Top 10 Potential Wealth Creators of 2021


8 min read
Top 10 Potential Wealth Creators of 2021

Image source: Gold vector created by pch.vector - www.freepik.com

After a sharp correction in the first half of the Calendar year 2020, markets turned 'extremely bullish' in the second half. Both the fall and the recovery from it were unprecedented. 2020 made me clear that there is no link between stock market and economy.  

Indian Stock Markets have logged the one of the best rebounds from the March lows globally while battling some of the world’s worst economic data. The surge has pushed up valuations to a record as investors look past the grim reality and the world’s second-highest tally in coronavirus cases.

Few important highlights of CY2020.

  1. 48 Out Of 50 Nifty Stocks are trading above 50 & 200-DMA.
  2. All 30 Stocks in S&P BSE Sensex are trading above their 50 & 200 DMA.
  3. IT and pharma sectors are the two biggest beneficiaries of the pandemic.
  4. Real estate, Power, Insurance, Road and Construction and Capital Goods were among the biggest laggards.
  5. Sensex and Nifty both delivered positive returns (~15%) for 5th straight year.
  6. For the first time in 5 years Nifty Bank underperformed (down 3%).
  7. Pharma Index was up 60% The best ever performance.
  8. IT Index was up 55%, The biggest yearly gain since 2013.

When market are at 'All Time High' then it may not be an easy task to find those handful of names from 7,000-odd stocks that are expected to deliver best returns.

In order to get best returns, Investor must diversify their portfolio and here are the Top 10 Potential Wealth Creators of 2021 as per my analysis.

1) Bharti Airtel Limited
(Current Price: 540, Target Price: 750 Rs, Tenure: 1 Year)

About the company: Bharti Airtel Limited is a leading global telecommunications company with operations in 18 countries across Asia and Africa. Headquartered in New Delhi, India, the company ranks amongst the top 3 mobile service providers globally in terms of subscribers.

Reason: The telecom sector is also one of the beneficiaries of the pandemic with users consuming more data. So, revenue is likely to increase once another round of price hike materializes. The company has a strong customer base, and is seeing a consistent rise in 4G subscribers and industry-leading Arpu. Company's continues investment in new technologies shows that Arpus need to increase from here and rise in Arpu will help profitability for Bharti Airtel.

Technicals: 19 out 28 major technical indicators show that Stock is bullish on daily chart.



2) HDFC Life Insurance Company Ltd
(Current Price: 715, Target Price: 950 Rs, Tenure: 1 Year)

About the company: Established in 2000, HDFC Life is a leading long-term life insurance solutions provider in India, offering a range of individual and group insurance solutions that meet various customer needs. HDFC Life continues to benefit from its presence across the country with 421 branches and 270 bancassurance partners including NBFCs, SFBs etc. and more than 40 new ecosystem partners.

Reason: HDFC Life is among the dominant private players in the Indian life insurance space today. The company is one of the most profitable in the industry and has gradually shifted from Ulip heavy to a more balanced product mix. HDFC Life has a strong distribution network and partnerships. Diversified product portfolio and focus on product innovation has enabled HDFC Life to be ahead of the curve.

Technicals: 17 out 28 major technical indicators show that Stock is bullish on daily chart.


3) Sun TV Network Ltd.
(Current Price: 525, Target Price: 800 Rs, Tenure: 1 Year)

About the company: Sun TV Network is an Indian mass media company headquartered in Chennai, Tamil Nadu, India. It is a part of Sun Group and is one of Asia's largest TV networks. Established on 14 April 1993 by Kalanithi Maran, it owns a variety of television channels and radio stations in multiple languages.

Reason: This zero debt company has a good return on equity (ROE) track record: 3 Years ROE 25.03%. Company has been maintaining a healthy dividend payout of 42.15%. Dividend Yield of 4.74 %, Interest Coverage of 138 and Free Cash Flow of ₹5,144 (5Yrs ) makes it fundamentally strong. Stock is trading at 17x PE, much lessor than industry average of 22.

Technicals: 18 out 28 major technical indicators show that Stock is bullish on daily chart. Fresh breakout on daily charts.

Also Read: Decoding Technical Analysis for Traders & Investors.


4) Federal Bank Ltd
(Current Price: 75, Target Price: 105 Rs, Tenure: 1 Year)

About the company: Federal Bank Limited is an Indian private sector, scheduled commercial bank headquartered in Aluva, Kochi. The Bank also has its Representative Offices abroad at Abu Dhabi and Dubai.

Reason: Favorable asset mix (negligible unsecured portfolio and limited exposure to vulnerable sectors like Hotel, Tourism, MHCV etc), best-in-class deposit profile to aid gain in credit market share.

Technicals: 18 out 28 major technical indicators show that Stock is bullish on daily chart. Fresh breakout on daily charts.

5) Larsen & Toubro Ltd
(Current Price: 1374, Target Price: 1850 Rs, Tenure: 1 Year)

About the company: Larsen & Toubro Limited, commonly known as L&T, is an Indian technology, engineering, construction, manufacturing and financial services conglomerate headquartered in Mumbai, Maharashtra, India. Larsen & Toubro is engaged in core, high impact sectors of the economy and its integrated capabilities span the entire spectrum of design to deliver.

