Explore
OPEN IN APP
Active Stocks
Thu Oct 17 2024 15:58:31
  1. Tata Steel share price
  2. 152.35 -1.87%
  1. State Bank Of India share price
  2. 810.90 0.63%
  1. Reliance Industries share price
  2. 2,713.45 0.20%
  1. Wipro share price
  2. 528.80 -0.65%
  1. Tata Motors share price
  2. 891.70 -1.70%
Business News/ Photos / Samvat 2080: Sharekhan suggests 15 stocks including DLF, Tata Motors to buy this Diwali; check complete list

Samvat 2080: Sharekhan suggests 15 stocks including DLF, Tata Motors to buy this Diwali; check complete list

15 Photos . Updated: 09 Nov 2023, 04:25 PM IST Pranati Deva

Samvat 2079 is ending with sparkling returns in the broader market, despite numerous global challenges. As we step into Samvat 2080, the market outlook looks promising. Sharekhan lists Diwali picks to capitalise on the current market weakness and craft a high-quality portfolio. Here's what it says:

Bank of India: Given a strong asset quality outlook, RoA would inch up closer to 1% on lower credit cost and improved core PPoP. Loan growth momentum is also expected to pick up, led by a resurgence in MSMEs and corporate credit growth for 9MFY24, while the retail segment continues to perform well. We believe valuations are expected to inch higher as the return ratio improves in the coming quarters on the back of an uptick in loan growth, stable margins, and further lower credit costs. At CMP, the stock trades at 0.7x/0.6x its FY24E/25E BV estimates. (Photo: Mint)

1/15Bank of India: Given a strong asset quality outlook, RoA would inch up closer to 1% on lower credit cost and improved core PPoP. Loan growth momentum is also expected to pick up, led by a resurgence in MSMEs and corporate credit growth for 9MFY24, while the retail segment continues to perform well. We believe valuations are expected to inch higher as the return ratio improves in the coming quarters on the back of an uptick in loan growth, stable margins, and further lower credit costs. At CMP, the stock trades at 0.7x/0.6x its FY24E/25E BV estimates. (Photo: Mint)

Bharat Forge: It is a domestically-grown MNC with expertise in forging and caters to both auto and non-auto segments. BFL is a leading company, which has built overseas markets ahead of time and is now considered to be a preferred global partner across sectors. It has a well-diversified, de-risked business model and a best-fit play on global auto as well as non-automotive engineering. A robust order book with a sustainable high margin would converge into the sustenance of a high valuation and the re-rating is expected to continue in our view, given engineering companies demand a premium valuation in the market.

2/15Bharat Forge: It is a domestically-grown MNC with expertise in forging and caters to both auto and non-auto segments. BFL is a leading company, which has built overseas markets ahead of time and is now considered to be a preferred global partner across sectors. It has a well-diversified, de-risked business model and a best-fit play on global auto as well as non-automotive engineering. A robust order book with a sustainable high margin would converge into the sustenance of a high valuation and the re-rating is expected to continue in our view, given engineering companies demand a premium valuation in the market.

Birlasoft: It is a global IT services and consulting company that aids businesses in their digital transformation journey. Their expertise spans across various domains, including cloud computing, analytics, and enterprise applications. The company's deal pipeline remains healthy and the outlook remains optimistic as management seeks to achieve $200 million in signings every quarter. The company continues to see a strong revival in EBITDA margin led by operational efficiencies, automation, lower attrition, and healthy utilisation, which is likely to continue going forward. Further, their renewed focus on key sectors such as BFSI and manufacturing verticals is expected to drive the overall performance of the company.

3/15Birlasoft: It is a global IT services and consulting company that aids businesses in their digital transformation journey. Their expertise spans across various domains, including cloud computing, analytics, and enterprise applications. The company's deal pipeline remains healthy and the outlook remains optimistic as management seeks to achieve $200 million in signings every quarter. The company continues to see a strong revival in EBITDA margin led by operational efficiencies, automation, lower attrition, and healthy utilisation, which is likely to continue going forward. Further, their renewed focus on key sectors such as BFSI and manufacturing verticals is expected to drive the overall performance of the company.

