With the Nifty 50 reaching an all-time high of 26,277 and the Sensex reaching 85,978 in September 2024, Samvat 2080 was a spectacular year for the Indian stock market. This was driven by foreign capital flow, India Inc.’s strong earnings growth, and ongoing economic confidence. The Nifty 50, Nifty Midcap 100, and Nifty Smallcap 100 indices have increased by 27%, 45%, and 42%, respectively, over the past 12 months.
The market’s performance was impacted by the rise of external variables, particularly global geopolitical tensions, but it was maintained by robust domestic flows and the involvement of ordinary investors. SIP inflows reached an all-time high trajectory on August 24 as the cumulative demat count crossed the 171 million threshold.
A thrilling Samvat 2081 is ahead, with many important events to keep an eye on, including the US Presidential Elections in November 2024, despite the spectacular Samvat 2080 behind us. All eyes are on the Reserve Bank of India (RBI) rate drop announcement, which might alleviate the tight liquidity situation in the banking and non-banking financial company (NBFC) sectors, even though the US Fed has declared its intention to decrease rates and expects two more cuts in 2024.
Given the attractive valuations and robust stimulus promises, foreign money outflows and the divergence to Chinese markets were the main causes of the flat October performance of domestic benchmark indices. Investors, however, are seizing the chance presented by this healthy correction to diversify their holdings at lower prices and capitalise on India’s long-term structural growth narrative.
Way2Wealth Brokers, a division of Shriram Credit Company Ltd. and a member of the “Shriram” Group claims that investors’ exposure to several companies related to industry-specific themes—the majority of which are included in mid-cap and small-cap indices—raises their valuations. “As a result, the relative underperformance of the frontline indices offers good entry opportunities in some large-cap companies, providing multiple growth levers and fair revenue visibility at current valuations,” said the brokerage.
Way2Wealth Brokers of the Shriram Group have selected 11 stocks for the forthcoming festive session that have the potential to yield returns over the next 12 months, based on the current state of the market. Based on technical and fundamental criteria, the broking has chosen high-quality equities that should yield gains of up to 15% to 20% at target levels.
Let’s explore the top 11 equities that Way2Wealth Brokers of the Shriram Group have selected for the Diwali Muhurat Trading session:
BEML
BEML is still a major player with a track record of success in mining equipment, defence, metro, and Vande Bharat. In addition to a decreasing employee-cost ratio, the broking anticipates higher margins as a result of improved use of its resources to execute orders more effectively and efficiently.
“However, a large part of the revenue growth rests on its ability to win future orders as all its segments face strong competition from large domestic OEMs. At the CMP, we find BEML an attractive BUY as it trades at 34x FY-26E P/E,” said Way2Wealth Brokers.
Solid long-term growth potential is indicated by the projected CAGRs of 15%, 19%, and 20% for revenue, EBITDA, and net profit, respectively, from FY24 to FY26. In order to improve customer service and operational efficiency and position itself for future market demands, the company is utilising cutting-edge technologies.
With ambitions to broaden its digital offerings and further penetrate non-MF segments, CAMS is well-positioned to gain market share and promote long-term growth. CAMS is a fantastic investment opportunity with promising growth prospects, market leadership, and solid foundations. The current price of the scrip is P/E 41x FY26E.
DLF Ltd
In response to these positive trends, DLF has raised its capital expenditure commitments to improve its rental portfolio. In Chennai and Gurugram, it has started building the next stages of downtown projects that span around 11 million square feet, including a two-million-square-foot retail complex in Gurugram. In the next quarters, rental money is expected to start trickling in from projects like three shopping malls and Atrium Place in Gurugram. The P/E of the scrip is 48.8 times that of FY26E.
HDFC Bank
Now that the effects of the merger are mostly behind them, several management’s long-term projects will begin to pay off. Listing HDB Financial Serv. would give the capital cushioning, even though some of the basic key drivers are value unlocking from synergies, loan growth pick-up, decrease in borrowing costs, and improvement in NIM profile. As a result, HDFCB trading at 2.4x FY26e P/B was chosen by the broker.
Hindustan Aeronautics Ltd (HAL)
International geopolitical concerns have had a significant influence on raw material supplies in recent months, which has delayed order fulfilment and revenue booking. The recent order for GE-414 engines, which will power the new LCA-Mk1A fighter fighters, has hammered this point home. This pessimistic outlook is reflected in the recent decline in stock prices.
“However, we believe this to be a blip in the larger scheme of things, and as supplies improve, we expect the trend to reverse strongly. Given the large order book, IAF’s mandate to refresh the fleet, and the large number of civilian Airbus aircraft in use – we believe that HAL is firing on all engines and will continue to grow from strength to strength,” said the brokerage.
A rise in consumption demand is predicted by the government’s focus on public infrastructure and the rural sector, the expectation of strong crop production, the expected moderation of inflation, and increasing agricultural terms of trade. ITC is selling for ₹19.1 P/E 25 to FY26 EPS. “We are still optimistic about ITC’s performance, and investors should take advantage of the recent correction to purchase the stock in the long run,” the broking stated.
Reliance Industries
Jio has successfully launched the world’s fastest 5G network deployment, and it is currently accessible throughout India. Customer engagement and demand for JioAirFiber have been high, particularly in underserved markets. In the next five years, Reliance wants to increase its EBITDA by making use of 5G technology potential.
“We are confident that Reliance Industries Limited presents a compelling investment opportunity, driven by strong growth prospects across its diverse business segments and the potential for significant value creation in its retail, digital services, and financial services portfolios,” said the brokerage.
The company’s future success is still largely dependent on its healthy loan book growth, which is bolstered by a robust liability franchise and the lowest cost of capital. Controlled OPEX and reduced credit costs allow the balance sheet to maintain its return ratios, while healthy asset quality puts it in a good position to absorb externalities. “We include SBI trading at P/B 1.4x FY26E, anticipating the bank will benefit from the likely pick-up in rural demand,” the broking stated.
Tata Investment Corp
On October 28, a special call auction was held by SEBI’s initiative to enhance the price discovery of Investment Companies and Investment Holding Companies. Investor sentiment may improve as a result, and holding businesses with improved liquidity may see value unlocked. “The fair value change in the portfolio of listed and unlisted companies will drive its earnings performance, even though any positive development on the listing of Tata Sons Ltd. can be a good trigger.” Tata Investment is therefore included,” the broking stated.
Tata Technologies
Tata Tech is at the forefront of this transition since the main industries need to transform cutting-edge and creative digital engineering solutions. Tata Tech has developed a strong business model that can function independently outside of the parent group by diversifying its clientele and skill set into heavy machine engineering, software-based solutions, automotive, aerospace, and battery technology. The firm stated, “We think the stock will continue to show a significant uptick given the strong fundamentals and outlook.”
Yatharth Hospital & Trauma Care Services
Improved occupancy and an emphasis on super-speciality treatments drove the company’s revenue, EBITDA, and PAT to grow at a CAGR of 43%, 39%, and 85%, respectively, over FY21–FY24. Over FY24–26E, we project revenue, EBITDA, and PAT to grow at a CAGR of 19%, 20%, and 22%, respectively, with EBITDA and PAT margins increasing to 27% and 18%. On FY26E, the stock is trading at a P/E of 33x EPS of ₹20 and 21x EV/EBITDA. As a result, the broking thinks the stock is good.
