Indian Indices are richly valued compared to their historical valuations, and the current prices of many stocks across different sectors offer a low margin of safety. India’s weight in global indices has been rising sharply over the past few years and continued performance will attract higher attention and allocation from large global funds.
Brokerage firm Kotak Securities said the Nifty surpassed 26,250 and BSE Sensex surpassed 85,900 in September 2024, with both Indexes gaining around 25 per cent during Samvat 2080. The BSE Midcap and Smallcap Index outperformed and gained 45 per cent and 50 per cent respectively. The up move in markets was exceptional considering geopolitical tensions, global weakness, and global elevated interest rates, it said.
The brokerage has identified eight potential stock ideas that are expected to do well in Samvat 2081. Here is a look at those eight names:
Aadhar Housing Finance: Kotak Securities recommends buying the stock with a price target of Rs 550 until the next Diwali. The brokerage said that Aadhar Housing Finance has a long track record, a well-diversified geographical presence, and a customer profile. It has a 7 per cent market share in the affordable segment.
Axis Bank: Kotak Securities has advised investors to buy the stock with a price target of Rs 1,500 until the next Diwali. The brokerage said the bank’s business execution is on expected lines, with a focus on the GPS strategy to build a solid franchise. With losses of over 3 per cent and are also down for the fourth day in a row. The lender is contributing 22 points to the Nifty fall.
Godrej Agrovet: The brokerage said the company’s near-term trends remain mixed, but longer-term outlook stays promising. Kotak believes there is strength in Astec’s product pipeline, which it finds promising. Kotak also said that it consider the acquisition of the 49 per cent minority stake in GTFL an incremental positive. The brokerage has an expectation of healthy earnings growth in FY26 as well. “We roll forward, build in stake purchase at GTFL and assign EV/EBITDA multiple of 15X to standalone crop protection,” it said while maintaining an ‘Add’ rating after the recent rally.
Zomato: Kotak Securities recommends buying the stock with a price target of Rs 315 until the next Diwali. It expects Zomato to deliver a revenue CAGR of 44 per cent over FY24-27E and strong improvement in EBITDA margin over the same period.
FIEM Industries: Kotak Securities has advised investors to buy the stock with a price target of Rs 2,140 until the next Diwali. Kotak said that FIEM is well-placed to benefit from the two-wheeler industry recovery. The company’s debt-free balance sheet; cash flow generation are expected to remain robust, the brokerage said.
Gravita India: The brokerage has an ‘Add’ rating, and a price target of Rs 2,800 per share on the counter. Kotak said that Gravita India’s organised segment’s market share is expected to expand significantly with regulatory tailwinds. Gravita is on best place to capture this opportunity, it said. The brokerage expects earnings per share to grow by 31.8 per cent in FY25E and 31.6 per cent in FY26E.
JB Chemicals & Pharma: Kotak Securities has advised investors to buy the stock with a price target of Rs 2,255 until the next Diwali. The brokerage expects the company to deliver 14 per cent, 19 per cent, and 22 per cent revenue, EBITDA and PAT CAGRs, respectively, over FY24-27E.
SH Kelkar and Company: Kotak said that the company is well-placed to drive double-digit revenue growth. The brokerage sees a long runway for growth, given its established and sticky relationships. The large order win from Unilever bolsters confidence in management guidance. High entry barriers in the F&F industry make for an attractive industry structure. Kotak has reinstated coverage with a buy rating and a price target of Rs 400 per share.
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