State Bank of India (SBI) , Dabur , Life Insurance Corporation of India, HDFC Life, Bandhan Bank, Piramal Enterprises (PEL), HDFC Bank , SBI Cards are amongst high conviction picks of Centrum Broking.
State Bank of India- the recommended target price by Centrum for SBI stands at ₹750.
Investment Rationale- After many years of low credit growth, rising NPAs write-offs and provisioning, SBI now is coming out of its shadows and showing growth. In Q2 and the last few quarters, SBI has shown good growth and low NPAs. SBI valuation remains attractive relative to its private sector peers. SBI remains a good play on India’s financial inclusion and growth story.
Dabur- The recommended target price by Centrum stands at ₹650-700
Investment Rationale- Dabur has a very strong portfolio of brands that are capable of giving higher than industry growth. Dabur is in focus on building capabilities, rural penetration and focus on brands can lead to superlative growth in the long term.
Life Insurance Corporation of India- The recommended target price stands at ₹900
Investment Rationale- LIC is trading at a discount to its Embedded Value which offers significant value comfort. As seen from Quarterly results, LIC still is a dominant player and despite its huge size, their market share is still increasing. The regulatory changes done with respect to the PAR and Non-PAR business is likely to significantly increase the profitability of LIC in the long run.
HDFC Life- The recommended target price stands at ₹750
Investment Rationale - HDFC Life is a leading private-sector life insurance company in India and operates in a sector with huge potential and fast growth. In the last four years, HDFC Life has shown consistent improvement in operating parameters like persistency ratio.
Bandhan Bank- The recommended target price stands at ₹270
Investment Rationale for Bandhan Bank - Bandhan Bank is trading at 1.2 time FY25 Price to Book Value. It is relatively cheaper as compared to its bug size. The bank is reducing its high-risk MFI book and increasing its retail book. HDFC is looking to sell its 5% stake which could lead to some headwinds. But the stock is good to buy/accumulate on declines.
Piramal Enterprises Ltd. (PEL)- The traget price stands at ₹1250
Investment Rationale for Piramal Enterprises as per Centrum is that Piramal Enterpr. Also, PEL is trading at a very attractive valuation of 0.7 times FY25 Price to Book with a 3% dividend yield. This makes Piramal Enterprises long-term investment very attractive.
HDFC Bank – The recommended target price for HDFC Bank is ₹1900
Investment Rationale for HDFC Bank is that HDFC Bank is trading at an attractive valuation of 2.2 times price to book FY25. HDFC Bank has an ROE of 17% and an ROA of 2.1%. HDFC Bank has the best asset quality in large banks in India. HDFC Bank has GNPAs of 1.1% and net NPAs of 0.3%. HDFC Bank has been the pioneer of retail lending in India. The recommend target price target of ₹1900 for HDFC Bank, implies a 21% upside from the current level.
SBI Cards and Payment Services- The target price recommended stands at ₹900
Investment Rationale for SBI Cards is that SBI Cards is India’s second largest card issuer in the country with a 19% market share in outstanding cards and 17% in overall card spending. Spending growth for SBI Cards remains healthy, positive traction in new card additions, reversal in interest rate cycle, and improvement in revolver credit mix are key triggers for future growth for SBI Cards. SBI Card is trading at 22 times FY25 earnings with an ROE of 25%.
Source Link: SBI, Dabur, HDFC Bank among 8 high conviction picks of Centrum Broking | Mint