Few stocks that may give better returns in 2021

2. Deepak Nitrite | Target: Rs 1,505 | Upside: 42%Deepak Nitrite stock with its import‐ substitute capabilities for domestic players, alternative to Chinese players for other global manufacturers, diversified and de‐risked business model, and improved operational and financial performance on account of ongoing and upcoming CAPEX. Additionally, the company has delivered healthy financial performance during FY10‐20 (PAT CAGR of ~35%). Many experts believe the improvement in financial performances across major business units to keep ROEs at 25%+ between FY21‐FY24.

3. PNC Infratech | Target: Rs 246 | Upside: 35%.  With monsoon largely behind and better labor availability, execution pace is set to see sharp improvement during H2FY21. The operating margin is expected to remain healthy at 13.5%. The order book is in a comfortable position with 3 times FY20 revenues. Recent order inflows, continued focus on asset monetization and comfortable balance sheet position provide comfort. The company would be one of the big beneficiaries of strong project awarding by NHAI.

4. TCI Express | Target: Rs 1,320 | Upside: 32% . The cost-cutting measures, price hikes, opening of owned sorting centers at select locations would ensure improvement in operating margin performance. The broker believes the asset-light model would significantly benefit the company in an uncertain business scenario. Also, its return ratios remain the best in the industry. The stock trades at a valuation of 34 times FY22 expected P/E. 

5. Credit Access Grameen | Target: Rs 1,020 | Upside: 31% .With renewed momentum in disbursements to continue, the consol. AUM growth is estimated to accelerate to 25‐30% in FY22. We estimate consolidated RoA delivery of 4.5‐4.8% over the next two years, manifesting the substantial synergies of the Madura Micro acquisition. The stock trades at 2.6x FY22 P/ABV (palatable for a best‐in‐class MFI) and it has not moved much in recent months. We see scope for further re‐rating as the investor focus shifts to FY22 delivery. 

6. Kansai Nerolac Paints | Target: Rs 785 | Upside: 31%.The broker is positive on Kansai largely due to expected improvements in structural drivers such as the shift towards organized sector, housing push in semi‐urban and rural areas, shorter painting cycles, governments focus on increasing rural income, and increased consumer awareness in rural areas. It expects EBITDA margins to stay in the higher range of 17‐18% between FY22‐FY24 on account of judicious control on costs and overheads and better-fixed cost absorption. We expect ROE to move to reach 17% by FY23.

7. ICICI Bank | Target: Rs 705 | Upside: 30% .Experts feel that the structural benefits of strategic initiatives will fully manifest in the coming years as the bank is ready to capture growth opportunities across segments. It believes the earnings will catapult over FY21‐23. A gradual improvement in the cost metric and core cost/income ratio is highly probable from the accelerated digital business acquisition and execution, and an integrated banking strategy. 

8. HDFC | Target: Rs 3,420 | Upside: 28% . Over the past few months, the core mortgage business has got re‐rated and is currently valued at 2.3x current P/BV. There exists material scope for further valuation re‐rating driven by sustained improvement in disbursement and loan portfolio growth, lesser‐than‐feared Covid impact and stress in non‐individual portfolios, and marginal improvement in NIM/Spread supporting steady profitability. 

9.Gillette India | Target: Rs 7,280 | Upside: 24% . Despite revenue and cost pressure in the short term owing to reduced consumption in the grooming segment, the broker is positive on Gillette over the medium to longer‐term backed by its strong brand recall, superior activation and go‐to‐market plans, innovative product range, and robust distribution strategies. Also, demographic tailwinds, increasing brand consciousness, rapid urbanization, increasing digital connectivity, better demand, and consumption from Tier‐2/3 cities, and rural areas will lead to multi‐year growth opportunities.