BSE: We believe that BSE Ltd is likely to deliver strong earnings growth of 40% CAGR over the next 3 years, driven by an uptick in volumes for the equity and index derivatives segments and increasing the transaction charges in the derivative segment gradually as the company gains sustainable momentum in overall equity derivatives volume over the medium term. It has re-launched derivative contracts on Sensex and Bankex in May 2023 and is witnessing healthy traction. Its derivative market share has improved notably since the launch of weekly index options expiry. BSE’s cash market average daily trading volume has also picked up strongly in recent times due to derivatives volumes and are at a multi-year high. The increase in derivatives volumes will further boost cash volumes.  (MINT_PRINT)

4/15BSE: We believe that BSE Ltd is likely to deliver strong earnings growth of 40% CAGR over the next 3 years, driven by an uptick in volumes for the equity and index derivatives segments and increasing the transaction charges in the derivative segment gradually as the company gains sustainable momentum in overall equity derivatives volume over the medium term. It has re-launched derivative contracts on Sensex and Bankex in May 2023 and is witnessing healthy traction. Its derivative market share has improved notably since the launch of weekly index options expiry. BSE’s cash market average daily trading volume has also picked up strongly in recent times due to derivatives volumes and are at a multi-year high. The increase in derivatives volumes will further boost cash volumes.  (MINT_PRINT)

DLF: DLF has a track record of over seven decades and has developed more than 158 real estate projects and developed an area in excess of 340 msf. The group has 215 msf of development potential across residential and commercial segments. The group has an annuity portfolio of over 42 msf. The company gave a sales guidance of <span class='webrupee'>₹</span>12,000-13,000 crore and 50% plus gross margin for FY2024 and has a planned launch pipeline of 11.2 msf with a sales potential of <span class='webrupee'>₹</span>9,710 crore for FY24. Its rental portfolio is gradually witnessing rising physical occupancies while focusing on doubling its retail portfolio over the next 4-5 years. DLF’s strong leadership position in Delhi-NCR, a strong residential project pipeline, huge rental portfolio, large land reserves at low carrying costs, and strong housing market tailwinds provide a high-growth opportunity.

5/15DLF: DLF has a track record of over seven decades and has developed more than 158 real estate projects and developed an area in excess of 340 msf. The group has 215 msf of development potential across residential and commercial segments. The group has an annuity portfolio of over 42 msf. The company gave a sales guidance of ₹12,000-13,000 crore and 50% plus gross margin for FY2024 and has a planned launch pipeline of 11.2 msf with a sales potential of ₹9,710 crore for FY24. Its rental portfolio is gradually witnessing rising physical occupancies while focusing on doubling its retail portfolio over the next 4-5 years. DLF’s strong leadership position in Delhi-NCR, a strong residential project pipeline, huge rental portfolio, large land reserves at low carrying costs, and strong housing market tailwinds provide a high-growth opportunity.

Garware Hi-Tech Films: Garware Hi-Tech Films Ltd (GHFL) has incurred a capex of <span class='webrupee'>₹</span>270 crore over the last two years. With the help of this capital expenditure, GHFL was able to vertically integrate its business, strengthen its dealer network, launch its new product (PPF), and increase the capacity of its current goods (SCF). Thus, ramping up capacity provides the company with strong medium-term growth visibility. GHFL has also continuously increased its share of value-added products within its sales mix. Value-added products, which accounted for 48% of total sales in FY2017, increased to 80% in FY2023. This led to an improvement in its margin to 18.7% in FY2023 from 9% in FY2017. As the company is planning to ramp up the capacity of value-added products and add new products, margins will continue to improve going forward.

6/15Garware Hi-Tech Films: Garware Hi-Tech Films Ltd (GHFL) has incurred a capex of ₹270 crore over the last two years. With the help of this capital expenditure, GHFL was able to vertically integrate its business, strengthen its dealer network, launch its new product (PPF), and increase the capacity of its current goods (SCF). Thus, ramping up capacity provides the company with strong medium-term growth visibility. GHFL has also continuously increased its share of value-added products within its sales mix. Value-added products, which accounted for 48% of total sales in FY2017, increased to 80% in FY2023. This led to an improvement in its margin to 18.7% in FY2023 from 9% in FY2017. As the company is planning to ramp up the capacity of value-added products and add new products, margins will continue to improve going forward.

