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This year’s special one-hour Diwali Muhurat trading session will take place on Friday, November 1; Here are a few stock picks for Samvat 2081
Muhurat Trading 2024
Diwali Muhurat Trading Stock Picks For 2024: Samvat 2080 has been a year of constant fresh highs for the key benchmarks BSE Sensex and NSE’s Nifty50, as both created many fresh lifetime highs during the year, buoyed by a resilient and one of the fastest growing emerging economies, steady earnings, a rate cut by the US Federal Reserve and a strong splurge of domestic flows.
The BSE Sensex created a fresh high of 85978.25 on 27th September, 2024, while the NSE’s Nifty50 also climbed a new peak on the same day, reaching 26,277.35 level. Both gained around 25 per cent during Samvat 2080.
The benchmark BSE Sensex has surged 25% since November 12, 2023, while the BSE Midcap and BSE Smallcap indices have jumped 49% and 47%, respectively, during the same period. Market experts attribute this strong performance to solid domestic inflows that have buoyed market sentiments.
For Diwali 2024, JM Financial has released its top 10 stock picks for Samvat 2081, offering investors a guide to capitalising on the festive season and market momentum. This year’s special one-hour Diwali Muhurat trading session will take place on Friday, November 1, from 6:15 PM to 7:15 PM. Let’s explore the stocks that could brighten your portfolio this Diwali.
Reliance Industries (Target price: Rs 3,500)
RIL’s stock price has underperformed broader markets with just 5% returns in CY24YTD versus 15% return for Nifty 50. JM Financial believes that 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 to remain strong across segments and the brokerage expects 15% PAT CAGR over FY24-27E.
Power Grid Corporation of India (Target price: Rs 383)
JM Financial believes that valuation of Power Grid is reasonable at 3.1x FY26E P/BV stock offers healthy dividend yield of around 4%, low earnings risk given regulated returns, and most importantly, it sees sharp recovery in transmission capex cycle. JM Financial expects the company to maintain a ROE of 18% during FY24-26E.
Bajaj Finance (Target price: Rs 8,552)
Bajaj Finance stock has over last 2 months witnessed a decent recovery of 20%. One of the important triggers behind this was IPO of its housing finance division recently. However, despite such a run up, there is still steam left in the stock. AUM growth of Bajaj Finance over the last 2-3 years has remained healthy at over 25% YoY levels. In Q1FY25, slight moderation was witnessed owing to the company shifting focus from unsecured loans to secured loans after RBI instructions for the entire sector with respect to unsecured loans. With festive season ahead, Q3FY25 is seasonally a good quarter in terms of AUM. On an annual basis too, JM Financial believes the company would maintain its healthy growth strategy ahead, owing to its diversified asset book.
ICICI Lombard General Insurance (Target price: Rs 2,450)
The company has a strong presence in health & motor segment owing to a strong product suite, growing retail agency and digital capabilities, deep distribution and conservative underwriting and a large balance sheet, reinsurance and agility. These capabilities have made the company a leader in this large and fast growing segment. A smooth management transition after a CEO at the helm for 14 years indicates depth in leadership, visible also in consistent growth and 15% plus returns, even as it toggles segments in response to customer demand and competition.
Jindal Steel & Power (Target price: Rs 1,150)
Jindal Steel and Power (JSPL) is one of India’s leading steel manufacturers with current capacity of 9.6mtpta. The company is undergoing capex to expand its crude steel production capacity by 65% to 15.9mtpa. JSPL’s strategic expansion would augment its crude steel capacity by 65% to 15.9m tonnes and enrich its product mix. Also, the company is strengthening raw-material integration and increasing the share of VAPs which should aid margins. Considering its strong focus on margin expansion, JM Financial expects it to achieve Rs 15,000 EBITDA/tonne by FY26. With a 0.9x net debt/EBITDA, it has one of the strongest balance sheets among domestic peers.
National Aluminium Company (Target price: Rs 264)
NALCO’s Q2FY25 EBITDA is expected to increase by around 3 times YoY to Rs 1,200 crore supported by rise in alumina/aluminium price, lower cost and benefit of captive coal mining. FY27E EBITDA estimate of Rs 6,000 crore and 7.5 times EV/EBITDA + FY26E Net cash of Rs 3,500 crore gives us equity value of Rs 48,500 crore (Rs 264/share). At CMP of Rs 227, the stock trades at attractive valuation of 6.8 times on FY26E EBITDA and offers healthy dividend yield of 3%.
Gravita India (Target price: Rs 3,068)
Gravita India is a leading player in India’s recycling industry and currently operates in three verticals i.e. lead, aluminum, plastics and has concrete plans to diversify into other verticals (steel, paper and lithium-ion batteries). The company is one of the largest lead recyclers in India and derives 82% of its EBITDA from lead recycling vertical while aluminum, plastic and turnkey projects contributed 5%, 4% and 9% of its FY24 EBITDA (Rs 343 crore).
Macrotech Developers (Target price: Rs 1,480)
Lodha is expected to generate robust operating cash flows (OCF), as collections catch up to the growth in pre-sales (in the last 3 years). The company will generate OCF of Rs 7,000-8,000 crore on average for the next 3 years. JM Financial estimates that Lodha should have surplus cash available for deleveraging even after accounting for a consummate increase in business development investments (growth investments).
Olectra Greentech (Target price: Rs 2,200)
Olectra is one of the largest manufacturers of electric buses in India. It has establishing greenfield state-of-the-art plant in Hyderabad with capacity of 5,000 units per year and scalable to 10,000 units per year. Company has commenced partially operations for manufacturing electric buses and other EV products in the new plant. Over the next 2 financial years, ramp up will be visible. Olectra delivered 156 units of e-buses in Q1FY25, management guides for volumes to double in Q2FY25, and further over 1,000 buses in H2FY25 equating to 1,800-2,000 buses volumes for FY25 which is an annual growth of nearly 300%. For FY26E management is targeting growth of 2 times over FY25E levels, hence volumes for Olectra should grow 8 times from FY24 levels in 2 years’ time.
Ashoka Buildcon (Target price: Rs 290)
The company is expected to clock a PAT CAGR of 33% over FY2024-2026E with a robust ROE of 10% in FY26E. The stock trades at 15.3x FY26E standalone EPS. JM Financial values company’s EPC business at 12x September-FY26E core EPS, HAM portfolio at 1.6x P/B and other ABL assets at 0.5x P/B.
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