Samvat 2081: Diwali picks from Kotak Sec, HDFC Sec, Nirmal Bang, JM Fin

Here's a list of top stock picks by select brokerages for Samvat 2081

Samvat 2080 has been a year of constant fresh highs for the key benchmarks BSE Sensex and NSE’s Nifty50, as both created many fresh lifetime highs during the year, buoyed by a resilient and one of the fastest growing emerging economies, steady earnings, a rate cut by the US Federal Reserve and a strong splurge of domestic flows. 

 

The BSE Sensex created a fresh high of 85,978.25 on September 27, 2024, while the NSE’s Nifty50 also climbed a new peak on the same day, reaching 26,277.35 level. Both gained around 25 per cent during Samvat 2080. 

 

The benchmarks have reached new summits, despite hurdles of a surprise in 2024 general elections, ongoing tensions in the Middle-East region, India-Canada spat escalation, and valuations concerns in small and midcap space. However, the recent trend of foreign institutional investors turning net sellers of Indian equities for cheaper markets in China and Hong Kong remains concerning. 

 

 

Further, the dream rally may be entering a phase of consolidation, analysts say, with the outlook for Samvat 2081 to be further guided by US Presidential elections, Indian state elections in Maharashtra and Jharkhand, ongoing war in West Asia, crude oil prices, earnings trajectory and fundamentals of Indian equities. 

 

Against this backdrop, here’s a list of top stocks to buy during Muhurat Trading 2024 today: 

 

Kotak Securities

 

Aadhar Housing Finance

CMP: Rs 439

Target price: Rs 550

Time: 12 Months 

Rating: BUY

Upside: 25%

 

Aadhar Housing Finance is a large affordable HFC. (Rs 21,100 cr of AUM in FY24).  The company has a 7 per cent market share in the affordable segment.  It has a long track-record, well-diversified geographical presence and customer profile.  Its multipronged expansion and appraisal strategy will drive 21 per cent AUM CAGR (FY24-27E).  Stable margins and improving leverage will accelerate RoEs back to high-teens.  Company stands out versus most peers due to a larger balance sheet, longer vintage and seasoning.  Company has a geographically diversified AUM mix with no state contributing more than 15 per cent.  Company has reported strong asset quality performance over the years.  We maintain BUY rating and RGM-based FV of Rs550; at our FV, the stock will trade 3.1X book and 20X earnings June 2026E.

 

Axis Bank

CMP: Rs 1197

Target price: Rs1500

Time: 12 Months

Rating: BUY

Upside: 25% 

 

Business execution is on expected lines, with a focus on the GPS strategy to build a solid franchise. On deposits, management held its view that the initiatives taken are granular and focused, but they would deliver the desired outcomes to grow faster-than-industry average over time. On loan mix, the bank would continue to build a profitable portfolio and was comfortable delivering better risk-adjusted growth. Axis Bank reported 18 per cent YoY earnings growth due to 25 per cent operating profit growth in Q2FY25. • The asset quality ratio was stable, with slippages stable at 2 per cent. The bank is trading at valuations, which largely address most key concerns. AXSB has one of the best upsides, among large private banks at these levels. We maintain BUY with a FV of Rs1,500 (unchanged), valuing the bank at 2.2X book and 15X FY2026E EPS for RoEs of 15 per cent.

 

FIEM Industries (FIEM)

CMP: Rs 1619

Target price: Rs 2140

Time: 12 Months

Rating: Buy

Upside: 32%

 

Fiem is a leading tier-1 manufacturer of automotive lighting and rear view mirrors, catering primarily to the two-wheeler OEMs.  FIEM is well-placed to benefit from two-wheeler industry recovery.  FIEM has a strong presence with key players in the two-wheeler segment. The company also has a strong presence with two-wheeler EV players.  Rising LED lighting adoption in the automotive segment to aid revenue growth for FIEM. LED based lamps content per vehicle are higher as compared with the halogen lamp.We expect FIEM’s revenue to witness healthy growth over FY24-25E.  We expect FIEM’s earnings to grow at a healthy 19 per cent CAGR over FY24-FY27E.  Debt-free balance sheet; cash flow generation expected to remain robust.

