Fundamental Muhurat Trading Picks: Canara Bank, Godrej, Reliance, Cipla, 4 Others Are Attractive To Invest

With Diwali nearing, traders will be looking to grab the opportunity of buying value-and-wealth-creating stocks on the occasion of Laxmi Pujan which is scheduled on November 12 this year. Generally, this day is significant for market traders as trading in stock exchanges will be allowed for an hour which is called 'Muhurat' trading. The concept of Muhurat trading is that this one hour is considered auspicious for investing in shares during Diwali by a large number of traders and stock brokers. Markets are also generally high during this hour.

Muhurat trading takes place every year, And this year, it will be held on November 12. The timings will be notified in due course by BSE and NSE.

Since Muhurat trading is considered auspicious, Kotak Institutional Equities has recommended buying, accumulating and adding in a host of eight stocks from diverse segments. These include Canara Bank, Cipla, Cyient, Dalmia Bharat, Godrej Consumer, Macrotech Developers, PCBL, and Reliance Industries.

Kotak is bullish on India for Samvat 2080. The brokerage's fundamental muhurat trading picks report said the e recent sharp correction in stock prices may reflect (1) growing recognition of short-term (higher-for-longer interest rates, weak domestic consumption) and medium-term (disruption across sectors) challenges or (2) a 'natural' correction in the market from 'high' levels. In our view, large-cap stocks offer better reward-risk balance given more reasonable valuations versus lofty valuations of most mid-and small-cap stocks.

Further, Kotak's note added, "At 19000, Nifty trades at 19.8x FY24E and 17.6x FY25E. We find the valuations of the Nifty-50 Index to be more reasonable at 17.6x FY25E EPS in the context of moderate earnings growth and muted performance over the past two years. However, we find decent value in a few large-cap stocks and BFSI sector only in light of the rich valuations of most stocks in the consumption, investment and outsourcing sectors. As the broader market valuations are rich, opportunities arising from market correction (esp. recent one) can be used to add quality stocks (with attractive valuation) from long-term investment perspective. Based on our assessment of markets, sectors and stocks, we have identified 8 potential stock ideas which are expected to do well in Samvat 2080. Happy Investing!."

Here's what Kotak Institutional Equities highlight about its 8 fundamental muhurat trading picks.

1. Canara Bank:

Canara Bank reported ~43% yoy earnings growth, driven by ~10% yoy growth in operating profit and ~28% yoy decline in provisions. Also, NII (Net Interest Income) growth was healthy at 20% yoy. The bank's asset quality continued to improve as NPL ratios declined and slippages were at a modest level. Meanwhile, its loan growth was healthy (12% yoy, 4% qoq), and RoE (Return on Equity) has improved over the past few quarters, driven by declining credit cost.

Canara Bank is trading at a discount to PSU bank peers. Hence, Kotak said, Maintain BUY; Fair Value of Rs425 (Rs400 earlier).

2. Cipla:

According to Kotak, Cipla scores a hat-trick with strong performance in Q2FY24, for the third consecutive quarter. The company also increased overall EBITDA margin guidance from 23% earlier to 23-24% with a bias toward the higher end.

Despite the regulatory setbacks, the brokerage believes Cipla to post a robust 20% EPS CAGR over FY23-26E. Like Cipla's sharpened focus on domestic Rx, US generics, and strong delivery of cost efficiencies.

However, any potential stake sale by the promoter group remains a key monitorable. Kotak said, "We raised our US sales and margin assumptions, leading to a 1-3% upgrade in Cipla's FY24-26E EPS," adding, "We roll forward to September 2025E to derive an FV of Rs1,320 (Rs1,290 earlier). We reiterate our ADD rating on Cipla."

3. Cyient:

Cyient has progressed well to increase mix of high growth services (digital & embedded engineering) & diversifying industry and geo exposure. Cyient expects sustained demand in aerospace, sustainability and automotive.

Also, realign sales incentives & org structure, enhance capabilities & shift toward higher-growth verticals & offerings would drive sustained growth profitability.

Furthermore, Cyient is expected to continue to give hefty dividends to its shareholders. Kotak said, "The company will continue to return 50% of net profit as dividends."

Hence, valuations are attractive at 19x FY25E PE. Kotak recommends buy with a target price of Rs 2,000.

4. Dalmia Bharat:

Kotak expects the company's volumes to see strong growth led by a combination of organic and inorganic expansions over FY23-26E. Further, it estimates EBITDA of Rs1,135/Rs1,250/ton in FY24/25E vs Rs955/ton in Q2FY24 for Dalmia.

Dalmia Bharat continues to enjoy strong balance sheet with limited leverage. Kotak said, "We expect leverage to remain comfortable despite increase in capex. Healthy operating cashflow to support growth capex."

Adding, Kotak's note further said, "We see attractive risk-reward given improved capital allocation, growth visibility and inexpensive valuations. Our Fair Value is Rs2,350/share at 8x EV/EBITDA on December 2025E."

5. Godrej Consumer Products:

Godrej's management turnaround initiatives have started to yield results, partly aided by favorable externalities (correction in palm oil prices and steady HI season). The company delivered double-digit volume growth in Q1, aided by a good Household Insecticide. Notably, the underlying performance of international businesses (both Indonesia and GAUM) also improved on expected lines.

The FMCG player has retained high-teen EBITDA growth guidance in FY24E, while it plans to invest Rs900 cr in capex over 18- 36 months to expand capacity by ~20%.

Despite two consecutive DD prints, management believes that more measures are needed to ensure sustainable HI growth. Kotak's note said, "We value GCPL at 45X September 2025E PE." Hence, the brokerage recommends "Add" with a target price of Rs 1,135.

6. Macrotech Developers:

Macrotech is seen to be well-placed to gain further market share with diversified geographical presence. It continues to deliver well on all aspects, with new business development offering visibility for future launches and consequent sales.

Lodha expects to maintain a CAGR of 20% in pre-sales over FY23-26E. Further, Kotak highlighted that Lodha is focused on reduction in net debt - 1x Net debt/OCF & 0.5x Net debt/Equity. Also, that its residential portfolio contributes 72% of the GAV. Thereby, Kotak recommended 'Add' with a target price of Rs 840.

7. PCBL:

Higher specialty black sales will give PCBL stability & support the margins, in Kotak's view. PCBL commissioned, final phase i.e., 84,000 MTPA of 1,47,000 MTPA in Chennai facility, and further secured 2 patents for oxidized grade carbon black and surface modified carbon black.

The management has guided for 12-13% volume growth CAGR over 5-6 years. Hence, Kotak said, "We recommend BUY (earlier ADD), with revised FV of Rs260 (Earlier Rs 179)."

8. Reliance Industries:

As per Kotak, outlook for each of RIL's key segments remains robust. The brokerage believes will shift to 5G monetization, given R-Jio's 5G rollout is nearing completion. Recent Jio AirFiber (FWA) launch is the first step. With rising subscriber base & consumer engagement on 5G, tariff hike soon.

In the telecom segment, Jio's subscriber net adds accelerated to 1.12 cr in Q2FY24 (vs 0.92 cr qoq). While in retail business, after 3,000 store additions in FY23 and 555 in Q1, Reliance added another 471 stores in Q2 to take total to 18,650 stores (+12% yoy).

Also, KG-D6 production up to ~2.6-2.7 cr mscmd in Jun'23, likely to ramp up to 3 cr mscmd.

"Our SoTP (Sum-of-the-parts) based fair valuation of RIL is Rs2,725 per share," Kotak said.

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.