Worst Nifty performers of 2021 can be best wealth creators from here on

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NEW DELHI: Nifty’s record high levels might be making investors jittery on Dalal Street, but some of the worst-performing index stocks of 2021 are signalling favourable risk-rewards for investors, analyst recommendations suggest.

The list included stocks like


, HDFC, ITC and


Kotak is down 14 per cent year to date, Hero MotoCorp has fallen 6 per cent, HDFC 4 per cent, ITC 3 per cent while Maruti Suzuki 1 per cent. Nifty50 is up 12 per cent for this period.

CLSA has since upgraded Kotak Mahindra Bank with an ‘outperform’ rating as it noted that the scrip has underperformed peers by 35-75 percentage points and the Nifty50 by more than 25 per cent over the past six months.

“Incrementally, the risk-reward is getting favourable. Hence, we upgrade our rating on the stock from ‘underperform’ to ‘outperform’. Kotak has built a formidable banking franchise with the lowest cost of funds, low opex and impeccable asset quality. While its willingness to grow looked low over the past two years, low cost of funds provides the bank with a strong ability to grow in segments like mortgages, unsecured credit and corporate lending, areas where the bank’s share has been traditionally low,” CLSA said.

Devang Mehta of Centrum Wealth Management said there no reason why one should ignore Kotak Mahindra Bank. “It has underperformed in the last one or two quarters compared with its peers. It is slated for excellent numbers in the next 1-2 years, once the recovery trade starts,” he said.

Axis Securities and Ashika Stock Broking have Hero Motocorp on their ‘buy’ lists. Axis Securities is betting on a healthy revival in rural demand led by the expectation of a good monsoon, robust water reservoir levels, MSP growth and higher crop procurement by the government.

“Hero is best-placed to benefit from this expected revival in the rural economy as 50 per cent of the company’s domestic volumes are derived from rural India, considering its solid product portfolio, strong brand recall, and robust distribution network,” it said.

HDFC is Emkay Global’s top pick in the NBFC space. “We stick to our preference for promoter-backed, moat-driven, well-governed NBFCs and HFCs with a stable liability franchise and ability to raise money comfortably. HDFC remains our top pick in the sector,” it said.

HDFC’s market share has stayed steady at 16.9 per cent in FY21. “Our analysis shows that though HFCs have lost a bit of market share, we see market share consolidation for HDFC while others continue to struggle to manage liquidity,” Emkay said.

Ashika Stock Broking has recommended investors to ‘buy’ the scrip for a target of Rs 2,940, as it values the stock at 3.85 times book value on FY22 EPS basis.

In the case of ITC, 33 analysts that track the stock have ‘hold’ or above ratings. The scrip has no ‘sell’ call. That said, analyst targets vary widely, with some projecting good upside potential, and others seeing limited upside.

For Maruti Suzuki, Emkay Global has a target of Rs 8,500, as it expects an improvement in Q2 volumes driven by the easing of lockdown, pent-up demand and low dealer inventory. Motilal Oswal Securities said it prefers companies with higher visibility in terms of demand recovery, a strong competitive positioning, margin drivers, and balance sheet strength. It listed Maruti among its top OEM picks.

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