Reason: Atma Nirbhar Bharat, defence opportunities, and national infrastructural pipeline to sustain healthy business prospects over the next five years. Strong order inflows during Q3FY2021 till date take order inflows (ex-services) to over 50% of FY2020 level. Healthy order prospects pipeline to continue momentum for balance fiscal year and FY2022.

Technicals: 18 out 28 major technical indicators show that Stock is bullish on daily chart. Fresh breakout on daily charts.



6) Sobha Ltd
(Current Price: 468, Target Price: 650 Rs, Tenure: 1 Year)

About the company: SOBHA is one of India's leading real estate entities. The only real estate company in India to have a full-fledged backward integration model. They have built some of the finest residential and contractual projects in India. The company is an Indian multinational real estate developer headquartered in Bangalore, India.

Reason: As the property prices have largely remained flat or improved at a low single digit growth rate over past 7‐8 years for most markets, any upsurge in demand may translate into better pricing going forward for Sobha.

Technicals: 18 out 28 major technical indicators show that Stock is bullish on daily chart. Fresh breakout on daily charts.



7) Coromandel International Ltd
(Current Price: 816, Target Price: 1110 Rs, Tenure: 1 Year)

About the company: Originally named Coromandel Fertilisers, the company is in the business of fertilizers, pesticides and specialty nutrients.

Reason: The crop protection business grew by 35% versus last year for the first half and 26% for the quarter, the company further strengthened its new product launches and strategic tie-ups with global players and co-marketing initiative. It continues to invest in R&D, product development and has a very rich product pipeline and tends to introduce new molecules in the coming quarters.

Technicals: 16 out 28 major technical indicators show that Stock is bullish on daily chart. Fresh breakout on daily charts.



8) Hero MotoCorp Ltd
(Current Price: 3159, Target Price: 3750 Rs, Tenure: 1 Year)

About the company: Hero Motocorp Limited, formerly Hero Honda, is an Indian multinational motorcycle and scooter manufacturer based in New Delhi, India. The company is the largest two-wheeler manufacturer in the world, and also in India, where it has a market share of about 46% in the two-wheeler category.

Reason: Hero MotoCorp is India’s largest two-wheeler company and its numbers for December 2020 were pretty impressive. The company reported an increase of 5.02% in total sales at 4,47,335 units for December compared to 4,24,845 units in December 2019. These numbers are a testament to how well the company has handled the pandemic. The October-December 2020 quarter was its third-best ever, as Hero recorded sales of 18.45 lakh units in this period. Hero has around 38.5% market share of the two-wheeler segment in India, with a particularly strong presence in semi-urban and rural India. Valuations are reasonable (16x/15x FY22/23E EPS) compared with a historical multiple of 18x.

Technicals: 18 out 28 major technical indicators show that Stock is bullish on daily chart. Fresh breakout on daily charts.



9) ITC Ltd.
(Current Price: 202, Target Price: 320 Rs, Tenure: 1 Year)

About the company: Established in 1910, ITC Limited is an Indian multinational conglomerate company headquartered in Kolkata, West Bengal. ITC has a diversified presence in FMCG, Hotels, Packaging, Paperboards & Specialty Papers and Agri-Business. Most of its revenue comes from cigarette manufacturing and sales.

Reason: It will take a day if you sit and understand the empire of ITC and its businesses. ITC’s renewed focus on maintaining cigarette market share, tailwinds for FMCG foods business, strong FCF, high dividend yield and compelling valuations make it more attractive for long term investors. ITC is the top pick of major brokerage houses.

Technicals: 08 out 28 major technical indicators show that Stock is bullish on daily chart. Fresh breakout on daily charts.

10) Exide Industries Ltd
(Current Price: 198, Target Price: 260 Rs, Tenure: 1 Year)

About the company: Exide Industries Limited is an Indian storage battery producing company and a life insurance company headquartered in Kolkata, India. It is the largest manufacturer of automotive and industrial lead-acid batteries in India and fourth largest in the world.

Reason: The rapid penetration of electric vehicles in India is expected to drive the need for Lithium (Li)-ion battery manufacturing in the country. Li-ion batteries act as the primary storage option for electro-chemical energy. These batteries are rechargeable and contain Li-ion as the key component of electrolyte.
The manufacturing of Li-ion batteries is dependent on the sourcing and mining of lithium, and other minerals like cobalt, aluminium and copper. Exide is holding one of the largest market share in the Lithium-ion Battery Manufacturing Market.

Technicals: 18 out 28 major technical indicators show that Stock is bullish on daily chart. Fresh breakout on daily charts.

Join our Free Telegram channel here (Or Simply search marketnotes.in in Telegram app) or Subscribe here

Previous recommendations:

Akshay Seth
Research Analyst (SEBI Regd.)
Linkedin | akshay.equity@gmail.com

If you are new to stock market then open your demat account here in just 2 hours and start investing.

GO TOP

🎉 You've successfully subscribed to Marketnotes - Decoding Financial News!
OK