Diwali Picks 2023: From Shares Below Rs 100 To Rs 2,300, Top 10 Stocks To Buy; HDFC Bank, RIL, Infosys In List

With the festival of light, and Diwali nearing to celebration in India, experts have also started to recommend stocks that are attractive to buy. Analysts at brokerage, Ajmera X-Change recommended 10 stocks to buy this Diwali as they believe these offer a margin of safety and are leaders or have the potential to outgrow their industry. As per past data, Ajmera's Diwali picks have outperformed Nifty 100, and the latest picks are expected to give potential returns of up to 15% ahead.

Ajmera's note also highlighted that the last 24 months have witnessed Global markets correct on the back of geopolitical tension, inflation and rising interest rates. However, the Indian market after a sharp correction last year, quickly recovered lost ground and touched new highs in 2023. Interest rate hikes and inflation on the back of geopolitical tension have continued to rise contrary to the market expectations of a top-out by early 2023.

It added, "Although India through its timely monetary policy measures has been able to keep a lid on the rising inflation and the last few months CPI data is an indication of the same. However, it was our endeavour while putting this note to focus on sector turnaround, emerging sectorial opportunities, earnings, quality of management, execution capabilities and most importantly valuations along with support by technical charts."

Diwali festival will kick start on November 10 and will continue till November 14, 2023. There will also be a one-hour auspicious Muhurat Trading held on November 12 on the day of Laxmi Pujan.

Here are the top 10 picks of Ajmera's analysts Dhruv Ajmera (MSC, E&I), Puneet Shah (NISM Series XV-Research Analsyt), and Kailas Shinare (CA):

1. HDFC Bank:

HDFC Bank has made changes to top management recently post the merger with HDFC Ltd to get the benefit of the merger in terms of cost reduction, better cross-selling of products, NPA Management and deeper branch penetration. Also, its valuation is reasonable having a PE of 23 and P/B of 2.6 FY25 which is one of the cheapest in the private banking sector. It is also trading at its cheapest valuation multiple over the last decade. Thus, the analysts recommend a buy on HDFC Bank.

Notably, HDFC Bank has tested its supply zone near 1650-1700 several times making it a good breakout zone. It has a good support zone near 1480 levels also we can see a spike in volume at current levels.

The analysts have set a target of 1720-1795 for HDFC Bank ahead.

2. Havells India:

The Growth in the basic main business of cables and switchgear is seen at a rate of 25% which has been coupled with improvement in the financial performance of Lloyds which has seen a reduction in losses thereby improving the overall financial position. Havells has now successfully deleveraged itself and stands debt-free.

Also, the Commodity price softening benefits are not passed onto the customers whereas price hikes have been taken on certain products which in turn will help its margin turnaround that has been compressed for the last few years.

Technically, Havells India has given a breakout after consolidating in a descending triangle pattern for over 20 months. Further, it is currently trading at its 200-day exponential moving averages, making higher highs and higher lows which indicates positive strength. Hence, the analysts have recommended buying with a target price of Rs 1565-1650 on Havells.

3. TVS Motors Company:

The stock has witnessed a sharp run-up over the last 1 year or so backed by solid growth in its numbers which justifies its expensive valuation. Going forward, the analysts expect the stock to continue to be valued 26x FY25 backed by industry-beating growth.

TVS Motors' export growth is likely to be in the moderate growth range of 10%, however, the demand is likely to be driven by its new launches and improved availability of its products given the improvement in the availability of chips. Rural markets will continue to do well.

The analysts have set a target of 1795-1890 on TVS Motors. The company has been moving in an upward trend since March 2023, after breaking a descending triangle consolidation.

4. Reliance Industries:

Reliance is the biggest conglomerate with the largest market cap in India. It is dominant in Oil and Gas Sector, Retail, Telecom, and Digital services.

With its traditional Oil and gas business maintaining moderate growth, Reliance expects the next round of disruption and growth to come in through its new-age business verticals such as retail, Financial services and green energy.

The company is trading at 21PE FY25 and EV/EBITDA of 11 FY25. The SOTP method valuation of the Company gives us an upside of 13-15% from the current levels. Thus, we recommend a buy on Reliance Industries, the analysts at Ajmera said.

The target price on RIL ranges from 2575-2710. It has recently made a positive divergence and formed a bear trap at the support zone.

5. United Spirits:

United Spirit is now a debt-free company which will help the company to make strategic acquisitions. Also, the company has sold the non-core brands to Focus on the core brands for growth. Management has indicated a double-digit growth for FY24. It's also likely to witness a demand boost from the current sports event.

As per valuations, United Spirits has the fairest valuation in the sector at 48PE FY2 and we recommend a buy for United Spirits with an Upside of 15%. The target price on the stock is set to range from 1175-1240.

6. Indian Oil Corporation:

Indian Oil also has improved margins in the marketing of petrol, diesel and other lubricant products. The Dividend Yield of the company stands at 3.35% and is likely to stay steady given its dividend payout policy.

Indian Oil is fairly priced at 7.1 PE FY25 and P/B is also 0.8. With steady dividend yield and improvement in margins, IOC becomes well placed in the portfolio as a stable investment. We recommend a buy on this share with 10%-12% upside, the analysts' report said.

The target price ranges from 102 to 107.

7. Marico:

Marico has now diversified into other segments by doing acquisitions in premium segment products like PLIX, Beardo and True Elements which is a potential game changer for Marico in terms of penetration into the urban niche market segment.

The company is Fairly Valued as it is trading at a PE Multiple of 40X FY25 and growth overall is seen at 10-15% CAGR in the next 2 years. So based on the potential growth in the new segment plus sustainability in the current segment and fair valuations, the analysts recommend a buy on Marico with an Upside of 10-15%. The target price ranges from 600 to 620.

8. Infosys:

The recent deal wins with a large MNC Telecom company and recovery in the BFSI & Communication segment revenues will enhance the growth of Infosys and spread across various geographies and coupled with a focus on top strategic clients it will help solidify the growth in revenue across verticals with better margins.

The tech player is well-placed to get more deals. Along with it, the analysts believe it has understated its revenue and margin guidance and is likely to outperform the same. Valuations are also available at multiyear lows as it is trading at a PE of 21.6 X FY25. Hence, the analysts recommend a buy on Infosys. The target price ranges from Rs 1620-1690.

9. Hindalco:

Hindalco is planning a major capex in the next 5 years of approximately $4.4 billion for several projects. The Company has also planned entry into EV Space by setting up a plant for battery making. Domestic Demand for aluminium is going to rise in the coming decade from the sectors of construction, transport, packaging and consumer durables from 4.5 MT to an estimate of 9MT. While Metals as a sector is cyclical, analysts believe the demand for aluminium as a lightweight, recyclable material will see structural demand.

Hindalco is trading at a PE of 10.1X FY2025 and P/B of 1.2 which is a fair valuation compared to its peers. Also, Hindalco is on the verge of becoming net debt-free. While giving buy recommendations, the analysts set a target price in the range of 545-560.

10. Muthoot Finance:

The valuation of Muthoot Finance as compared to its peers in the sector is fairly valued at a P/B of 2.40. Based on the prospective high growth in the loan books, rising base of customers, increase in number of branches and fair valuations compared to peers. Hence, the analysts Recommend a buy on this company.

The company is the largest Gold loan provider in the country. The company also provides other loans, insurance and money transfer services. The target market of the company is micro businesses, SME owners, farmers, traders and salaried individuals.

While recommending buying, the analysts set a target price in the range of 1455-1540.

Disclaimer:

The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.