Mar 02 2024, 09:12
7 stocks from financial service sector with upside potential of up to 26%:
In the correction that markets saw in the last four trading sessions, the financial sector stocks, right from banks to other players also declined. But if one looks at the magnitude and the internal breadth of the sector it was much better as compared to a month back when the market correction was started by HDFC bank. There was a bit of profit booking in the PSU bank space, but once again after a small corrective move, things were back with a strong intraday recovery. The way things are panning out in the industry with regulatory tightening taking place, there is very likely that we might see a divergence in performance of different segments of this sector which has the highest correlation with the GDP growth. Better balance sheets and strong franchise are likely to be the differentiating factors. The factor which is largely technical in nature is the shareholding patterns that will also impact the performance of the stocks from this sector.
There have not been many instances where one would have seen PSU banks strongly out performing the private banks. But we have seen that divergence in recent times. Similarly, not many times the street has seen a strong re-rating of the AMC stocks across the board. During this period, housing finance companies have not seen any strong up move. So, each segment of the financial service sector has been following its own path.
It is probably a time when a sort of internal re-rating is going on in this very important part of both the economy and stock markets. One of the triggers is the regulatory tightening which RBI has been doing in one segment after another of the financial service sector. Right from the unsecured credit market to micro finance, each segment of the financial service sector has gone through a health check. It is very likely that this readjustment might continue for some more time.
The following list of stocks (ex-banks) in the NIFTY Financial Services index were given a "Strong Buy/Buy/Hold/Sell" recommendation in the latest Stock Reports Plus report dated March 1st, 2024. Analysts' recommendations are provided using Institutional Brokers' Estimate System (IBES) to provide you actionable insights. You can also check the breakdown of the count of analysts' giving buy/sell/hold recommendations to each stock in the index.
Refinitiv, is a comprehensive research report that evaluates five key components of 4,000+ listed stocks - earnings, fundamentals, relative valuation, risk and price momentum to generate standardized scores. Simple average of the above-mentioned five component ratings is normally distributed to reach an average score. Each stock is ranked on a scale of 1 to 10. A score of 8 to 10 is considered positive, 4 to 7 is neutral and 1 to 3 is given a negative outlook. In addition to scores, the report also contains trend analysis, peer analysis and mean analysts' recommendations.
Earnings rating is calculated based on three factors - earnings surprises, estimate revisions and recommendation changes. Profitability, debt, earnings quality and dividend trends are evaluated under the fundamentals component in the report. Relative valuation has three components price to sales (50% weight), trailing P/E (25% weight) and forward P/E (25% weight). These metrics are evaluated against the overall market, index and company's own historic 5-year averages. Risk score evaluates a series of long term (5-year) and short term (90-day) stock performance measures including volatility, magnitude of returns, beta and correlation. Price momentum rating is based on a combination of two technical performance factors: relative strength (70% weight) and seasonality (30% weight).
List of NIFTY Financial Services stocks ex-banks with 'Strong Buy/Buy/Hold/Sell' recommendations.
NIFTY Financial Services Stocks
Upside Potential - Mar 1, 2024
Search in table
Company Name
Avg Score
Reco
Analyst Count
Upside Potential%
Inst Stake %
Market Cap Type
MarketCap Rs Cr
HDFC Life
6
Buy
30
26.8
24.0
Large
125.395
REC Limited
7
Buy
20.1
19.9
Large
116,467
Aditya Birla Capital
8
Strong Buy
16.0
8.1
Large
47,800
Muthoot Finance
9
Buy
20
15.8
19.2
Large
52,423
Manappuram
10
Buy
17
15.8
27.9
Mid
14,923
Finance
Cholamandalam
Investment &
8
Buy
33
15.7
32.2
Large
91,463
Finance Co
Power Finance
8
Corporation
Strong Buy
8
10.8
22.7
Large
132.219
source:et
Mar 02 2024, 09:20
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