Over 25 Stock Ideas For Mahurat Trading 2020

With Diwali around the corner, NSE and BSE have announced that the two exchanges will hold the 1-hour Mahurat trading session on 14 November, the day of Laxmi Pujan.

While companies were affected by the COVID-19 related lockdown disruptions and eventual decline in consumer spending, many have shown signs of a gradual recovery in financial results of the September-ended quarter. In fact, some companies like those in the IT (information technology), pharma and telecom sectors have benefitted from the disruptions.

NSE and BSE Mahurat Trading timings on Saturday, 14 November 2020

• Block deal session: 5:45 pm to 6:00 pm
• Pre-open session: 6:00 pm to 18:08 pm
• Trading session: 6:15 pm to 7:15 pm
• Call auction: 6:20 pm to 7:05 pm
• Post-closing session: 7:25 pm to 7:35 pm

The exchanges will remain closed on the following Monday, 16 November for the occasion of Diwali Balipratipada. Normal trading would resume from Tuesday.

MCX has also announced its date and timings for commodities trading.

What is the Mahurat Trading?

Exchanges in India, including NSE and BSE, hold special trading on the occasion of Diwali and this is called the Mahurat Trading session. The session, which lasts for an hour, is considered auspicious to make purchases and begin the traditional Hindu accounting year, called Samvat. It is believed by the Hindu community that buying small quantities of shares on this occasion can bring the blessings of Goddess Lakshmi, the goddess of wealth and prosperity, throughout the Samvat year.

Historically, the market momentum is positive during the Mahurat Trading and is become a symbolic ritual for the Indian trading community for over half a century. Stocks bought during this time are generally held for the long term by investors. Long-term investment in quality stocks is the key to wealth creation using equities.

If you are also looking for stock investment ideas for Mahurat Trading in Diwali 2020, brokerages have disclosed their picks:

ICICI Securities' picks

1. Zydus Wellness (ZWL)

Target Price: Rs 2,300

Zydus Wellness operates in the niche wellness & health product segments with brands like Sugar Free, Nutralite, Everyuth, Heinz, Glucon-D, Complan, Nycil and Sampriti.

2. SBI Life Insurance (SBILIF)

Target Price: Rs 1,000

SBI Life Insurance has 20% market share in the insurance business in India. ICICI Securities said that continued focus on business growth and improvement in product mix has remained the core strength of the company. In terms of business growth, SBI Life has reported highest NBP (new business profit) growth among top private insurers at ~27% CAGR in the last four years, thereby increasing its market share.

3. Ramco Cements (RAMCEM)

Target Price: Rs 1,000

Chennai-based Ramco Cements is an efficient player in South India with total capacity of 18.5 MT (including 2 MT in the east). With a strong business profile and healthy market share, the company's volumes have grown faster than the respective regional growth in the past three years, the brokerage said.

4. Mahindra Logistics (MAHLO)

Target Price: Rs 430

Mahindra Logistics is among the largest 3PL (third-party logistics) players in the country. It operates an asset light business with investment in assets being done by ~ 1,500 business partners. ICICI Securities said that the 3PL industry is expected to grow higher than logistics industry amid a change in perspective of manufacturers whereby higher proportion of logistics operation is being outsourced to specialised 3PL players like MLL.

Mahindra Logistics has seen a sharp recovery in Q2FY21 that has enabled it to reach pre-Covid levels before peers, the brokerage added.

5. Cipla Ltd (CIPLA)

Target Price: Rs 900

With 46 manufacturing facilities spread globally, Cipla has a gamut of therapeutic offerings ranging from simple anti-infectives to complex oncology products. With ~5% market share, Cipla is the third-largest player in domestic formulations market. Domestic formulations comprise ~39% of FY20 revenues.

Yes Securities' picks:

1. HDFC Ltd

Target Price: Rs 2,500

The brokerage said that with improved funding availability, the company has started pruning the excess liquidity being carried and this will reflect positively on the margins. Value creation by banking, insurance and asset management subsidiaries and associates will continue as well, it said.

2. ICICI Bank

Target Price: Rs 519

Post the Rs 150 billion equity capital raise, CET‐1 ratio of the bank stands increased to 15.6%. Yes Securities believes that augmented capital base positions ICICI Bank strongly for future growth. The core bank trades at 1.4x FY22E P/ABV; insurance and AMC subsidiaries will continue to accrete value.

3. Kotak Mahindra Bank

Target Price: Rs 1,949

Yes Bank sees no deterioration in RoA (return on assets) for the current year despite higher provisions and expect profitability to improve to a lifetime high in FY22. The private bank has underperformed in recent months and its valuation premium to HDFC Bank has dissipated.

4. Mahindra & Mahindra (M&M)

Target Price: Rs 800

The brokerage expects improved financials with improved performance in core business with FES segment doing well and better automotive segment, better mix and exit from loss-making subsidiaries.

5. Kansai Nerolac Paints

Target Price: Rs 700

Yes Securities believes that lower raw material prices to aid in higher gross margins and most part of negative impact on account of lower absorption of fixed costs would be negated by higher GM's for remaining part of the financial year 2020-21. The brokerage expects ROE (return on equity) to move to reach 17% by FY23E.

6. Alembic Pharma

Target Price: Rs 1,180

While factors like robust execution record, a clean history in terms of FDA compliance and improving FCF profile are positive but the brokerage feels that known factors, solid earnings delivery over next 2‐3 years will act a persistent trigger.

