Centrum Broking expert suggests SBI Life, PFC as long term buys? Know what is working for these counters

Stocks to Buy: With Diwali now behind us and beginning of new Samvat 2079, market experts remain bullish on the domestic equity markets despite global challenges on the economic and geo-political fronts. Brokerage Centrum Broking sees stock specific action during this period and is bullish on certain stocks with a long term view. The brokerage house suggests stocks like SBI Life and PFC for gains with a view of I year.

Stocks to buy: SBI Life | CMP: Rs 1220 | Targets Rs 1360 / Rs 1500 | Stop Loss: Rs 1060 | View: 12 Months  

The SBI Life Insurance Company stock was trading at Rs 1,264.15 on Tuesday and was up 0.52 per cent from the last closing price on Monday. It was recommended at levels of Rs 1220.

The stock has been trading in higher top higher bottom formation in an uptrend currently on weekly charts prices have retraced 50 per cent from the corrective move from the rally from Rs 1000 to 1340.

Prices have formed inside a bullish bar on the weekly time frame. RSI has also formed a positive reversal on the weekly time frame adding further confirmation, the report said.

SBI Life Insurance Company Limited, incorporated in 2001, is a joint venture between the State Bank of India and BNP Paribas. It provides individual and group insurance plans, including traditional and unit-linked plans. Its products cover life, health, annuity, pension, and variable insurance.

Investment Rational - SBI Life is a fast-growing private sector insurance company in India. It is expected to maintain the momentum shown in the last few quarters where it delivered good growth in its APE business and VNB margin also increased. The company has the backing of its peer SBI which provides the largest distribution network.

SBI Life is trading at P/EV of 3x TTM EV per share of Rs 395. Insurance is a under-penetrated market in India and SBI Life is expected to play a strong role.

 Source: Centrum Broking

Stock to Buy: PFC | CMP: Rs.104 | Target Rs 121 / Rs 141 | Stop Loss: Rs 81 | View: 12 Months

The Power Finance Corporation stock was trading at Rs 105.75, down by Rs 0.50 or 0.47 per cent from the Monday closing price. It was recommended at levels of Rs 104.

The stock has been trading in the range from 80 to 160 levels for the last 6 years while currently, prices have taken support near the uptrend line drawn from 73 levels.

The move from 73 to 153.75 has been in higher top higher bottom formation while the current correction seems to be completed the corrective move.

As long as the low is protected there are changes of a trend reversal in the near term. RSI has been moving near 40 levels.

PFC is a leading NBFC company specializing in the area of the Indian energy sector. It is a PSU and has around 20 per cent market share, It has been awarded Maharatna CPSE status by the Government of India.

Source: Centrum Broking

Investment Rational - Power Finance Corporation trades at a very attractive valuation of 0.5x PB (FY22 BVPS of Rs 213) with an ROE of 17 per cent and a dividend yield of 12 per cent (FY22 DPS Rs 12). Most of their NPAs are provided for and any recovery will lead straight to the bottom line. We believe the downside is limited to the stock and the upside potential remains good also very high dividend yield makes it a good buy.