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Below the Navratri Special Top 5 Stock Picks - Mayank Mehraa, Smallcase manager and principal partner at Craving Alpha.

Metro Brands

Upside Potential: 35% Holding Period: 6 months

Fundamental Details:

Metro Brands is a well-managed company with a strong track record and a bright future. The company is well-positioned to benefit from the growing demand for footwear in India, especially during the Navratri festive season. Metro Brands has a wide range of footwear and accessories for men, women, and children, under its own brands, such as Metro, Mochi, Walkway, Da Vinchi, and J. Fontini, as well as other third-party brands.

Investment Rationale:

During Navratri, there is a high demand for new footwear and accessories as people prepare for the festival and celebrate with their families and friends.

Metro Brands has a strong track record of financial performance, with revenue growing at a CAGR of 17% over the past five years and profit after tax growing at a CAGR of 20% over the same period.

The company is planning to expand its store network by 15-20% in FY24.

The Indian footwear industry is expected to grow at a CAGR of 10-12% over the next five years, driven by factors such as increasing urbanization, rising disposable incomes, and changing consumer preferences.

Amaraja Batteries

Upside Potential: 25% Holding Period: 6 months

Fundamental Details:

Amaraja Batteries is India's leading automotive battery manufacturer, with a market share of over 40%. The company offers a wide range of batteries for cars, trucks, buses, and other vehicles. Amaraja Batteries is also a major player in the industrial battery market.

Amaraja Batteries has a strong track record of financial performance. The company's revenue has grown at a CAGR of 15% over the past three years. The company is also expanding its presence in the electric vehicle battery market.

Investment Rationale:

During Navratri, there is a high demand for new vehicles as people prepare to celebrate the festival with their families and friends. As a result, Amaraja Batteries is expected to see strong sales growth during this period. Amaraja Batteries' batteries are known for their quality, performance, and durability. This makes them a leader in the replacement battery market.

Amaraja Batteries is a well-managed company with a strong track record of financial performance and a bright future. The company is well-positioned to benefit from the growing demand for automotive batteries in India, especially during the Navratri festive season. Amaraja Batteries' stock is currently trading at an attractive valuation of 13.8x PE, making it a good investment option for investors.

PI Industries

Upside Potential: 30% Holding Period: 6 months

Fundamental Details:

PI Industries is India's leading crop protection company, with a market share of over 10%. The company offers a wide range of crop protection products, including insecticides, herbicides, and fungicides. PI Industries also exports its products to over 50 countries.

PI Industries has a strong track record of financial performance. The company's revenue has grown at a CAGR of 23% over the past five years, and its profit after tax has grown at a CAGR of 28% over the same period. However, the stock performance has been lagging at only 19% CAGR over the past 3 years making a case for a pent up bull move

PI Industries is well-positioned to benefit from the growing demand for crop protection products in India, driven by factors such as increasing agricultural productivity and rising farmer incomes. The company is also expanding its presence in the international market.

Investment Rationale:

PI Industries' crop protection products are known for their quality, effectiveness, and safety. This makes them a popular choice for farmers who are looking to protect their crops from pests and diseases. The company is well-positioned to benefit from the growing demand for crop protection products in India, especially during the Navratri festive season.

PI Industries' stock is currently trading at an attractive valuation of 0.75x it’s median PE, making it a good investment option for investors who are looking for wealth creation.

Eclerx

Upside Potential: 35% Holding Period: 6 months

Fundamental Details:

Eclerx is a leading global provider of business process services (BPS), with a focus on the financial services and healthcare industries. The company offers a wide range of BPS services, including customer relationship management, data entry, and accounting. Eclerx has over 15,000 employees across 10 delivery centers in India and the United States.

Eclerx has a strong track record of financial performance. The company's revenue has grown at a CAGR of 23% over the past three years, and its profit after tax has grown at a CAGR of 32% over the same period.

Eclerx is well-positioned to benefit from the growing demand for BPS services from global companies and from the expected increased hiring activities in the US. The company is also expanding its presence in new markets and service lines.

Investment Rationale:

Eclerx's stock is currently trading at a TTM PE of 20x with a strong growth rate of 31.3% making it a good investment option for investors who are looking to generate wealth in the near term.

It’s asset light model has allowed them to maintain high ROEs of 26% over the past 10 years, which is commendable for a debt free company.

United Spirits Limited

Upside Potential: 25% Holding Period: 6 months

Fundamental Details:

United Spirits Limited is India's leading spirits company, with a market share of over 50%. The company offers a wide range of spirits, including whisky, brandy, vodka, and rum. United Spirits Limited also exports its products to over 30 countries.

United Spirits Limited has a strong track record of financial performance. The company's profit after tax has grown at a CAGR of 26% over the past 10 years.

United Spirits Limited is well-positioned to benefit from the growing demand for alcoholic beverages in India, driven by factors such as increasing urbanization and rising disposable incomes. The company is also expanding its presence in the international market.

Investment Rationale:

During Navratri, there is a high demand for alcoholic beverages as people celebrate the festival with their families and friends. The company is hence expected to see strong sales growth during this period. United Spirits Limited's brands are known for their quality, taste, and affordability. This makes them a popular choice for consumers who are looking for alcoholic beverages to celebrate with.

The company had been going through major re-organization of their product portfolio and management since they got acquired by Diageo. These major events were the possible cause of their stocks underperformance over the past few years. However, we strongly believe this over hang is now over and the company would go ahead to create significant wealth for their shareholders.

Their Debt- Equity ratio has significantly improved from 0.933 in March 2019 to 0.03x in March 2023

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