IIFL Recommendations on investment in the time of Corona

COVID-19 pandemic in India is hurting the chances of economic revival and driving EPS cuts. Refer the following recommendation by IIFL for investing Mutual Funds and Equity.

Mar 21, 2020 10:03 IST India Infoline News Service

Indian Markets have corrected by ~30% since start of 2020 owing to fears of Coronavirus (COVID-19) further slowing down global growth leading to sell-offs across markets, 50bps cut + USD 1.5 tn liquidity infusion and oil price wars indicating fragile state of global economy. Further, COVID-19 pandemic in India is hurting the chances of economic revival and driving EPS cuts. Refer the following recommendation by IIFL for investing Mutual Funds and Equity. 

Mutual Fund Recommendation
Scheme AUM(₹cr) Category Return Risk
1Y 3Y 5Y
Axis Bluechip Fund(G) 11,824 Large Cap -10.1 7.0 5.0 Moderately High
Kotak Standard Multicap Fund(G) 29,460 Multi Cap -24.9 -2.6 2.5 Moderately High
Axis Midcap Fund(G) 5,193 Mid Cap -9.7 6.2 4.9 Moderately High
IIFL Focused Equity Fund(G) 756 Focused -10.5 1.2 4.5 Moderately High
ICICI Pru Asset Allocator Fund(FOF)(G) 7,375 Hybrid -14.0 1.3 4.1 Moderately High
 
Equity Recommendation for Bull Case
Scenario Nifty Level
Bull Case 11,200-11,500
Stocks Rationale
Bajaj Finance Bajaj Finance strong competitive position, better client acquisition, cross-sell opportunities and stable asset quality that are likely to drive earnings. Moreover, consistent positive cash flows and capital infusion will support growth.
HDFC Bank HDFC Bank has best in the industry asset quality and is leveraging on digitization to not only grow its loan book but also target cross-selling opportunities via higher exposure to retail lending.
ICICI Bank ICICI Bank has waning asset quality concerns and the profitability of the subsidiaries is expected to aid earnings growth. Inclination towards retail lending will bring stability to earnings.
L&T L&T would emerge as the primary beneficiary of early capex cycle owing to its excellent execution capabilities. Strong order book provides comfort and higher services salience will aid RoE improvement.
Gujarat Gas Gujarat Gas is expected to maintain its volume growth on account of structural changes (Morbi-like order in other clusters). Benign LNG prices would drive not only margins but also volumes.
 

Equity Recommendation for Bear Case
Scenario Nifty Level
Bear Case 7,600-8,555
Stocks Rationale
HUL HUL, being the largest FMCG company, is likely to remain least impacted in an event of mass-scale breakout. Strong cash flows/margin defense would provide safety during deteriorating conditions.
Sun Pharma Sun Pharma, the largest Indian pharma company, would benefit on account of its strong footing in India and RoW markets. Even a marginal uptick in specialty revenues would support profitability.
Dabur Dabur’s strategy to invest in power brands, innovate/renovate to plug portfolio gaps, expansion of the herbal market, premiumisation and strengthening rural distribution will support volumes.
Navin Fluorine Navin Fluorine’s earnings visibility has improved significantly on the back on entry into newer segment, which is likely to protect the stock from de-rating.
IPCA Labs Strong volume growth in the domestic market (competitive positioning in pain segment) and improving sales representative productivity rate are likely to result in better than industry standard growth rate.

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