World Cup Portfolio: 11 dream stocks to pick

The cricket world cup is here again. But unlike the damp green tops that normally greet batsmen in England, the pitches this time around seem to be soaking in sunshine, promising many a run fest. The mood is equally sanguine in the Indian markets, with the ‘Captain’ PM Modi ardently padded up for his second innings. And so, IIFL Institutional Equities takes a shot at selecting a team of market beater stocks, not only for the month-long tournament but perhaps till the next elections.

These are IIFL's high alpha generators thumping the new ball in powerplay on sentiments, and once they get their eye in, capitalising on early signs of a cyclical recovery.

Larsen & Toubro (L&T)

This infra giant, even in a challenging environment, has perfected its technique through an RoE & cashflow-focussed approach to merit a top order inclusion. Its strong balance sheet coupled with a large order book makes it conducive to an aggressive stroke-play towards efficiently executing complex and large projects.

State Bank of India (SBI)

Virtually plagued into retirement with NPA injuries, the nation’s biggest bank is now back with much gusto, mainly buttressed by clarity on trends of stressed asset formation and imminent resolution in certain accounts in NCLT. Its appetite to score with higher RoA, going forward, has returned, with several levers to NIM expansions, better LDR, stable CASA ratio, and redeployment of balance sheet liquidity into loans.

Equally dexterous with both, the bat and the ball, these players can lend the final momentum to innings and provide those crucial bowling breakthroughs. Also, if there is a cyclical downslide, they can hold the innings together in a solid partnership with less aggressive players, as their earnings come from multiple sources.

Reliance Industries (RIL)

An Oil & Gas batsman, a telecom tearaway fast bowler, or an eagle-eyed Retail fielder- this is truly the three dimensional cricketer every selector dreams of. RIL can merit selection in the team on any parameter. Its refining & petrochemical business will continue providing stability to the lower order; JIO will keep hitting the deck hard, and troubling the batsman as it heralds towards an EV of US$100bn, decimating most competition.

Tata Global Beverages (TGBL)

For the past few years, TGBL has been a bits-and-pieces dasher, appearing in small global T20 leagues, but not really unearthing its mojo. However, it has been identified by the Tatas as their protege for becoming the consumer face in India. It is highly ambitious and shows a lot of faith in the rookie. With 75% of the consolidated business coming from India, a re-rating is imminent.

This includes a no-frills safe option that does not let anything slip by. It holds on to chances offered in an upcycle and protects the portfolio if the middle order crumbles.

ICICI Lombard (ILOM)

The disciplined conservative style makes this player safe, as a house. New changes in playing conditions brought about by regulations have favoured ILOM’s style of play and allowed it to focus on profitability over growth. ILOM is a good long-term compounding story, to stand solidly behind the stumps, and will keep accumulating the runs and dismissals from improving GDPI/combined ratios.

The pundits have divined that the World Cup will be won not by the team with the best batting, but with the finest bowling. In a sentimental upcycle, with most positives seemingly priced in, the same could be said about the guardians of the portfolios.

Bajaj Finance (BAF)

Undoubtedly among the world’s finest players. In times when nagging regulations and conditions, with liquidity squeeze and various headwinds, have reduced its NBFC peers to bowling machines lying butchered all around the park, BAF has not deviated from its core strength. Its slower-delivery, HFC, is also improving well, adding another dimension to its lethal repertoire.

RBL Bank (RBK)

From being a one dimensional pitcher, RBK is likely to witness a sustained increase in scale and profitability for the next few years and graduate into a wholetime fast bowler, set to rub shoulders with the big banks. A well-set management team, clearly articulated strategies, focus on sectors with high-growth potential, ability to acquire adequate deposits and access to equity capital help it in clocking a consistent high pace (growth).

Tech Mahindra (TechM)

If facing an aggressive rising dollar, TechM is the ideal bowler to pitch the perfect yorker. But this performer is not just a defensive, onedimensional, death-over specialist, as growth led by telecom should drive a re-rating, with TechM still being at a discount to peers.