Diwali 2024 Stock Picks: From Reliance Industries to Bajaj Finance; 10 stocks to buy for Samvat 2081 by JM Financial

Diwali 2024 Stock Picks: Indian stock market has been volatile this year on the back of uncertain global developments amid strong domestic macroeconomic conditions. The benchmark Nifty 50 has risen more than 25% in the past 12 months period, while analysts expect the volatility in the Indian stock market to continue going ahead.

Brokerage firm JM Financial has released its list of Diwali 2024 stock picks. The 10 stocks to buy in Diwali 2024 includes Reliance Industries, Power Grid Corporation of India, Bajaj Finance, ICICI Lombard General Insurance Co, Jindal Steel & Power, National Aluminium Company, Gravita India, Macrotech Developers, Olectra Greentech and Ashoka Buildcon.

Here are JM Financial’s Diwali stock picks 2024:

Reliance Industries | Buy | TP: ₹3,500

Reliance Industries stock price has underperformed broader markets in CY24YTD and JM Financial believes this underperformance could reverse, supported by faster-than-anticipated telecom tariff hikes by telcos’, recovery in retail business and positive announcements on new energy business. Earnings growth momentum is expected to remain strong across segments and the brokerage firm expects 15% PAT CAGR over FY24-27E.

JM Financial retained ‘Buy’ rating on RIL shares with SoTP based target price of ₹3,500.

Power Grid Corporation of India | Buy | TP: ₹383

Power Grid Corporation of India’s valuation is reasonable at 3.1x FY26E P/BV and the stock offers a healthy dividend yield of ~4%, low earnings risk given regulated returns, and most importantly, we see sharp recovery in transmission capex cycle. We expect the company to maintain a ROE of ~18% during FY24-26E, JM Financial said.

It values Power Grid Corporation of India shares at 3.6x FY26E P/BV, and arrives at a target price of ₹383. It has a ‘Buy’ call on the stock.

Bajaj Finance | Buy | TP: ₹8,552

On the valuation front, Bajaj Finance shares are at a reasonable level of ~4x FY26E BV which is a tad below its long term average. Thus, scope for re-rating on the upside is there considering its healthy ROEs and RoA and growth prospects ahead, said the brokerage firm.

It has a ‘Buy’ rating and Bajaj Finance share price target of ₹8,552 apiece.

ICICI Lombard General Insurance Co | Buy | TP: ₹2,450

While ICICI Lombard stock trades at premium valuations, JM Financial believes it can compound with consistent 17%+ growth and 17%+ RoE. It has seen growth slowdown in Q2 after a strong start to FY25, - any seasonal weakness in numbers can be bought into.

It has a ‘Buy’ call on ICICI Lombard shares and a target price of ₹2,450 valuing the company at ~41x FY26e EPS.

Jindal Steel & Power | Buy | TP: ₹1,150

Considering Jindal Steel & Power’s strong focus on margin expansion, the brokerage firm expects the company to achieve ₹15,000 EBITDA per tonne by FY26. With a 0.9x net debt/EBITDA, it has one of the strongest balance sheets among domestic peers. It recommends ‘Buy’ on JSPL shares with a TP of ₹1,150 per share, valued at 8x FY26E EV/EBITDA.

National Aluminium Company | Buy | TP: ₹264

NALCO’s Q2FY25 EBITDA is expected to increase by ~3x YoY to ₹1,200 crore supported by rise in alumina / aluminium price, lower cost and benefit of captive coal mining. FY27E EBITDA estimate of ₹6,000 crore and 7.5x EV/EBITDA + FY26E Net cash of ₹3,500 crore gives us equity value of ₹48,500 crore ( ₹264/share), JM Financial said.

It believes, at CMP, National Aluminium Company stock trades at an attractive valuation of 6.8x on FY26E EBITDA and offers a healthy dividend yield of 3%. It has a ‘Buy’ call with a target of ₹264 per share.

Gravita India | Buy | TP: ₹3,068

Regulatory tailwinds in the domestic lead recycling space and massive capacity expansion plan focused to diversify earnings toward non-lead business/improve VAP mix is expected to drive strong 30% PAT CAGR over FY24-27E along with high RoE/RoCE of 32%/28% in FY27E for Gravita India.

The brokerage firm maintains ‘Buy’ rating on Gravita India shares with an increased target price of ₹3,068 apiece.

Macrotech Developers | Buy | TP: ₹1,480

JM Financial expects Lodha to generate robust operating cash flows (OCF), as collections catch up to the growth in pre-sales (in the last 3 years). It expects the company to generate OCF of ₹70 billion - 80 billion on average for the next 3 years and estimates that Lodha should have surplus cash available for deleveraging even after accounting for a consummate increase in business development investments.

The brokerage has a ‘Buy’ call on Macrotech Developers with a TP of ₹1,480 per share.

Olectra Greentech | Buy | TP: ₹2,200

Based on pro-forma estimates, Olectra Greentech shares trade roughly at 35x FY26E P/E, ROEs expected to be robust at 25%+. We believe considering the strong long term potential and near term ramp up in volumes Olectra should rerate to higher levels, said the brokerage firm.

It has a ‘Buy’ rating on Olectra Greentech the stock with a target price of ₹2,200 per share.

Ashoka Buildcon | Buy | TP: ₹290

Ashoka Buildcon is expected to clock a PAT CAGR of 33% over FY2024 - FY2026 with a robust ROE of 10% in FY26. The stock trades at 15.3x FY26E Standalone EPS. The brokerage values Ashoka Buildcon’s EPC business at 12x September-FY26E core EPS, HAM portfolio at 1.6x P/B and other assets at 0.5x P/B and arrive at an SOTP-based price target of ₹290 per share.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.