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Business News/ Photos / Diwali Muhurat Trading Picks: Ajmera X-change lists 10 stocks to buy including HDFC Bank, RIL

Diwali Muhurat Trading Picks: Ajmera X-change lists 10 stocks to buy including HDFC Bank, RIL

10 Photos . Updated: 09 Nov 2023, 04:24 PM IST Pranati Deva

The festival of lights is around the corner and financial services platform Ajmera X-change has come out with its list of top Diwali picks. It believes these stocks offer margin of safety and have the potential to outgrow their industry and sees them delivering over 15% returns. Let's take a look:

HDFC Bank: HDFC Bank after its merger with HDFC Ltd is the largest private bank in India with <span class='webrupee'>₹</span>16 lakh crore loan book and has shown consistent NIM growth for many years. Also, its valuation is reasonable with a PE of 23 and P/B of 2.6 FY25, which is one of the cheapest in the private banking sector, it said. ‘We recommend buying the stock at the CMP for a target of <span class='webrupee'>₹</span>1,720-1,795,’ added Ajmera. (Bloomberg)

1/10HDFC Bank: HDFC Bank after its merger with HDFC Ltd is the largest private bank in India with ₹16 lakh crore loan book and has shown consistent NIM growth for many years. Also, its valuation is reasonable with a PE of 23 and P/B of 2.6 FY25, which is one of the cheapest in the private banking sector, it said. ‘We recommend buying the stock at the CMP for a target of ₹1,720-1,795,’ added Ajmera. (Bloomberg)

Havells India: ‘We recommend buying HAVELLS at CMP for a target of 1565-1650. Havells India has given a breakout after consolidating in a descending triangle pattern for over 20 months. It is currently trading at its 200-day exponential moving averages, making higher highs and higher lows which is indicating positive strength,’ it said. Havells is a leading company in India in cables, switchgear, and white goods. The growth in the basic main business of cables and switchgear is seen at a rate of 25% which has been coupled with improvement in the financial performance of Lloyds. It has now successfully deleveraged itself and stands debt-free. The commodity price softening benefits are not passed onto the customers whereas price hikes have been taken on certain products which in turn will help its margin, added Ajmera.

2/10Havells India: ‘We recommend buying HAVELLS at CMP for a target of 1565-1650. Havells India has given a breakout after consolidating in a descending triangle pattern for over 20 months. It is currently trading at its 200-day exponential moving averages, making higher highs and higher lows which is indicating positive strength,’ it said. Havells is a leading company in India in cables, switchgear, and white goods. The growth in the basic main business of cables and switchgear is seen at a rate of 25% which has been coupled with improvement in the financial performance of Lloyds. It has now successfully deleveraged itself and stands debt-free. The commodity price softening benefits are not passed onto the customers whereas price hikes have been taken on certain products which in turn will help its margin, added Ajmera.

TVS Motor: ‘We recommend buying it at CMP for a target of 1795-1890. TVS Motors has been moving in an upward trend since March 2023, after breaking a descending triangle consolidation. Also, it is holding above its 50, 100, and 200-day EMA, this shows its bullish strength.’ TVS Motors is the 3rd largest two-wheeler company with 18% market share in India. The stock has witnessed a sharp run-up over the last 1 year or so backed by solid growth in its numbers which justifies its expensive valuation. Going forward, Ajmera expects the stock to continue to be valued 26x FY25 backed by industry-beating growth. Also, export growth is likely to be in the moderate growth range of 10%, however, the demand is likely to be driven by its new launches and improved availability of its products, it said. (MINT_PRINT)

3/10TVS Motor: ‘We recommend buying it at CMP for a target of 1795-1890. TVS Motors has been moving in an upward trend since March 2023, after breaking a descending triangle consolidation. Also, it is holding above its 50, 100, and 200-day EMA, this shows its bullish strength.’ TVS Motors is the 3rd largest two-wheeler company with 18% market share in India. The stock has witnessed a sharp run-up over the last 1 year or so backed by solid growth in its numbers which justifies its expensive valuation. Going forward, Ajmera expects the stock to continue to be valued 26x FY25 backed by industry-beating growth. Also, export growth is likely to be in the moderate growth range of 10%, however, the demand is likely to be driven by its new launches and improved availability of its products, it said. (MINT_PRINT)

Reliance Industries: ‘We recommend buying at CMP for a target ranging from 2575-2710. Reliance has made a strong zone ranging between 2150 and 2550. It has recently made a positive divergence and formed a bear trap at the support zone,’ Ajmera said. Reliance Industries is the biggest conglomerate with the largest market cap in India. Reliance has taken a very aggressive bet on the Indian retail story by entering into the financial services sector through its carved-out entity Jio Financial Services. It expects the next round of disruption and growth to come in through its new-age business verticals such as retail, financial services, and green energy. The company is trading at 21PE FY25 and EV/EBITDA of 11 FY25. The SOTP method valuation of the company gives us an upside of 13-15% from the current levels, it said.