7. Radico Khaitan

Target Price: Rs 568

Yes Securities believes that the company is well placed to grow revenues by 12‐15% CAGR and margins in mid-high teens. It will be helped by volume growth in the premium segment, high margin exports and price hikes by some states with supportive ENA prices, it said.

8. Manappuram Finance Limited

Target Price: Rs 225

The brokerage noted that the increasing share of gold loans and its rising profitability fortifies the company's already strong capital and funding/liquidity position. It estimates 10-12% consol AUM CAGR over FY20-22, which is satisfactory in the current scenario and would be better than most other NBFCs. RoE delivery is likely to be sturdy at 24-25% in FY21/22 with improving capitalization levels.

9. TCI Express

Target Price: Rs 1,036

TCI Express is one of the better placed express player in the industry with its sturdy position in the express industry, higher contribution from B2B clients and focuses on growing SME sector, Yes Securities said. Also, its return ratios remain the best in the industry.

10. CRISIL

Target Price: Rs 2,600

The brokerage is positive on CRISIL with its strong foothold in the rating industry, above-average growth rate compared to GDP, presence into risk-free non-lending business, high entry barriers, asset-light business with a debt-free balance sheet, better pricing power compared to peers due to a stronger brand and high profitability ratios.

11. Redington India

Target Price: Rs 182

Yes Securities is positive on the company backed by a) track record of growth, b) cost optimization initiatives, c) better collection management, d) relatively de‐risked business model with different offerings, presence across different geographies and brands, and e) its focus on being cash flow positive.

12. KPR Mills

Target Price: Rs 1,105

Due to the integrated nature of operations and better competitiveness, the company has delivered ROE and ROCE of 20 percent in FY20 with EBITDA margins of 20 percent, the brokerage said. The stock is trading at an attractive valuation of 8.5x FY23E P/E and 5.7x FY23E EV/EBITDA, it added.

Sharekhan's picks

1. Tech Mahindra

Sharekhan prefers Tech Mahindra on the back of anticipated improvement in growth in the enterprise segment, 5G opportunity, and scope for a rise in margins. It expects TechM's USD revenue/earnings to clock a CAGR of 10.5%/15.5% over FY2021-FY23E. Meanwhile, any hostile development with respect to the current visa regime would affect employee expenses. Further, a delay in the pick-up of 5G-related spends would affect revenue estimates.

2. Kotak Mahindra Bank

The bank's strong operating metrics, prudent and agile leadership team, well-capitalized balance sheet, as well as the quality of its subsidiaries provide long-term value. The recent capital issue provides the bank with the wherewithal to pursue inorganic opportunities as well, Sharekhan said. It added that a prolonged lockdown and consequent rise in NPAs can pose risks to profitability.

3. Bharti Airtel

Sharekhan is positive on Bharti Airtel, considering its strong EBITDA performance, continued growth in 4G subscriber base and potential improvement in free cash flows. However, increasing competition could keep up the pressure on realisations, it said. However, any slowdown in data volume growth could affect revenue growth.

4. Larsen & Toubro (L&T)

L&T is better poised to ride any uncertainties owing to multiple levers such as a strong business model, diversified order book, and a healthy balance sheet. The brokerage expects L&T revenues and PAT to clock a CAGR of 11 percent and 22 percent over CY2021-23E.

5. HDFC Life Insurance Company

The insurance sector has huge growth potential in India, and capable players like HDFC Life, armed with the right mix of products, services and distribution mix, are likely to gain disproportionally from it, Sharekhan said. A well-diversified product bouquet, strong brand image, and strong metrics make HDFC Life attractive, it added.

6. Asian Paints

With a sturdy balance sheet, consistent cash flows and cheery dividends, Asian Paints remains one of the better picks among consumer players with a 14 percent earnings CAGR over FY20-23E, the brokerage said. The stock is trading at 52x its FY2023E.

7. Amber Enterprises

With a uniquely scalable and sustainable business model, Sharekhan expects Amber to clock a 32 percent/54 percent/87 percent CAGR in Revenue/EBITDA/PAT over FY2021E-FY2023E led by enhanced capacity, increased product offerings and customer penetration coupled with healthy demand outlook for the electronic outsourcing industry.

8. APL Apollo Tubes

A superior growth outlook, robust RoE (return on equity) of 23-25 percent, and strong balance sheet make it a strong re-rating candidate, Shareskhan said. The brokerage expects EBITDA/PAT to register 25 percent/34percent EBITDA/PAT CAGR over FY2021E-FY2023E.

9. Info Edge India

With its dominant market share and strong cash-flow generation capabilities, any slowdown in the economy would provide the company an opportunity to gain market share among close peers, Sharekhan said. However, intense competition from both international and domestic players in the recruitment business could affect the growth trajectory and margins of the recruitment business, it added.

10. Ipca Labs

Strong revenue growth and margin expansion, almost near-nil remedial costs, a sturdy balance sheet and healthy return ratios augur well for Ipca, the brokerage said. Sales and PAT are expected to grow by 18 percent /41 percent CAGR for FY2020-FY2022.

11. SRF Limited

Sharekhan expects calibrated expansion in the right segments (chemicals and packaging films) will help the company deliver a healthy revenue/PAT CAGR of 16 percent/22.6 percent over FY2020-23E.

12. Tata Consumer Products

The integration of Tata Chemical's consumer business with Tata Consumer Products heightens sustainable revenue and PAT growth visibility owing to multiple growth levers, Sharekhan said.

Disclaimer

The article is purely informational and is not a solicitation to buy, sell in securities mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.