Samvat 2080 stock choices: A look at Sharekhan's diwali selections

Samvat 2080 stock choices: As Samvat 2079 draws to a close, the market has exhibited resilience despite global economic challenges. Year-to-date, the Nifty has surged 14.6 per cent, and the CNX Midcap index has shown a rise of 31 per cent. Sharekhan's Diwali Picks 2022, comprising a mix of large and mid-cap stocks, has outperformed both Nifty and CNX Midcap, delivering a 35.9 per cent return on investment.

Looking forward to Samvat 2080, despite looming global headwinds and forthcoming elections, country's economy is displaying signs of strengthening. Corporate earnings are projected to grow at a Compound Annual Growth Rate (CAGR) of 15 per cent over the next two years. Sharekhan has unvield  its Diwali Picks for Samvat 2080, with a keen focus on domestic and export market opportunities.

Top stock picks for Samvat 2080

1. Bank of India

• Current Market Price (CMP): Rs 100.90
• Strong asset quality outlook with expected improvement in Return on Assets (RoA).
• Anticipated strong cash recoveries and loan growth, especially in the MSME and corporate sectors.
• Valuations expected to increase as return ratios improve.
• Key risks: Economic slowdown, slower loan growth, and macroeconomic factors.

2. Bharat Forge Ltd

• CMP: Rs 1,075.70
• A domestically-grown MNC with expertise in forging, catering to auto and non-auto segments.
• Focus on expanding in the global casting segment.
• Expectation of growth in the defense segment.
• Well-diversified business model and strong order book.
• Key risks: Unfavorable global business cycle, rise in raw material costs, and regulatory changes.

3. Birlasoft

• CMP: Rs 597.45
• Global IT services and consulting company.
• Renewed focus on select geographies and service lines.
• Strong revenue growth and robust deal pipeline.
• Expected growth in the digital and data business.
• Key risks: Exchange rate fluctuations, macroeconomic headwinds, and a possible recession in the US.

4. BSE Limited

• CMP: Rs 1,863.25
• Expected strong earnings growth driven by equity and index derivatives segments.
• Improvement in derivative market share and growth in cash volumes.
• Potential in the derivative segment and cash market.
• Key risks: Slower-than-anticipated growth in equity derivatives.

5. DLF

• CMP: Rs 592.00
• Strong position in real estate with a diverse project portfolio.
• Sales guidance and planned launches.
• Focus on increasing the rental portfolio.
• Key risks: Real estate demand slowdown, unfavorable macro indicators.

6. Garware Hi-Tech Films Ltd

• CMP: Rs 1,536.60
• Capital expenditure for capacity expansion and focus on value-added products.
• Fully vertically integrated manufacturing facilities.
• Improvement in margins and product customization.
• Key risks: Surge in oil prices and sluggish demand in automotive and real estate sectors.

7. Hindustan Aeronautics

• CMP: Rs 1,934.75
• Aerospace and defense company with strong growth prospects.
• Healthy order book and potential for long-term growth opportunities.
• Expected double-digit revenue growth from FY2025.
• Key risks: Fluctuations in raw material prices and delays in component availability.

8. IndusInd Bank

• CMP: Rs 1,470.25
• Focus on granular growth and internal risk framework.
• Strong loan growth and stable NIMs.
• Predictable performance and potential re-rating.
• Key risks: Economic slowdown, higher credit costs, and slow growth in the retail liability franchise.

9. Kirloskar Oil Engines

• CMP: Rs 544.95
• Leading generator set manufacturer with growth opportunities in the domestic market.
• Strong demand for CPCB IV+ compliant gensets.
• Robust balance sheet and lean working capital cycle.
• Key risks: Macroeconomic slowdown and unfavorable overseas conditions.

10. Kolte-Patil Developers

• CMP: Rs 520.30
• Realty developer with a robust project portfolio and sales growth plans.
• Focus on new business developments and diversification.
• Inflection point in flagship project and expansion in non-Pune regions.
• Key risks: Real estate demand slowdown, project delays, and new deals.

11. Larsen & Toubro

• CMP: Rs 2,975.45
• Multinational company engaged in engineering, construction, and more.
• Strong order book and growth opportunities in the Middle East and defense segments.
• Key beneficiary of the AtmaNirbhar Bharat scheme.
• Key risks: Domestic macroeconomic slowdown and geopolitical conflicts.

12. Sanofi India Ltd

• CMP: Rs 7,698.75
• Leading MNC pharma company with a focus on the Diabetes portfolio.
• Demerger of the consumer health segment expected to unlock value.
• Expected growth in Diabetes portfolio and maintained margins.
• Key risks: Inclusion of key brands in the NLEM list and higher raw material costs.

13. Tata Motors

• CMP: Rs 646.05
• JLR's strong performance and order book position.
• Market leader in the domestic CV industry.
• Gained market share in the domestic PV segment.
• Expected consistent performance and reduction in net automotive debt.
• Key risk: Cyclical downturn and geopolitical conflicts.

14. Wonderla Holidays

• CMP: Rs 938.25
• One of the largest theme park operators in India.
• Transformation into an asset-light model and plans for new parks.
• Attractive valuations and double-digit earnings visibility.
• Key risks: Footfall slowdown and park delays.

(CMP as on November 6, 2023)