4/10Reliance Industries: ‘We recommend buying at CMP for a target ranging from 2575-2710. Reliance has made a strong zone ranging between 2150 and 2550. It has recently made a positive divergence and formed a bear trap at the support zone,’ Ajmera said. Reliance Industries is the biggest conglomerate with the largest market cap in India. Reliance has taken a very aggressive bet on the Indian retail story by entering into the financial services sector through its carved-out entity Jio Financial Services. It expects the next round of disruption and growth to come in through its new-age business verticals such as retail, financial services, and green energy. The company is trading at 21PE FY25 and EV/EBITDA of 11 FY25. The SOTP method valuation of the company gives us an upside of 13-15% from the current levels, it said.

United Spirits: ‘We recommend buying at CMP for a target range of 1175-1240. United Spirits has recently given a breakout after forming a descending triangle pattern consolidation. It is trading above its 20,50,100 and 200-day exponential moving average indicating a positive strength,’ Ajmera said. United Spirits is a leading company in the alcohol space with one of the largest market shares of more than 30% in whiskey and premium whiskey products. United Spirits is now a debt-free company which will help the company make strategic acquisitions. Also, the company has sold the non-core brands to focus on the core brands for growth. Management has indicated a double-digit growth for FY24, it said. ‘As per valuations, United Spirits has the fairest valuation in the sector and we recommend a buy for United Spirits with an Upside of 15%,’ it added.

5/10United Spirits: ‘We recommend buying at CMP for a target range of 1175-1240. United Spirits has recently given a breakout after forming a descending triangle pattern consolidation. It is trading above its 20,50,100 and 200-day exponential moving average indicating a positive strength,’ Ajmera said. United Spirits is a leading company in the alcohol space with one of the largest market shares of more than 30% in whiskey and premium whiskey products. United Spirits is now a debt-free company which will help the company make strategic acquisitions. Also, the company has sold the non-core brands to focus on the core brands for growth. Management has indicated a double-digit growth for FY24, it said. ‘As per valuations, United Spirits has the fairest valuation in the sector and we recommend a buy for United Spirits with an Upside of 15%,’ it added.

Indian Oil: ‘We recommend buying at CMP and selling at a target ranging from 102 to 107. Indian oil has given breakout from a downward trend of four years. It is currently trading above its 200-day exponential moving average and has made a positive divergence which in turn can lead to a higher high,’ said Ajmera. Indian Oil is one of the leading PSU oil marketing companies in India. The firm also has improved margins in the marketing of petrol, diesel, and other lubricant products. The dividend yield of the company stands at 3.35% and is likely to stay steady given its dividend payout policy. Indian Oil is fairly priced at 7.1 PE FY25 and P/B is also 0.8. With steady dividend yield and improvement in margins, IOC becomes well placed in the portfolio as a stable investment, it said.

6/10Indian Oil: ‘We recommend buying at CMP and selling at a target ranging from 102 to 107. Indian oil has given breakout from a downward trend of four years. It is currently trading above its 200-day exponential moving average and has made a positive divergence which in turn can lead to a higher high,’ said Ajmera. Indian Oil is one of the leading PSU oil marketing companies in India. The firm also has improved margins in the marketing of petrol, diesel, and other lubricant products. The dividend yield of the company stands at 3.35% and is likely to stay steady given its dividend payout policy. Indian Oil is fairly priced at 7.1 PE FY25 and P/B is also 0.8. With steady dividend yield and improvement in margins, IOC becomes well placed in the portfolio as a stable investment, it said.

Marico: ‘We recommend buying at CMP for a target ranging from 600 to 620. Marico has currently moving in an upward channel since May 2021, making higher highs and higher lows, and is at its low. It is currently trading near its 200-day exponential moving average which is a good support zone,’ said Ajmera. Marico is a leading FMCG company in the hair care and edible oil market. Marico is fairly valued as it is trading at a PE Multiple of 40X FY25 and growth overall is seen at 10-15% CAGR in the next 2 years. ‘So based on the potential growth in the new segment plus sustainability in the current segment and fair valuations, we recommend a buy on Marico with an Upside of 10-15%,’ it added.

7/10Marico: ‘We recommend buying at CMP for a target ranging from 600 to 620. Marico has currently moving in an upward channel since May 2021, making higher highs and higher lows, and is at its low. It is currently trading near its 200-day exponential moving average which is a good support zone,’ said Ajmera. Marico is a leading FMCG company in the hair care and edible oil market. Marico is fairly valued as it is trading at a PE Multiple of 40X FY25 and growth overall is seen at 10-15% CAGR in the next 2 years. ‘So based on the potential growth in the new segment plus sustainability in the current segment and fair valuations, we recommend a buy on Marico with an Upside of 10-15%,’ it added.

