Diwali Picks Samvat 2079 – Indian Stock market is fundamentally strong compared to global stock market. India stood strong amidst many global headwinds like; high inflation, rising interest rates, currency swings, geo political uncertainties, and the onslaught of FII selling.
Despite the huge volatility, Nifty since last Diwali lost a marginal ~3% (as of 17th Oct) as compared to 20-30% fall in most of the global indices. Nifty largely oscillated in a broader range of 3,000 points. While the Nifty Midcap index remained resilient with a fall of just -2%, Nifty Smallcapindex faced the major brunt with a fall of -12%.
The driving force behind India’s outperformance was the strong corporate earnings growth of 24% CAGR during FY20-22. Going ahead too, Nifty earnings are expected to grow robustly at 16% CAGR over FY22-24. Further strong domestic inflows provided stability to the market with DIIs putting in Rs1.8lakh crore, compensating for FII outflows of Rs1.8 lakh crore.
Here are 10 Fundamental Diwali Picks Samvat 2079 by Motilal Oswal. These stocks are expected to give the best returns in the future.
10 Large Cap Mid Cap Diwali Picks Samvat 2079 by Motilal Oswal
Large Cap Diwali Picks Samvat 2079
Infosys continues to see traction in the large deal pipeline, despite an adverse demand environment. It is a long-term beneficiary of an acceleration in IT spending, given its capabilities around Cloud and Digital transformation.
SBI continues to strengthen its Balance Sheet and focuses on building a superior loan book. This has aided in a sustained turnaround in operating performance and will drive return ratios higher. Among PSU Banks, SBI remains the best play on a gradual recovery in the Indian economy, with a healthy PCR (~ 75%), Tier I of 11.2%, a strong liability franchise, and improved core operating profitability.
#3 Larsen & Toubro
L&T is a beneficiary of a record high order book, improving the health of the Hyderabad Metro project, and revival in private CAPEX. Focus on asset monetization to further strengthen the balance sheet and improve return ratios.
Strong demand and favorable product lifecycle for Maruti augurs well for market share and margin. We expect a recovery in both market share and margin from 2HFY23, led by an improvement in supplies and mix, and operating leverage.
#5 Apollo Hospital
Apollo Hospital (APHS) is well placed to deliver improved occupancy in healthcare services, partly supported by international patients and a higher share of insurance-linked patients. Enhanced offerings to patients through Apollo 24/7 platform and better footfalls in Apollo Health and Lifestyle (AHLL) network to aid growth.
Mid Cap Diwali Picks Samvat 2079
#6 Ashok Leyland
Ashok Leyland is a good play on a CV cycle recovery, coupled with retrieval in market share and bet on expansion in revenue and profit pools. Any fundraising in Switch Mobility (EV business) could serve as a re-rating catalyst.
#7 Jubilant Food
Jubilant, our top pick in the QSR space, is well-placed to capture the enhanced post-Covid opportunity presented to QSRs in India.It continues to build extensively on its three key moats of delivery expertise, supply chain efficiency, and technological superiority to tap this opportunity.
IDFC First Bank is entering a phase of strong loan growth of 21% CAGR over FY22 25E, aided by improvement in profitability due to the replacement of high cost borrowings, better cost trends and controlled credit costs.
A strong brand, quality service levels, transparency and customer-friendly products have enabled IDFC First Bank to improve its funding mix in favor of low cost customer deposits. We expect RoA RoE to touch 1.3%/13.9% in FY25E.
Zee Sony merger has received both the CCI as well as shareholder’s approval. With this, the merger process may conclude by 4QFY23.
With the majority stake now being owned by Sony, the stock should also benefit from better capital allocation, improved corporate governance, and business synergies. The combined entity has the potential to become a strong dominant player in the Broadcasting space and also capitalize on large-scale digital opportunities.
#10 Lemon Tree Hotels
Lemon Tree has a strong presence in the mid-priced Hotel segment. It benefits from improving traction in corporate travel as ~ 86 of its rooms are located in the business destination. It is focusing on adding rooms under the ‘management contract’ model where it has a strong pipeline of 24 properties lined up.
(The views content and recommendations expressed in this post are of leading stock market experts and do not represent those of Moneyexcel.com. Please consult your financial adviser before taking any position in the stocks mentioned)