 

Gravita India (GRAV)

CMP: Rs 2514

Target price: Rs 2800

Time: 12 Months

Rating: ADD

Upside:  11%

 

Gravita India is the market leader in India’s emerging recycling industry with a focus on lead recycling. Its operations are spread across India & overseas.  Organised segment’s market share to expand significantly with regulatory tailwinds. Gravita is the best place to capture this opportunity. Penalties on battery OEMs for missing recycling obligations: Boost to recycling. GRAV is increasing its recycling capacity by 72 per cent to 500 ktpa by FY27E. Company is foraying into new recycling segments - rubber/paper/steel/copper and lithium which would drive the revenue growth going ahead.  We expect earnings per share to grow by 31.8 per cent in FY25E & 31.6 per cent in FY26E. 

 

JM Financial 

 

Reliance Industries

CMP: 2,745

Target price: 3,500

Time: 6-12 Months

Rating: BUY

Upside: 28%

 

RIL’s stock price has under-performed broader markets with just 5% returns in CY24YTD versus 15 per cent return for Nifty-50. We believe that this under-performance could reverse, supported by faster-than-anticipated telecom tariff hikes by telcos', recovery in retail business and positive announcements on new energy business. Earnings growth momentum to remain strong across segments and we expect 15 per cent PAT CAGR over FY24-27E. We retain our Buy rating on RIL with SoTP based target price of Rs 3,500.

 

Power Grid Corporation of India

CMP: 329

Target price: 383

Time: 6-12 Months

Rating: BUY

Upside: 17%

 

Valuation is reasonable at 3.1x FY26E P/BV stock offers a healthy dividend yield of 4 per cent, low earnings risk given regulated returns, and most importantly, we see sharp recovery in the transmission capex cycle. We expect the company to maintain a ROE of 18 per cent during FY24-26E. Valuing at 3.6x FY26E P/BV, we arrive at a TP of INR 383.

 

Bajaj Finance

CMP: Rs 7,209

Target price: Rs 8,552

Time: 6-12 Months

Rating: BUY

Upside: 18.6%

 

On the valuation front, Bajaj Finance is at a reasonable level of 4x FY26E BV which is a tad below its long term average. Thus, scope for re-rating on the upside is there considering its healthy ROEs and RoA and growth prospects ahead.

 

ICICI Lombard General Insurance Co Ltd

CMP: Rs 2090

Target price: Rs 2450

Time: 6-12 Months

Rating: BUY

Upside:  17%

 

With COR trajectory on target, comfort on growth as peers align with EOM guidelines, and sorted ownership, the stock has done well during the last 17 months. While the stock trades at premium valuations, we believe it can compound with consistent 17 per cent growth and 17 per cent RoE. It has seen growth slowdown in 2Q after a strong start to FY25, - any seasonal weakness in numbers can be bought into. We have a TP of Rs 2450 valuing the company at ~41x FY26e EPS.

 

Jindal Steel & Power

CMP: Rs 980

Target price: Rs 1,150

Time: 6-12 Months

Rating: BUY

Upside:  19%

 

JSPL’s strategic expansion would augment its crude steel capacity by 65% to 15.9 million tonnes and enrich its product mix. Also, the company is strengthening raw-material integration and increasing the share of VAPs which should aid margins. Considering its strong focus on margin expansion, we expect it to achieve INR 15,000 Ebitda/tonne by FY26. With a 0.9x net debt/Ebitda, it has one of the strongest balance sheets among domestic peers. We recommend Buy on JSPL with TP of Rs1,150 (valued at 8x FY26E EV/Ebitda).

 

HDFC Securities

 

Bank of India

Buy range: Rs 96 - Rs 106

Target price: Rs. 132 

Time: 12 Months

Rating: Buy

Upside: 37.5%

 

BoI boasts a strong capital adequacy ratio, improved NIMs, and enhanced asset quality, evidenced by lower gross and net non-performing assets (GNPA & NNPA). Bank is trading at P/B 0.6x FY26E ABV, which is an attractive entry point. We expect the valuation to improve given improved financials and better outlook. We recommend investors to buy the stock in the Rs. 96-106 band for a target price of Rs. 132 (0.75x FY26E ABV) till next Diwali. 

 

JK Lakshmi Cement

Buy range: Rs. 738 - 819

Target price: Rs. 936

Time: 12 Months

Rating: Buy

Upside: 27%

 

We expect the cement demand to pick up pace by H2FY25. Taking into consideration the capacity expansion and strengthening operational performance, we expect the company to report a healthy performance in the coming years. We expect revenue/EBITDA/PAT to increase at a CAGR of 7.6 per cent/15.7 per cent/13.9 per cent over FY24 to FY26E. We believe investors can buy the stock in Rs. 738-819 band (15x FY26E EPS) for a target of Rs 936 (18x FY26E EPS) till next Diwali.

