Consensus might not be able to spot a multibagger but they could spot safe investments. Not all stocks which carry a maximum buy rating have managed to beat the benchmark index by a wide margin, according to a study conducted by Motilal Oswal.
The constituents of the BSE 100 index can be referred to as quality names. Stocks with the highest buy rating in the index include MRF, Vedanta, Mahindra & Mahindra (M&M), ICICI Bank, Aurobindo Pharma, HDFC Bank, Crompton Greaves, Federal Bank, UPL and Tata Chemicals.
Among these companies, MRF has been trending higher since its Q3 FY18 earnings, aided by strong revenue growth and stable rubber prices.
M&M is the best play on a rural recovery, as the recovery in the hinterland improves visibility of volumes in the tractor and utility vehicle businesses. “The tractor business is launching its third brand – Trakstar – which will focus on undercutting lower-priced competitors by 5-10 percent. The intent is to gain 3-5 percent market share,” the report stated.
HDFC Bank has consistently grown its loans and deposits market share across credit cycles. It has also emerged as the best-managed bank in India with robust profitability and growth metrics. The brokerage said increasing granularity of HDFC Bank’s balance sheet, focus on fee income growth, improvement in operating leverage aided by digital initiatives and controlled credit costs backed by strong underwriting has enabled it to outperform most peers.
Aurobindo Pharma, which has delivered negative returns so far in 2018 and the last one year, is a good buy on dips stock for Motilal Oswal. The pharma major has transformed from being a pure active pharmaceutical ingredient (API) player to a formulations manufacturing company.
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