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The domestic stock market witnessed a strong economic environment and liquidity from domestic investors in FY24. The growth momentum in corporate earnings, strong GST collection, capex cycle revival, favourable monsoon and robust domestic demand were positive factors.The benchmark equity index NSE Nifty gained around 25% since Diwali last year. However, the recent surge in crude oil prices, global economic slowdown worry and geopolitical concerns are potential near-term uncertain risks for the overall GDP growth of the economy.

For this year’s Samvat 2081, we have curated a selection of stocks that should help investors in the mid to long term.

Reliance Industries:

RIL is a diversified conglomerate with businesses spread across Oil to Chemicals (Oil Refining and Petrochemicals), E&P, Digital Services, Retail, Media & New Energy. The company plans to grow its revenue from Jio and retail businesses in the next 3-4 years. Additionally, its focus on green energy positions it well for the future.

Earnings growth momentum to remain strong across segments and we expect 15% PAT CAGR over FY24-27E.

The current market price is ?2,745, and our target is ?3,500, which indicates an upside of about 28% over the next 6-12 months.

Power Grid Corporation of India:

India’s largest power transmission company, handling about 45% of the total power generated in the country. It owns and operates most of India’s inter-regional and inter-state power transmission system (ISTS).

With a strong transmission growth opportunity till 2032, PGCIL has a robust capex guidance and regulated business model that gives confidence on earnings visibility.

The current price is ?329, and our target is ?383, giving an expected upside of 17% within 6-12 months.

Bajaj Finance:

Bajaj Finance is a leader in retail lending, offering consumer loans across two & three wheelers, Housing, Gold loans as well as MSME financing. Bajaj Finance has shown consistent growth in assets under management and is focusing on secured loans as per RBI guidelines. It has one of the largest deposit profile amongst the NBFCs at Rs. 63,000 crores. The festive season is also expected to boost demand.

The current market price is ?7,209 and our target is ?8,552—an upside of about 18.6%.

ICICI Lombard General Insurance

ICICI Lombard is the second largest Indian general insurer, behind the public insurer New India Assurance Co., with a market share of 8.6% of FY24 premiums. It is the segment leader in motor insurance space and amongst the private insurers, it is the leader in key commercial segments of fire, engineering, marine & liability and scaling up rapidly in the fast-growing health segment.

The current price is ?2,090, with a target of ?2,450, giving an upside of 17% over the next 6-12 months.

Jindal Steel & Power

Jindal Steel and Power (JSPL) is one of India's leading steel manufacturers with current capacity of 9.6mtpta. The company is undergoing capex to expand its crude steel production capacity by 65% to 15.9mtpa.

The company’s ongoing expansion would also significantly enhance its crude steel capacity, by 65% catapulting it to the fourth largest steel manufacturer in India by FY26.

The current market price is ?980, with a target of ?1,150—an upside of 19%.

National Aluminium Company (NALCO):

NALCO is a PSU with government of India stake at 51.3% as of June 2024. The company is one of the largest producer of bauxite, alumina and aluminum in India with production of 0.46mt/2.12 mt for aluminium/alumina in FY24. The export sales volume of alumina stood at 1.17mt in FY24. NALCO's expansion of its alumina refinery, rising alumina prices, and cost-saving through captive coal mining are expected to drive earnings growth.

The current

Gravita India:

Gravita India is a leading player in India’s recycling industry and currently operates in three verticals i.e. lead, aluminum, plastics and have concrete plans to diversify into other verticals (steel, paper and lithium-ion batteries). The company is one of the largest lead recyclers in India and derives 82% of its EBITDA from lead recycling vertical while aluminum/plastic/turnkey projects contributed 5%/4%/9% of its FY24 EBITDA (Rs343 crore).

Gravita’s capex plans and favorable regulatory changes provide strong growth potential for its recycling operations.

The current market price is ?2,541, and we’re aiming for a target of ?3,068—an upside of 21%.

Macrotech Developers:

Macrotech Developers (popularly known as Lodha) should be able to consolidate its leadership position further, led by its robust sales machinery and healthy mix of premium, mid-income and affordable

projects, coupled with existing tailwinds across the residential cycle. It has also continued to expand into segments such as logistic parks, commercial and retail, as part of mixed-use developments, to strengthen its position as a top developer across product categories and customer segments.

Macrotech’s strong track record in developing residential townships and generate annuity-like cash flows and its focus on higher intensity of asset-light portfolio additions is likely to drive growth.

The current market price is ?1,200, with a target of ?1,480, suggesting a potential upside of 23%.

Olectra Greentech:

Olectra is one of the largest manufacturers of electric buses in India and a key player in the EV segment. It has establishing greenfield State-of-the-Art plant in Hyderabad with capacity of 5,000 units/year and scalable to 10,000 units/year. Partial operations have commenced for manufacturing electric buses and other EV products in the new plant. Over the next 2 fiscals ramp up will be visible.

Olectra’s collaboration with BYD, a growing market for electric buses, and a strong order book provide growth potential.

The current market price is ?1,725, with a target of ?2,200—an upside of 27%.

Ashoka Buildcon Limited:

Ashoka Buildcon (ABL) provides a wide range of construction services from the building of roads, bridges, and power transmission and distribution projects. The company is one of the leading players in the BOT (Build Own, Transfer) segment. The company also recently forayed into the CGD (City Gas Distribution) segment. Going forward, companies’ performance is expected to improve given a diversified order book, respectable execution capabilities, an anticipated acceleration in execution, and a reduction in debt.

The current price is ?252, with a target of ?290 - an upside of 15%.

So there you have it. Our stock picks for Diwali.

Happy Diwali and Happy Investing from JMFS Research Team.

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