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Market Insights- The Critical Role of Stock Analysis in Investment Strategy


Large Cap: IDFC First Bank Ltd (Rs57,018cr)

  • The Indian economy is growing and because of this finance stocks (Nifty Bank Index) grows and also outperforms the Nifty 50 Index.
  • The net profit is increasing YOY by 18% , NII by 30%. Their fixed assets and investment are increasing by 50% and 33% respectively from FY21 to 23.
  • The company has not paid any dividend since 2019 and is investing the same in their business.
  • Their retail deposit is increasing by 30% YoY and the company is expanding by increasing their branches from 23 to 809 branches at present.
  • From a technical point of view, it has reached the same price level as on Nov’16 and has also self-corrected by 30%.
  • The company also demonstrates strong EPS growth along with excellent managerial efficiency throughout the previous financial year.
  • These factors make this large cap stock an excellent investment for investors going into the new financial year. Analysts have given a 35% that the stock will outperform in the upcoming months.

Mid Cap: Ujjivan Small Finance Bank Ltd (Rs10,949cr)

  • This company is a small finance bank providing robust and simple banking solutions and services like savings accounts, MSME loans, gold loans, micro loans, retail forex trade etc.
  • The current and savings account of this company increased by 24% YOY and 8% QoQ basis and total deposit has also increased. Loan book is up by 27% YoY.
  • This bank is also moving to new segments like gold loans and 2 wheeler loans.
  • The ROCE is 10.6% and ROE is 33.33% which is greater than industry average. This indicates a better return for equity holders and efficient use of net assets available to the company.
  • Top line and bottom line both have increased by 23% and 174% CAGR over 5yrs and also have a positive FCF of Rs 953 Cr.
  • Although around 30 MFs have reduced their shareholding in this stock in the past month, the company has shown a strong EPS growth of 165%, which shows a strong potential growth laid out in the future.
  • The price of the share is projected to shoot up in the coming months with a high of 67.54 Rs and a low of 58.65 Rs. This stock could be a great potential investment for investors looking for a moderate risk.

Small Cap: Gabriel India Ltd (Rs 5,196 Cr)

  • This company is amongst the Top 10 suspension manufacturers globally and is also a supplier to some of the leading EV companies in India like OLA and TVS Bajaj.
  • From Dec 2020 to Dec 2023 QoQ basis the Sales has grown by 53% , operating profit by 84% and net profits by 72%.
  • Sales have increased by 10% in the last 5 years on a YoY basis and net profit by 7% CAGR over 5 years.
  • Their investments and asset acquisition have also increased by 30% CAGR over 5 years thus indicating that the company is expanding.
  • They have a positive Free Cash Flow of Rs48cr which is a good sign that the company can use it for expansion purposes.
  • From Sep '21 till Dec’23 FII have been continuously increasing their stakes and promoters' stakes remain unchanged since 2017 at around 55%, indicating long term commitment and trust in the company.
  • The company’s P/E ratio matches with the industry P/E, ROCE is at 22% and ROE is at 16% more than industry average.
  • The company is also actively adding new products across each segment in various areas like 2&3 wheeler, railways, commercial vehicles etc. which shows the company’s expansion vision and potential. An investment into such a fast growing and committed company will be an excellent choice for investors.