Indian equities have had a decent Samvat if we go back to the first three months of the year and then see returns from the lows in March. The Nifty 50 index has risen 9% in the Samvat, while broader markets have outperformed with the Nifty Midcap and Smallcap indices rose by 28% and 26% respectively.
In this feature, we bring to you 10 stock picks, highlighted by brokerage firm HDFC Securities for the upcoming Samvat. These stocks are a mix of large, mid and smallcap companies. Here is a look at these 10 names. All these recommendations have been shared with a timeframe till the next Diwali.
Reliance Retail, Jio and new energy businesses are poised to become the upcoming growth drivers for Reliance Industries over the next 2-3 years, given the large technological advancements and ambitious growth targets, HDFC Securities said. The company is expected to report a revenue, EBITDA and PAT CAGR of 13.5%, 12.3% and 10% over financial year 2023 and 2025, the brokerage said. It recommends buying the stock within the ₹2,075 and ₹2,325 for an upside target of ₹2,695 until the next Diwali.
HDFC Securities expects Dr Reddy's US business to grow at a Compounded Annual Growth Rate (CAGR) of 11% over financial year 2023-2025, including sales of Revlimid generic. The brokerage also expects margin to remain around the 26.5% - 27.5% mark led by niche opportunities in the US. It recommends buying the stock in the ₹4,800 - ₹5,400 range for a price target of ₹6,250 until the next diwali. Higher API prices, delay in launches of niche products, adverse regulatory action are some key risks.
HDFC Securities is projecting a 24% Compounded Annual Growth Rate (CAGR) for Equitas Small Finance Bank's Net Interest Income and a 31% CAGR for its net profit over financial year 2023 - 2025. Over the same time frame, it is projecting the company's loan book to grow at a 27% CAGR. The brokerage is recommending investors to buy the stock within the ₹82 - ₹92 range for a price target of ₹112 till the next Diwali.
Growing domestic gas supplies, LNG liquefaction capacity and expectations of relatively moderate pricing of the same, normalisation of LPG prices and improvement in the petchem segment implies that earnings of each of these segments of GAIL (India) Ltd. should improve over the next 2-3 years, according to HDFC Securities. The brokerage is projecting the company's operating profit (EBITDA) and net profit to grow 48% and 46.4% respectively for financial year 2024 and 13.5% and 13.4% respectively for financial year 2025. HDFC Securities recommends buying GAIL in the ₹106 - ₹120 band for a price target of ₹140.
HDFC Securities believes that while Godrej Industries faces some pressure in the near-term as a standalone business, its consumer products (GCPL) and real estate subsidiaries (Godrej Properties) are doing well and their outlook remains healthy. "We expect value unlocking due to the split between the brothers and the holding company discount cound narrow too," the brokerage wrote. It recommends buying Godrej Industries in the ₹555 - ₹624 range for a price target of ₹735 until next Diwali.
While Grasim's standalone business remains under pressure in the near-term, the outlook for its cement and financial services subsidiary remains healthy, HDFC Securities said. Grasim's expansion in the paints business is likely to provide the next leg of growth for the stock. "It can also lead to a rerating of the stock as it brings down the share of the commodity business in favour of the branded paints business. HDFC Securities recommends investors to buy Grasim in the ₹1,700 - ₹1,925 price band for a price target of up to ₹2,275.
Gujarat Alkali and Chemicals is expected to report strong earnings growth in financial year 2025 due to a steady increase in caustic soda prices and lower energy costs, according to HDFC Securities. The brokerage also expects 30% to 35% dividend payout to continue in the medium term. Adverse movement in market prices of gas and power, lower realisation in key end products could hurt operational performance and profitability are some of the key risks. Yet, HDFC Securities recommends buying the stock in the ₹638 and ₹718 price band for a target of ₹875 until next diwali.
Indian Oil's earnings may continue to improve as stable petchem demand allows for a turnaround. "With broad and superiod refining marketing mix, we believe continued demand for petroleum products and declining crude oil prices will continue to drive greater profitability," HDFC Securities said. Regulatory challenges, crude volatility, rupee depreciation, lack of fuel price hikes, volatility in Singapore GRM, high inventory gains or losses are some of the key risks. It recommends buying the stock in the ₹78 - ₹90 band for a price target of ₹103.
HDFC Securities expects Kalpataru Projects (Earlier Kalpataru Power) to report revenue, EBITDA and PAT CAGR of 18%, 27% and 36% over financial year 2023 and 2026, according to HDFC Securities. It is also trading at a significant discount to its Indian peers. As of June 2023, the company's order book stood at ₹47,332 crore, indicating a robust visibility of 3.3x of financial year 2023 revenue. Higher debt levels and elongated working capital, slower execution, promoter pledges are some of the key risks. HDFC Securities recommends buying the stock in the ₹580 - ₹660 band for a price target of ₹795.
HDFC Securities expects United Spirits to continue to focus on driving profitable growth led by a double-digit topline growth, sustained Advertising and Promotion investments, improving pricing and premium mix and productivity gains. "United Spirits has wiped out all accumulated losses of the past in the June quarter and will now look to establish a dividend payout policy," the brokerage said. Regulatory changes, rise in raw material and packaging costs, slowdown in spends on drinking or downtrading are some key risks. HDFC Securities recommends buying the stock in the ₹915 - ₹1,040 band for a price target of ₹1,195.