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Outlook

Samvat 2082 begins on a positive note, thanks to a combination of fiscal and monetary tailwinds. The RBI has cut the repo rate by 100 bps and CRR by 150 bps, together with several measures, injecting much-needed liquidity into the system. This, coupled with the income tax relief of Rs.1 lakh crore, would aid demand revival and improved potential for corporate earnings. Inflation remains comfortably low while the GST 2.0 has simplified rates and revived consumer sentiment. We believe this marks the beginning of a turnaround in India's domestic growth momentum, with significant pick up in consumption paving the way for a robust revival in the private capex cycle. This, along with the improving earnings trajectory, should lend support to Indian equities.

We perceive H2FY26 to mark the crossing-over from a subdued low-single-digit earnings growth to a more sustainable double-digit earnings growth. Nifty earnings growth is expected at a healthy 8%/16% YoY in FY26/FY27 as compared to 1% in FY25. Also, Nifty valuations are reasonable at about 20x FY26 earnings, close to long-term averages. However, mid and smallcap trades at a slight premium; thus one needs to follow a selective approach in stock picking. For Samvat 2082, we expect domestic cyclicals and structural growth themes to do well. We are positive on sectors such as BFSI and Capital Markets, Consumption, Manufacturing (EMS/Defence/Industrial) and Digital.

Our last year's Diwali picks have done well, with stocks such as Eternal (+37%), Amber Enterprises (+33%), ICICI Bank (+11%), L&T (+10%) making significant gains, while the overall portfolio generated 4.8% returns (including dividends) - outperforming Nifty's gain of 3.6% over Samvat 2081.

Key Themes

Diwali Picks- Summary

State Bank of India Ltd

* Structural tailwinds from government reforms such as GST 2.0, income tax reforms and RBI’s liquidity infusion, will lead to robust credit growth & support profitability for BFSI sector.

* SBI stands out for its diversified growth momentum across retail, SME, and corporate segments, supported by a robust credit pipeline and digital transformation.

Mahindra And Mahindra Ltd

* M&M plans seven ICE SUVs, five BEVs, and five LCVs by 2030, starting from CY26, positioning M&M strongly across both ICE and EV segments.

* M&M is poised to deliver strong earnings growth, driven by rural recovery, & robust launches, further reinforced by improving tractor margins & immediate GST rate pass-through to consumers

Bharat Electronics Ltd

* The Indian Army’s Rs.300b tender for ‘Anant Shastra’ project, with BEL as lead integrator, boosts its order book beyond Rs.1t and underscores its leadership in strategic defense programs.

* Positioned strongly under the TPCR 2025 roadmap, it is set to benefit from sustained opportunities across the Army, Navy, and Air Force. BEL offers robust long-term growth visibility, making it a compelling investment in India’s defense modernization journey.

Swiggy Ltd

* Swiggy expects its Quick Commerce arm to achieve profitability sooner, aided by easing competition, moderated dark store expansion, and lower acquisition costs.

* Swiggy has strengthened its Food Delivery outlook, with growth estimates raised to ~23% for FY26–FY27 (vs. ~20% earlier), driven by GST-led boost to disposable income & rising discretionary spending.

Indian Hotels Ltd

* The Indian hospitality industry is set for robust growth in FY26, driven by rising ARR, higher occupancy, and strong RevPAR. Increased MICE activity, cultural events, and a vibrant wedding season in 2HFY26 will further boost performance

* We expect strong momentum to continue, led by strong room addition pipeline in owned/management hotels (3,770/16,430 rooms) and continued favorable demand-supply dynamics.

Max Financial Ltd

* Max Financial is poised for above-industry growth, supported by strong bancassurance traction, a resilient agency channel, and a favorable product mix. VNB margins are improving QoQ, aided by product mix shifts and rising rider penetration.

* The GST waiver is set to further boost affordability and insurance penetration. MFSL will maintain its premium valuations, driven by new product launches, robust growth trend & improving margin profile.

Radico Khaitan Ltd

* Radico Khaitan is well positioned for long-term growth through aggressive expansion in the premium and luxury spirits segment, leveraging strong brand equity with leading products like 8PM, Magic Moments, and Rampur Single Malt.

* It commands an 8% market share in the Prestige & Above (P&A) segment, with rising consumer premiumization. New launches like Morpheus Super Premium Whisky & Spirit of Kashmir support future growth

* Lately, Radico acquired 47.5% equity stake in D’YAVOL Spirits B.V., aiming to take India to the World by building bottled-in-origin luxury brands, targeting Tequila and other niche categories.

Delhivery Ltd

* Delhivery, has a market share of >20% in the express logistics space and has rapidly increased presence in the PTL segment after the acquisition of Spoton Logistics in 2021

* The recent Rs.14b Ecom Express acquisition enhances Delhivery’s rural coverage, strengthens network density, and drives cost synergies

* It is poised for sustained growth, supported by a rising user base, new category launches, and expanding e-commerce

LT Foods Ltd

* LT Foods is well-positioned for long-term growth, leveraging its strong brand equity with Daawat and Royal, exporting to 80+ countries & commanding ~30%/50% share in India/US basmati market

* Growth drivers include expanding volumes in Basmati and Specialty Rice and increasing focus on high-margin O&CH segments. Exports (66% of revenue of FY25) offer better realizations and margins vs domestic market, making the business structurally export-led.

* Recent acquisition of 100% stake in Hungary-based Global Green Europe Kft. for ~ €25 million will align the long term strategy of the company for growth through packaged food and to further strengthen its RTH (ready to heat) and RTE segment

V I P Industries Ltd

* VIP Industries, a leading player in India’s INR170b luggage market, has outpaced industry growth, delivering a revenue CAGR of 19% over FY22–25

* With a scalable, profitable digital engine complementing its offline leadership, VIP is wellplaced to capture long-term market share gains

* We expect VIP to deliver industry-beating growth, by leveraging the integrated strategy of premiumization, digital scale and margin accretive supply chain

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