 

Jyothy Labs Ltd

CMP: Rs. 480-533

Target price: Rs. 600

Time: 12 Months

Rating: Buy

Upside: 25%

 

JLL has successfully undergone a substantial transformation from a promoter-driven, south-centric, singleproduct entity to a professionally managed, and multi-product company operating nationwide. As a result, the company’s revenue has grown at 12.7 per cent CAGR between FY20-24. Margin expansion is being driven by better product mix and improving operating efficiencies. We expect Revenue/EBITDA/PAT CAGR of 12 per cent/15 per cent/17 per cent between FY24-26E. We recommend a buy on Jyothy Labs in the band of Rs 480-533 for target price of Rs 600 (43.75x FY26E EPS) till next Diwali.

 

L&T Finance

Buy range: Rs 153-170

Target price: Rs 219

Time: 12 Months

Rating: Buy

Upside:  43%

 

LTF, over the years has been constantly reducing its dependence on the wholesale lending business by aggressively expanding its well diversified retail financing business. We envisage a 18 per cent growth in advances over FY24-FY26. We believe the stock is available at reasonable valuations for a reason of possible asset quality hiccups in wholesale lending though the focus on this business has been falling. We recommend investors to buy the stock in the Rs. 153-170 band for a target price of Rs. 219 (2.0x FY26 ABV) till next Diwali.

 

National Aluminium Company 

Buy range: Rs 198 - 220

Target price: Rs 270

Time: 12 Months

Rating: Buy

Upside: 36%

 

Nirmal Bang

 

Archean Chemical Industries

CMP: Rs 643

Target price: Rs 823

Time: 12 Months

Rating: Buy

Upside: 28% 

 

We expect ACIL to witness topline growth of 16 per cent in FY24-27E led by its existing portfolio as well as upcoming bromine derivative products. It has seen a steep correction in its valuation in the last few months due to weak performance in Q1FY25; however, we remain bullish on ACIL's business model. We assign a PE valuation of 16x to FY27E EPS to arrive at a target of Rs. 823/share.

 

Fineotex Chemical

CMP: Rs 402

Target price: Rs 483 

Time: 12 Months

Rating: BUY

Upside: 20%

 

We have modelled topline growth at 20 per cent CAGR between FY24-26E with operating margins in the range of 27-28 per cent. Based on this, the stock is currently trading at 30x / 24x to FY25E / FY26E EPS. We assign 30x to FY26E EPS to arrive at a target of Rs. 483/share with an upside of 25 per cent over the CMP.

 

Five Star Business Finance

CMP: Rs 872

Target price: Rs 1,165

Time: 12 Months

Rating: BUY

Upside: 34%

 

Five-Star’s strong return metrics (RoA/RoE of 8 per cent/19 per cent in FY25E) and high earnings growth of 27 per cent CAGR over FY24-27E shall be driven by strong AUM CAGR of 28 per cent; stable NIM and cost/income; and subdued credit cost in 0.6-0.8 per cent range. We recommend ‘BUY’ with a target of Rs. 1165 at 4x Sep 2026 BVPS at 10 per cent premium to fair multiple for Home First on the back of higher return ratios of Five Star.

 

Garware HiTech Films

CMP: Rs 3,858

Target price: Rs 4,800

Time: 12 Months

Rating: BUY

Upside: 24%

 

GHFL has increased contribution of value added products from 48 per cent in FY17 to 89 per cent in FY24 resulting in better margins and highly differentiated product portfolio for the company. It is now increasing the capacity of the PPF segment and is seeing strong traction in SCF’s architectural segment which would act as key catalysts for future growth. Moreover, the valuation of 24x its FY2026E EPS looks attractive, considering strong growth prospects and high cash. Hence, we recommend a BUY on the stock with a price target of Rs 4,848 upside of 20 per cent.

 

Jyoti Resins & Adhesives

CMP: Rs 1,470

Target price: Rs 1,786

Time: 12 Months

Rating: BUY

Upside: 21%

 

Decrease in Vinyl Acetate Monomer (VAM) prices over the last few quarters has resulted in sharp increase in Ebitda margins, as the benefit of price decrease has not been passed on to the customers. We believe the same will be incorporated in the years to come which will normalise the margins to an extent. However, we are bullish on the JRAL’s future prospects with robust performance. We estimate revenue growth at 18 per cent CAGR between FY24-26E and expect the Ebitda margin to moderate from 33 per cent in FY24 to 28 per cent over the next few years. We assign 25x to FY26E EPS to arrive at a target of Rs. 1,786/share with an upside of 20 per cent over the CMP.