Infosys: ‘We recommend a buy at CMP for a target of 1620-1690. Infosys has been in a downtrend for over eighteen months and a recent breakout can be seen with a spike in volumes. It has recently given a crossover of its 200-day exponential moving average which indicates the bullishness of the stock,’ Ajmera said. Infosys is one of the largest IT services providing companies in India. The recent deal wins and recovery in the BFSI & communication segment revenues will enhance the growth of Infosys and its spread across various geographies. Coupled with a focus on top strategic clients, it will help solidify the growth in revenue across verticals with better margins. Infosys is well-placed to get more deals, it said. ‘Along with it, we believe it has understated its revenue and margin guidance and is likely to outperform the same. Valuations are also available at multiyear low as it is trading at a PE of 21.6 X FY25. Hence recommend a buy on Infosys with a 12-15% Upside from current levels,’ added Ajmera. (REUTERS)

8/10Infosys: ‘We recommend a buy at CMP for a target of 1620-1690. Infosys has been in a downtrend for over eighteen months and a recent breakout can be seen with a spike in volumes. It has recently given a crossover of its 200-day exponential moving average which indicates the bullishness of the stock,’ Ajmera said. Infosys is one of the largest IT services providing companies in India. The recent deal wins and recovery in the BFSI & communication segment revenues will enhance the growth of Infosys and its spread across various geographies. Coupled with a focus on top strategic clients, it will help solidify the growth in revenue across verticals with better margins. Infosys is well-placed to get more deals, it said. ‘Along with it, we believe it has understated its revenue and margin guidance and is likely to outperform the same. Valuations are also available at multiyear low as it is trading at a PE of 21.6 X FY25. Hence recommend a buy on Infosys with a 12-15% Upside from current levels,’ added Ajmera. (REUTERS)

Hindalco: ‘We recommend a buy near CMP, for targets ranging from 545-560. Hindalco has been moving in an upward channel since June 2022 and can be a good buy. It has recently formed a crossover, and the price sustaining above its 200-day exponential moving average,’ said Ajmera. Hindalco Industries of the Aditya Birla Group is a leading player in the metals sector. It is planning a major capex in the next 5 years of approximately $4.4 billion for several projects. Hindalco is trading at PE of 10.1X FY2025 and P/B of 1.2 which is a fair valuation compared to its peers and on the verge of becoming net debt Free. Considering the tremendous growth prospects and fair valuations, Ajmera recommends a BUY with a potential upside of 12-15%.

9/10Hindalco: ‘We recommend a buy near CMP, for targets ranging from 545-560. Hindalco has been moving in an upward channel since June 2022 and can be a good buy. It has recently formed a crossover, and the price sustaining above its 200-day exponential moving average,’ said Ajmera. Hindalco Industries of the Aditya Birla Group is a leading player in the metals sector. It is planning a major capex in the next 5 years of approximately $4.4 billion for several projects. Hindalco is trading at PE of 10.1X FY2025 and P/B of 1.2 which is a fair valuation compared to its peers and on the verge of becoming net debt Free. Considering the tremendous growth prospects and fair valuations, Ajmera recommends a BUY with a potential upside of 12-15%.

Muthoot Finance: ‘We recommend a buy near CMP, for targets ranging from 1455-1540. Muthoot Finance has given a long-term downward trendline breakout with forming a bear trap at the support zone. It has also taken support from its 200-day exponential moving average,’ said Ajmera. Muthoot Finance Ltd is the largest gold loan provider in the country. The recent quarter saw the highest disbursal of gold loans by the company at <span class='webrupee'>₹</span>518 billion and the company also saw a strong 15% AUM growth in gold aided by the rise in gold prices. The management commentary has given a guidance of growth of NIM by 11% and also reiterated the growth in other loan segments. The valuation of Muthoot finance as compared to its peers in the sector is fairly valued at P/B of 2.40, it said. ‘Based on the prospective high growth in the loan books, rising base of customers, increase in number of branches and fair valuations compared to peers, we recommend a buy on this company for 12-15% upside,’ it added.

10/10Muthoot Finance: ‘We recommend a buy near CMP, for targets ranging from 1455-1540. Muthoot Finance has given a long-term downward trendline breakout with forming a bear trap at the support zone. It has also taken support from its 200-day exponential moving average,’ said Ajmera. Muthoot Finance Ltd is the largest gold loan provider in the country. The recent quarter saw the highest disbursal of gold loans by the company at ₹518 billion and the company also saw a strong 15% AUM growth in gold aided by the rise in gold prices. The management commentary has given a guidance of growth of NIM by 11% and also reiterated the growth in other loan segments. The valuation of Muthoot finance as compared to its peers in the sector is fairly valued at P/B of 2.40, it said. ‘Based on the prospective high growth in the loan books, rising base of customers, increase in number of branches and fair valuations compared to peers, we recommend a buy on this company for 12-15% upside,’ it added.

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