Domestic broking firm JM Financial has come out with a list of 10 stocks including Reliance Industries, Bajaj Finance, Power Grid Corporation of India, Jindal Steel & Power (JSPL) and Ashoka Buildcon, which it believes can be bought this Diwali for solid 15-28 per cent returns in Samvat 2081.
Since last Diwali, Nifty has gained about 25 per cent. But the recent surge in crude oil prices, global economic slowdown worry and geopolitical concerns are potential near-term risks for the overall GDP growth of the economy, JM Financial said.
Here’s what it said on the Diwali 2024 stock ideas:
Reliance Industries Ltd
RIL is a diversified conglomerate with businesses spread across Oil to Chemicals (Oil Refining and Petrochemicals), E&P, Digital Services, Retail, Media & New Energy. The company plans to grow its revenue from Jio and retail businesses in the next 3-4 years. Additionally, its focus on green energy positions it well for the future.
Earnings growth momentum is seen remaining strong across segments. JM Financial sees RIL to log 15 per cent PAT growth compounded annually over FY24-27. The brokerage has suggested a target price of Rs 3,500, which indicates an upside of about 28 per cent over the next 6-12 months.
Power Grid Corporation of India Ltd
Power Grid is India’s largest power transmission company, handling about 45 per cent of the total power generated in the country. It owns and operates most of India’s inter-regional and inter-state power transmission system (ISTS).
With a strong transmission growth opportunity till 2032, PGCIL has robust capex guidance and regulated business model that gives confidence on earnings visibility. JM Financial suggested a target price of Rs 383 on the counter, which suggested a potential upside of 17 per cent within 6-12 months.
Bajaj Finance Ltd
Bajaj Finance is a leader in retail lending, offering consumer loans across two & three wheelers, Housing, Gold loans as well as MSME financing. Bajaj Finance has shown consistent growth in assets under management and is focusing on secured loans as per RBI guidelines. It has one of the largest deposit profiles amongst NBFCs at Rs. 63,000 crore. The festive season is also expected to boost demand. JM Financial has a target price of Rs 8,552 on Bajaj Finance, suggesting a potential upside of about 18.6 per cent.
ICICI Lombard General Insurance Ltd
ICICI Lombard is the second largest Indian general insurer, behind the public insurer New India Assurance Co., with a market share of 8.6 per cent of FY24 premiums. It is the segment leader in motor insurance space; and amongst the private insurers, it is the leader in key commercial segments of fire, engineering, marine & liability and scaling up rapidly in the fast-growing health segment. JM Financial suggested a target of Rs 2,450, giving an upside potential of 17 per cent over the next 6-12 months.
Jindal Steel & Power Ltd
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 per cent to 15.9 mtpa. The company’s ongoing expansion would also significantly enhance its crude steel capacity, catapulting it to the fourth largest steel manufacturer in India by FY26.
JM Financial suggested a target price of Rs 1,150 for JSPL. The target suggested an upside of 19 per cent.
Nalco Ltd
Nalco is a PSU with the government of India’s stake at 51.3 per cent, as of June 30. The company is one of the largest producer of bauxite, alumina and aluminum in India with production of 0.46mt/2.12 mt for aluminium/alumina in FY24. The export sales volume of alumina stood at 1.17mt in FY24. NALCO’s expansion of its alumina refinery, rising alumina prices, and cost-saving through captive coal mining are expected to drive earnings growth. JM Financial finds this stock worth Rs 264, hinting at a potential upside of 17 per cent over the next 6-12 months.
Gravita India Ltd
Gravita India is a leading player in India’s recycling industry and currently operates in three verticals i.e. lead, aluminum, plastics and have 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 per cent of its Ebitda from lead recycling vertical. Gravita’s capex plans and favorable regulatory changes provide strong growth potential for its recycling operations, JM Financial said as it suggested a target of Rs 3,068 for the stock. The target suggests a potential 21 per cent upside
Macrotech Developers Ltd
JM Financial said Macrotech Developers (popularly known as Lodha) should be able to consolidate its leadership position further, led by its robust sales machinery and healthy mix of premium, mid-income and affordable projects, coupled with existing tailwinds across the residential cycle. Lodha has also continued to expand into segments such as logistic parks, commercial and retail, as part of mixed-use developments, to strengthen its position as a top developer across product categories and customer segments, JM said.
“Macrotech’s strong track record in developing residential townships and generate annuity-like cash flows and its focus on higher intensity of asset-light portfolio additions is likely to drive growth. We set a target of Rs 1,480, suggesting a potential upside of 23 per cent,” it said.
Olectra Greentech Ltd
Olectra is one of the largest manufacturers of electric buses in India and a key player in the EV segment. It has establishing greenfield State-of-the-Art plant in Hyderabad with capacity of 5,000 units/year and scalable to 10,000 units per year. Partial operations have commenced for manufacturing electric buses and other EV products in the new plant. Over the next 2 fiscals ramp up will be visible.
Olectra’s collaboration with BYD, a growing market for electric buses, and a strong order book provide growth potential, JM said as it suggested a target of Rs 2,200
Ashoka Buildcon Ltd
Ashoka Buildcon Ltd provides a wide range of construction services from the building of roads, bridges, and power transmission and distribution projects. The company is one of the leading players in the BOT (Build Own, Transfer) segment. The company also recently forayed into the CGD (City Gas Distribution) segment. Going forward, the company’s performance is expected to improve given a diversified order book, respectable execution capabilities, an anticipated acceleration in execution, and a reduction in debt. JM suggested a target price of Rs 290 for the stock.
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