Gokaldas Exports: Gokaldas Exports (GKEL) is one of India’s largest integrated apparel manufacturers with manufacturing capacity of 36 million pieces per annum. Capex of <span class='webrupee'>₹</span>370 crore over FY22-24E is expected to generate revenues of <span class='webrupee'>₹</span>1,100-1,300 crore (fixed asset-turnover at 3.0-3.5x). PBT is expected to grow at 20% CAGR over FY2023-25E. Acquisition of Atraco will result in revenues potentially increasing to <span class='webrupee'>₹</span>4,000 crore by FY2025 and is expected to be earnings accretive by <span class='webrupee'>₹</span>5-6 per share by FY2025. GKEL is seeing a strong upward trend in export demand starting Q3FY2024. Atraco has strong order booking till April, 2024. Atraco is likely to do revenues in-line with CY2024 with capacity utilisation marginally less than 90%.

7/15Gokaldas Exports: Gokaldas Exports (GKEL) is one of India’s largest integrated apparel manufacturers with manufacturing capacity of 36 million pieces per annum. Capex of ₹370 crore over FY22-24E is expected to generate revenues of ₹1,100-1,300 crore (fixed asset-turnover at 3.0-3.5x). PBT is expected to grow at 20% CAGR over FY2023-25E. Acquisition of Atraco will result in revenues potentially increasing to ₹4,000 crore by FY2025 and is expected to be earnings accretive by ₹5-6 per share by FY2025. GKEL is seeing a strong upward trend in export demand starting Q3FY2024. Atraco has strong order booking till April, 2024. Atraco is likely to do revenues in-line with CY2024 with capacity utilisation marginally less than 90%.

Hindustan Aeronautics: HAL is one of the oldest and largest aerospace and defence manufacturers in the world today. It was conferred Navratna status in 2007. We are bullish on HAL’s growth trajectory as it is one of the key beneficiaries of structural reforms in the defence sector. The company’s impending deal with GE and potential export tie-up with countries like Argentina can provide strong long-term growth opportunities. HAL guided for order inflows of <span class='webrupee'>₹</span>48,000 crore. It has a healthy order book having more than three years of revenue visibility. Once the execution of large orders like LCA (Mk1A) picks up pace, the company could post double-digit revenue growth from FY2025E onwards, and it should stabilise at 14-15% sales growth from FY2026 onwards.

8/15Hindustan Aeronautics: HAL is one of the oldest and largest aerospace and defence manufacturers in the world today. It was conferred Navratna status in 2007. We are bullish on HAL’s growth trajectory as it is one of the key beneficiaries of structural reforms in the defence sector. The company’s impending deal with GE and potential export tie-up with countries like Argentina can provide strong long-term growth opportunities. HAL guided for order inflows of ₹48,000 crore. It has a healthy order book having more than three years of revenue visibility. Once the execution of large orders like LCA (Mk1A) picks up pace, the company could post double-digit revenue growth from FY2025E onwards, and it should stabilise at 14-15% sales growth from FY2026 onwards.

IndusInd Bank: We believe that IndusInd Bank has come out of a tough cycle. Focus on granular growth and building of a strong internal risk framework is a right strategy. Near-term business trends look comfortable for the bank and the franchise is looking towards a more predictable performance. The bank is confident of sustaining strong momentum in earnings, led by robust loan growth, stable NIMs, and lower credit cost. Loan growth would be broad across the retail and wholesale segments. Strong loan growth momentum and lower credit cost are likely to support earnings growth, and this should keep RoEs at 15% in the near term. RoA trajectory is expected at 1.9% over the next two years. We believe re-rating is expected given sustained earnings progression and strengthening of liability franchise.

9/15IndusInd Bank: We believe that IndusInd Bank has come out of a tough cycle. Focus on granular growth and building of a strong internal risk framework is a right strategy. Near-term business trends look comfortable for the bank and the franchise is looking towards a more predictable performance. The bank is confident of sustaining strong momentum in earnings, led by robust loan growth, stable NIMs, and lower credit cost. Loan growth would be broad across the retail and wholesale segments. Strong loan growth momentum and lower credit cost are likely to support earnings growth, and this should keep RoEs at 15% in the near term. RoA trajectory is expected at 1.9% over the next two years. We believe re-rating is expected given sustained earnings progression and strengthening of liability franchise.

