As the Indian equity market is about to enter Samvat 2081, financial services firm Prabhudas Lilladher Capital (PL) firm released a report naming ten stocks that are expected to perform remarkably. Samvat-2081 set to start from November 1, 2024, with Muhurat trading scheduled between 6 pm to 7 pm on the day.
Equity and gold performed remarkably well in Samvat-2080, both hitting record highs this year. Sensex and Nifty touched 85,978 points and 26,250 points respectively on September 27, 2024. Currently, the benchmark indices have shed over 6 per cent, however, it is after having retirement 25.1 per cent, and the NSE Nifty50 grew 27.9 per cent this year. Gold and silver gave 39.7 per cent and 44.3 per cent respectively.
"Although US FED has cut interest rates, rising concerns on the state of the US and Chinese economy and geopolitical uncertainty is making gold as a preferred currency," PL Capital said.
Looking ahead, weather patterns are affecting crops and keeping food inflation high while election freebies can cripple growth. We believe froth in small caps, and primary markets is coming off, and larger mid-caps and large caps are likely to outperform. Focus on businesses with strong moats will help investors preserve capital and generate returns in coming years.
Stock Picks By PL Capital
Out of the 10 stocks recommended by PL Capital, seven are from the large-cap space and three are from small and mid-cap space. Large-cap stocks include Ambuja Cement, Bharat Electronics, Cipla, ICICI Bank, LTIMindtree, Max Healthcare Institute and Reliance Industries.
DOMS Industries, Praj Industries and Safari Industries (India) are the stocks from mid-cap and small-cap space.
PL Capital vouches for the upside potential, also citing its past performance. The portfolio comprising of these stocks has outperformed Nifty by 23 per cent since November 2018. Since April 2023, these stocks gave 49.1 per cent outperforming Nifty by 9.1 per cent. We list five stocks that PL Capital believes to hold the highest upside potential.
Ambuja Cement; CMP: Rs555; Target Price: Rs756
As Ambuja Cements (ACEM IN) added 17.6 metric tonne production capacity via an inorganic route in the past 2 years and laid plans to add 6 metric tonnes of organic capacity by FY25 end, the stocks have substantial upside potential, the release said. ACEM seems well placed given its strong balance sheet, particularly since its EV/EBITDA is at 10.4x.
ICICI Bank; CMP: Rs 1,252; Target Price: Rs 1,520
ICICI Bank's balance sheet profile is strong since its core capita is adequate at 16 per cent. Further, the provision buffer is best-in-class at 1 per cent of loans. After the Net interest margin (NIM) stabilises, the core earnings growth could be 17 per cent YoY for FY27, which could provide RoA and RoE at 2.16 per cent and 16.8 per cent respectively.
LTI Mindtree; CMP: Rs 5,935; Target Price: Rs 7,360
LTI Mindtree is well-positioned to capture discretionary and non-discretionary spending. While near-term margins face pressure from ongoing Sales and Marketing investments, growth will enable capitalizing on these investments, projecting a 9.7 per cent CAGR in USD revenue and 13.7 per cent in earnings from FY24-FY27E.
DOMS Industries; CMP: Rs 2,704; Target Price: Rs3,349
This company holds a strong competitive edge in a fragmented market full of unorganised players, through brand recall, innovative products, and backward integration for cost competitiveness. With plans for a Rs 4.5bn capital expenditure to expand its portfolio and a recent entry into diapers and ancillary categories, PL Capital expects a 26 per cent revenue and 28 per cent PAT CAGR over FY24-FY27.
Safari Industries; CMP: Rs 2,278; Target Price: Rs 3,005
Safari Industries, a luggage brand is growing rapidly with a 21.2 per cent sales and 20.9 per cent EBITDA CAGR projected until FY26E. A new plant in Jaipur will help meet rising demand and alleviate pricing pressures. Further, it will enhance cost competitiveness and help the company compete in the price-sensitive mass segment, it said.
