1 IT And 3 Banking Stocks To Buy By Angel One For April 2022

Angel One is bullish on the banking stocks even as the consolidation shall rule in the months to come. This is as the credit offtake is seen to increase as well as the NPA situation is far behind us. Similarly, Angel One is of the view that the IT and consumer staples such outperform given the lower impact of energy costs on margins.

So, here are the top fundamental picks from the IT and Banking space that investors can consider for investment:

HCL Technologies

The company is among the 4 leading IT majors in the country and offers a range of services such as ADM, Enterprise solutions,
Infrastructure management services etc. IT services witnessed robust growth of 5.3% QoQ CC in Q3FY22. New deal
TCV at USD 2.1bn was up by 64% YoY and included many large deals. Strong
deal wins will help drive growth in the services business, which should make
up for any shortfall in the product business due to the delays in deal signing.

Considering the CMP, the stock is trading at a significant discount in comparison to TCS, Infosys and offers substantial given market leadership status in infrastructure management.

For the stock, the company has suggested a target price of Rs. 1466 and this at the recommended price of Rs. 1196, means an upside of 23%.

Federal Bank

At the end of Q3 FY2022 the bank had advances of Rs. 1.41 lakh cr. and deposits of Rs. 1.75 lakh cr. The bank predominantly has a secured lending book which helped limit asset quality issues during the Covid 19 pandemic. The company's third quarter has been outstanding with NII as well as advances increasing. Provisioning for the quarter has gone lower and consequently PAT was up. For the bank, there are expectations that NPA situation shall improve further. "We expect the Federal bank to post NII/PPOP/PAT CAGR of 22.8%/23.7%/23.2% between FY2020-23 and remain positive on the bank", said the brokerage.

HDFC Bank

This banking major has also been a given 'Buy' for a target price of Rs. 1859. The company has a loan book of Rs. 12 lakh crore in H2Fy2022 and deposit of Rs. 14 lakh crore. The bank commands a well spread out asset book with appx. 54% being accounted by the wholesale segment. The management held that there will be maximum 10-20 bps impact on asset quality due to the restructured pool. "Given best in class asset quality and expected rebound in growth from FY2023 we are positive on the bank given reasonable valuations at 2.9xFY23 adjusted book which is at a discount to historical averages", adds the brokerage.

AU Small Finance Bank

The leading SFB has an AUM of Rs. 40181 crore at the end of Q3fy22. Wheels (auto) and SBL-MSME segment
accounting for 37% and 39% of the AUM respectively
AU continued to report very strong numbers in Q3FY2022 as GNPA/ NNPA reduced by 56/36bps QoQ to 2.60% and 1.26% of advances. Restructured advances at the end of the quarter also declined to 3.6% of advances. The bank posted NII growth of 29.6% for the quarter on the back of strong advances growth of 32.6% YoY while NIMs for the quarter stood at 6.3% "We expect AU SFB to post robust NII/PPOP/ PAT CAGR of 21.7%/25.1%/26.4% between FY2020-23 on the back of AUM CAGR of 23.6%. reducing cost of funds will also help NIM expansion going forward. We believe that the worst is over for the bank and expect continued improvement in asset quality in FY2023 which should lead to a rerating", adds the brokerage.

Stock	Price at recommendation	Target price	Upside
HCL	1196	1466	23%
Federal Bank	98	135	37%
HDFC Bank	1607	1859	16%
AU Small Finance Bank	1312	1520	16%

Disclaimer

The stocks are taken from the April top stock picks by Angel One.