Kirloskar Oil Engines: KOEL, the flagship company of the Kirloskar Group, is one of the world’s largest generating set manufacturers, specialising in both air-cooled and water-cooled engines. We believe the company is well poised to benefit from sector tailwinds such as PLI schemes, infrastructure spending by the government, and power deficits. The company is a leading player in the backup power market and has a healthy balance sheet and a lean working capital cycle. We build in a Revenue/PAT CAGR of 9%/18% (FY2023-FY2025E).

10/15Kirloskar Oil Engines: KOEL, the flagship company of the Kirloskar Group, is one of the world’s largest generating set manufacturers, specialising in both air-cooled and water-cooled engines. We believe the company is well poised to benefit from sector tailwinds such as PLI schemes, infrastructure spending by the government, and power deficits. The company is a leading player in the backup power market and has a healthy balance sheet and a lean working capital cycle. We build in a Revenue/PAT CAGR of 9%/18% (FY2023-FY2025E).

Kolte-Patil Developers: KPDL is a nearly three-decade-old Pune-based realty developer, who has developed over 58 projects of more than 26 msf across Pune, Mumbai, and Bengaluru. It is eyeing a sales booking CAGR of 25% over FY2023-FY2025E at <span class='webrupee'>₹</span>2,800 crore/ <span class='webrupee'>₹</span>3,500 crore in FY2024/FY2025. It targets new business developments of <span class='webrupee'>₹</span>8,000 crore in FY2024 (Rs. 3450 crore added in FY2024 till date) with an investment of <span class='webrupee'>₹</span>500-600 crore, which would be majorly funded through internal accruals. Its flagship 390-acre Life Republic project in Pune (18.6msf) is at an inflection point and has become a cash cow with premiumisation tailwinds. Further, it is focusing on non-Pune regions (especially Mumbai) to increase sales contribution to 30% by FY2025 from 20% in FY23, which would provide scale along with diversification.

11/15Kolte-Patil Developers: KPDL is a nearly three-decade-old Pune-based realty developer, who has developed over 58 projects of more than 26 msf across Pune, Mumbai, and Bengaluru. It is eyeing a sales booking CAGR of 25% over FY2023-FY2025E at ₹2,800 crore/ ₹3,500 crore in FY2024/FY2025. It targets new business developments of ₹8,000 crore in FY2024 (Rs. 3450 crore added in FY2024 till date) with an investment of ₹500-600 crore, which would be majorly funded through internal accruals. Its flagship 390-acre Life Republic project in Pune (18.6msf) is at an inflection point and has become a cash cow with premiumisation tailwinds. Further, it is focusing on non-Pune regions (especially Mumbai) to increase sales contribution to 30% by FY2025 from 20% in FY23, which would provide scale along with diversification.

Larsen & Toubro: L&T is an Indian multinational company engaged in technology, engineering, construction, manufacturing, and financial services and is one of the largest engineering conglomerates in India’s private sector. The company sees ample opportunities in the middle east region in hydrocarbon and renewables. The capex is large in this region and therefore all players would get a fair share of the pie. The company expects 19,000-20,000 crore of orders to be awarded in the defence segment in the near to medium term. L&T remains at the forefront to reap benefits from the AtmaNirbhar Bharat scheme with its diversified businesses across sectors such as defence, infrastructure, heavy engineering and IT and is the best proxy for domestic capex.

12/15Larsen & Toubro: L&T is an Indian multinational company engaged in technology, engineering, construction, manufacturing, and financial services and is one of the largest engineering conglomerates in India’s private sector. The company sees ample opportunities in the middle east region in hydrocarbon and renewables. The capex is large in this region and therefore all players would get a fair share of the pie. The company expects 19,000-20,000 crore of orders to be awarded in the defence segment in the near to medium term. L&T remains at the forefront to reap benefits from the AtmaNirbhar Bharat scheme with its diversified businesses across sectors such as defence, infrastructure, heavy engineering and IT and is the best proxy for domestic capex.

