Diwali 2023 Stock Picks: Almost all the investors have started preparations for Muhurat trading on the day of Diwali. This year, the Indian domestic equity market reached new highs in 2023. For the first time, frontline index Nifty 50 crossed the 20,000 mark. Whereas the broader index Nifty Mid saw a gain of 30 percent and Smallcap saw a gain of 36 percent. According to market experts, resilient economic conditions, healthy corporate earnings, foreign capital inflows and retail participation propelled the market. In this, equities were also supported by the softening of inflation and expectations of global interest rates reaching their peak in the last few months. Elections are going to be held in many states this year. At the same time, Lok Sabha elections are to be held in May 2024. According to Mint report, domestic brokerage firm Motilal Oswal Financial Services expects Nifty earnings to maintain its growth at 18 percent CAGR or compound annual growth rate during financial year 2023-25. According to domestic brokerage firm Motilal Oswal Financial Services, Nifty’s earnings are expected to maintain its growth at 18 percent CAGR or compound annual growth rate during FY 2023-25. Nifty is trading at 12-month forward P/E of 17.6x, which is 13 per cent lower than its 10-year average.
Diwali 2023 Stock Selection by Motilal Oswal
Brokerage firm Motilal Oswal has released its 10 Diwali stock picks for Samvat 2080. Motilal Oswal has selected quality stocks that have strong fundamentals and are well positioned to deliver good returns for investors in the next one-year time frame.
State Bank of India (SBI): Gain: 22 percent; Target price: ₹700
SBI has strengthened its balance sheet by making higher provisions. It increased its PCR (including two) to 92 per cent in 2QFY24 and maintained high (~99.5 per cent) provision coverage on corporate NPAs. Among PSU banks, SBI remains the best bank with healthy PCR, Tier I of ~12 per cent, strong liability franchise and better operating profitability.
Titan: Gain: 19 percent; Target price: ₹3,900
With 7 percent market share in the jewelery industry, Titan is at the forefront of growth among organized players. Emerging businesses, fragrances and fashion accessories and Indian apparel wear are expected to register double-digit growth.
M&M’s: Gain: 19 percent; Target price: ₹1,770
M&M has the highest exposure in the rural market (about 65 per cent volume), which is likely to improve considering rural cash flows. M&M’s restructuring of its SUV business to maintain its DNA and brand positioning has led to a strong surge in demand for its SUVs. Motilal Oswal said that we expect 16 percent volume CAGR in passenger UV during financial year 2023-25.
Cipla: Growth: 21 percent; Target price: ₹1,450
Cipla’s strong pipeline with complex products (inhalers, peptides, injectables, etc.) should drive continued growth in the US generic segment. With continued outperformance in the branded generic market (India/South Africa), it will be able to generate 19 percent CAGR earnings in FY 2023-25.
Indian hotels: Growth: 22 percent; Target price: ₹480
RevPAR (revenue per available room) growth for Indian hotels has been strong in October 2023, and is displaying a healthy demand visibility for November 2023. Management has guided for double-digit RevPAR growth in FY24. Favorable demand-supply scenario and increase in foreign tourist arrivals should increase occupancy going forward.
Dalmia India: Gain: 33 percent; Target price: ₹2,800
Dalmia India is benefiting from a strong rise in cement prices, especially in the east, where prices have increased by ₹40-50/bag and demand has improved. Motilal Oswal said we expect ~11 per cent volume CAGR over FY20-26, and ~11 per cent volume CAGR in FY20/FY25/FY26 due to reduction in OPEX (operational efficiencies and moderation in fuel prices). Estimate EBITDA/t of ₹1,045/1,150/1,250.
Keynes Technology: Gain: 26 percent; Target price: ₹3,100
Kynes is a leading end-to-end and IoT-enabled integrated electronics manufacturer with strong growth in order book (96 per cent CAGR in FY20-23) and high share in box builds (~40 per cent in 1HFY24). Motilal Oswal said that we estimate 41 percent/56 percent CAGR in revenue/adjustment. PAT in FY13-FY26 is driven by healthy order book and improved margin profile (increasing mix of higher value orders).
Raymond: Lead: 38 percent; Target price: ₹2,600
Raymond has strengthened his leadership team and restructured his group over the last 2-3 years. Balance sheet strengthened due to demerger and capital investment by promoter. It has a collection of established brands like Raymond, Park Avenue, ColourPlus, Ethnics, which it plans to grow through a capex-light franchise mode.
Spandana Spurti: Increase: 22 percent; Target price: ₹1,100
Spandana Spurti has moved from consolidation to growth phase to drive customer acquisition-led growth, with the addition of 350k borrowers in 2QFY24 (up 180 per cent YoY). With strengthened processes, it is now ready to take advantage of the strong opportunity in the MFI sector. Motilal Oswal said that we estimate 34 percent AUM CAGR in FY 2023-26 and ROA/ROE of 4.4 percent/17 percent in FY 26.
Restaurant Brands Asia: Gain: 16 percent; Target price: ₹135
Restaurant Brands Asia has worked on its products, new categories and price segments over the past few years to attract traffic. Changes may be seen in business in the next 2-3 years. According to Motilal Oswal, with aggressive store growth (17 per cent CAGR over FY2023-26), Restaurant Brands Asia is well positioned to deliver a strong 26 per cent/45 per cent CAGR in revenue/EBITDA over FY2023-26 for the Indian business. Is in position.
Disclaimer: The views and recommendations given above are those of individual analysts or broking companies. We advise investors to check with certified experts before taking any investment decision. Investing in stock market is subject to market risk. Invest after thinking and getting information.