The shares of UTI Asset Management, Angel One, and SBI Life Insurance Company have been assigned a buy rating by HDFC Securities. The brokerage expects these stocks' market value to rise even higher ahead of their Q3FY22 announcements.
UTI Asset Management (UTIAM)
UTI AMC is a mutual fund house that is registered with the Securities and Exchange Board of India (SEBI). The stock is now trading at a market price of Rs. 1,082 as of 3:30 p.m. IST on 14 January. The stock hit a 52-week high of Rs 1,216.20 on September 8, 2021, and a 52-week low of Rs 538.00 on April 12, 2021, according to the NSE.
According to the brokerage "Active equity schemes attracted net inflows of INR672bn in Q3FY22 (Q2FY22: INR635bn), aided by robust and all-time high SIP flows that clocked in at INR109bn (Q3 average). The recent correction in markets seems to have garnered strong equity flows, leading to a 7% QoQ rise in Active Equity AUM. Higher equity prices and lower fixed-income yields are expected to boost treasury gains. Given there is a spike in equity AUMs, which is partially offset by lower debt AUMs, we upgrade our FY22E/FY23E earnings forecasts to factor in the higher AUM for the entire coverage universe. We reiterate UTIAM as our top BUY and increase TP to INR1,360 (20.4x Sep-23 NOPLAT + Sep-22 cash + investments)."
Angel One is one of India's top retail brokerage firms and also the company is registered with Bombay Stock Exchange (BSE), National Stock Exchange (NSE), Metropolitan Stock Exchange of India (MSEI), National Commodity & Derivatives Exchange Limited (NCDEX) & Multi Commodity Exchange of India Limited (MCX).
HDFC Securities has said in its research report that "Despite healthy consolidation seen in index levels in Q3FY22, cash ADTVs (ex-prop) were sequentially flat whereas growth in derivatives ADTVs (ex-prop) continued unabated at 22% (estimated). A buoyant market for primary issuances resulted in an impressive pace of new investor additions at 7mn in the first 2 months of Q3 (H1FY22: 15mn). Despite flattish volume in the cash segment, the delivery volume has increased; this, coupled with healthy derivatives volume, is expected to boost broking revenues. Distribution income is expected to improve sequentially as industry-wide active equity AUM grew 7% QoQ. Any sharp drops in cash ADTVs pose a major risk to the earnings profiles of full-service brokers. We reiterate ANGELONE as our top pick in the space and maintain our BUY rating on the stock with a target price of INR1,770 (21x Sep-23 AEPS)."
SBI Life Insurance
SBI Life Insurance is one of India's prominent life insurance providers. The company has a market capitalization of Rs 126,395.80 crores, making it a large-cap company. As of 3:30 p.m. IST on 14 January, the stock was trading at a market price of Rs. 1,260.90. According to the NSE, the stock reached a 52-week high of Rs 1,273.90 on October 6, 2021, and a 52-week low of Rs 838.00 on January 22, 2021.
The brokerage has claimed in its research report that "On a favourable base (+3% YoY in Q3FY21), private life insurers continue to report strong individual APE growth at +28% (2- year CAGR at 14%). The savings business (particularly ULIP) appears to have grown more strongly compared to the protection business, as reflected in the non-single premium sum assured/premium ratio moderating 3% YoY to 27.6. While mortality claims for life insurers subsided in Q3FY22 on account of lower COVID-related deaths, we remain watchful of any impact of the Omicron variant in future quarters. We raise our FY22E/23E VNB forecasts for SBILIFE by 4.4%/4.3% to factor in exceptional growth reported in Q3 and maintain a BUY rating with an increased target price of INR1,530 (21x Sep23 VNB + 2.9x Sep-22 EV)."
The above stocks have been picked from the brokerage report of HDFC Securities. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.