Sanofi India: Sanofi is among the top 4 MNC pharma companies in India with 3 brands within the top 100 brands of the Indian pharmaceutical market with a production volume of 500 crore tablets. Sanofi had announced the demerger of its consumer health segment into a separate entity Sanofi Consumer Health. This move will further unlock the shareholders’ value. We believe the worst is over for Sanofi and going forward Sanofi’s focus on the Diabetes portfolio will accelerate growth and maintain margins of 25%. The stock is currently trading at 28x CY24E and due to higher returns ratios, we would like to allot a PE multiple of 32x on CY24E EPS of <span class='webrupee'>₹</span>267.

13/15Sanofi India: Sanofi is among the top 4 MNC pharma companies in India with 3 brands within the top 100 brands of the Indian pharmaceutical market with a production volume of 500 crore tablets. Sanofi had announced the demerger of its consumer health segment into a separate entity Sanofi Consumer Health. This move will further unlock the shareholders’ value. We believe the worst is over for Sanofi and going forward Sanofi’s focus on the Diabetes portfolio will accelerate growth and maintain margins of 25%. The stock is currently trading at 28x CY24E and due to higher returns ratios, we would like to allot a PE multiple of 32x on CY24E EPS of ₹267.

Tata Motors: Continued improvement in JLR, PV, and CV businesses and reduction in net automotive debt and value unlocking in its subsidiaries bode well for consistent performance. JLR has been observing strong demand, as reflected in its strong order book position. At the end of Q2FY24, JLR’s order book stands at 1.68 lakh units. A strong order book gives adequate visibility for the near term. JLR has also been consistently registering healthy EBITDA margins and has started generating positive free cash flow. TML being a market leader is a key beneficiary of the upcycle in the domestic CV industry. Further, TML has shifted its strategy from discount-driven market share expansion to profitable volume growth. This, we believe, would help it in registering improvement in its EBITDA margin in the CV division. The management is targeting a double-digit margin in the CV segment. (Bloomberg)

14/15Tata Motors: Continued improvement in JLR, PV, and CV businesses and reduction in net automotive debt and value unlocking in its subsidiaries bode well for consistent performance. JLR has been observing strong demand, as reflected in its strong order book position. At the end of Q2FY24, JLR’s order book stands at 1.68 lakh units. A strong order book gives adequate visibility for the near term. JLR has also been consistently registering healthy EBITDA margins and has started generating positive free cash flow. TML being a market leader is a key beneficiary of the upcycle in the domestic CV industry. Further, TML has shifted its strategy from discount-driven market share expansion to profitable volume growth. This, we believe, would help it in registering improvement in its EBITDA margin in the CV division. The management is targeting a double-digit margin in the CV segment. (Bloomberg)

Wonderla Holidays: Wonderla Holidays (WHL) is one of the largest theme park operators in India and has been in business for over 20 years. The company is transforming itself into an asset-light model by entering into lease-land agreement with various state governments for setting up of park. This will help WHL to generate high cash flows, which will be utilised to add more attractions in new and existing parks. It is in talks with states such as Punjab, Gujarat and Goa to set up new parks. Attractive valuations of 17.8x/15.3x its FY24E/FY25E EV/EBIDTA, a sturdy balance sheet despite a huge capex and double-digit earnings visibility makes WHL a comfortable play in discretionary space.

15/15Wonderla Holidays: Wonderla Holidays (WHL) is one of the largest theme park operators in India and has been in business for over 20 years. The company is transforming itself into an asset-light model by entering into lease-land agreement with various state governments for setting up of park. This will help WHL to generate high cash flows, which will be utilised to add more attractions in new and existing parks. It is in talks with states such as Punjab, Gujarat and Goa to set up new parks. Attractive valuations of 17.8x/15.3x its FY24E/FY25E EV/EBIDTA, a sturdy balance sheet despite a huge capex and double-digit earnings visibility makes WHL a comfortable play in discretionary space.

OTHER GALLERIES
Recommended For You

Wait for it…

Log in to our website to save your bookmarks. It'll just take a moment.

Yes, Continue

You are just one step away from creating your watchlist!

Login Now

Wait for it…

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.

Your session has expired, please login again.

Yes, Continue