wheelers (3W) capacity of over 55 lakh and 2 lakh respectively. It has a market cap of ₹29,813 crore. The company's net profit declined around 8 percent in FY21 (YoY), however, its sales rose around 3 percent in the same period. TVS has outperformed the industry over the last few years in most of the segments, said the brokerage. It also noted that TVS is the only auto player within the listed space that witnessed margin improvement, even in FY22, in a weak demand environment and despite a sharp rise in input costs led by improvement in product mix and cost-cutting initiatives.