Diwali Stock Picks 2024: Strategic Investments for Samvat 2081

With the festive season of Diwali around the corner, investors are preparing for the Muhurat Trading session scheduled for November 1, which marks the commencement of Samvat 2081. This period is traditionally associated with auspicious investments, and as we look ahead, there are several compelling stock options that present promising opportunities.

The Economic Landscape: A Bright Outlook

India’s economic growth trajectory continues to be robust, positioning the nation to potentially become the world’s third-largest economy. According to SBI Securities, Nifty 50 companies are projected to achieve an impressive earnings compound annual growth rate (CAGR) of 11.8% over FY24-FY26. Last year, the Nifty and Sensex both hit record highs, delivering returns of 27% and 25%, respectively. Meanwhile, the broader market also showcased remarkable rallies, particularly in mid-cap and small-cap segments, which achieved a staggering 47% return.

As market volatility increases and broader market benchmarks experience fluctuations, analysts suggest that this might be an opportune moment for investors to reassess and bolster their portfolios. While small and mid-cap stocks have enjoyed significant gains, the focus is now shifting towards large-cap stocks, which may offer a better risk-reward balance moving forward.

Top Stock Picks for Samvat 2081

1. Zomato

Zomato has showcased exceptional quarterly performances, solidifying its market share against competitors like Swiggy. The company’s gross order value has driven an increase in market share from 54% in FY22 to 58% in the first quarter of FY25.

Zomato’s aggressive expansion into quick commerce through Blinkit is noteworthy, with plans to enter new cities and diversify product categories, including beauty and electronics. A strategic capital raise capped at $1 billion will bolster its competitive stance, ensuring financial flexibility in a rapidly evolving market.

Moreover, the acquisition of Paytm’s entertainment business for Rs 2,000 crore may yield significant returns, enhancing Zomato’s growth prospects. Although current valuations are high at 54 times revenue, brokerages remain optimistic, with target prices reaching Rs 370.

2. HUDCO

HUDCO stands to gain significantly from the government’s commitment to affordable housing and infrastructure development. Recently reclassified as an NBFC-Infrastructure Finance Company, HUDCO can now finance a broader range of projects, including renewable energy and smart city initiatives.

In FY24, HUDCO reported a total income of Rs 7,948 crore, reflecting a 12% year-on-year increase, while net profit surged by 24%. With a healthy loan growth trajectory and an impressive asset quality profile, HUDCO is currently trading at attractive valuations, making it a valuable addition to any portfolio.

3. Coal India

Once seen as a controversial investment, Coal India has re-emerged as a critical player in India’s growth story. With a production target of 838 million tonnes for FY25 and an ambitious goal of 1 billion tonnes by FY26, the company is positioned to benefit from consistent demand, particularly from the power and steel sectors.

Coal India’s ongoing projects aimed at enhancing transportation efficiency and its foray into graphite mining to meet the rising demand for electric vehicles further bolster its growth narrative. With a dividend yield of 5.2% and competitive valuations, Coal India represents a sound investment opportunity.

4. REC Ltd.

Despite its remarkable performance since 2020, REC Ltd. Continues to thrive due to its focus on the burgeoning power and infrastructure sectors. The company’s assets under management (AUM) are projected to grow significantly, driven by government initiatives and green financing.

With a strong profit trajectory and plans to resolve non-performing assets, REC is well-positioned for sustained growth. Institutional interest remains robust, and its valuation metrics are favorable compared to sector averages.

5. Muthoot Finance

As gold prices reach new heights amid global economic uncertainties, Muthoot Finance is poised for growth. The company stands to benefit from increased loan demand and a stable asset quality profile, thanks to the secure nature of gold lending.

Muthoot’s strategy includes expanding its branch network and maintaining conservative auction policies to mitigate risks. With a projected CAGR of 16% for loan assets and improving operational efficiencies, Muthoot Finance presents a compelling investment case, supported by the intrinsic value of gold collateral.

Conclusion: Seize the Moment

As we enter Samvat 2081, the stock market presents a plethora of opportunities. With careful consideration of the stocks listed above, investors can position themselves to capitalize on India’s economic resurgence. However, it’s crucial to conduct thorough research and consult with financial experts before making any investment decisions.

Happy investing this Diwali, and may your portfolio prosper in the year to come!

Disclaimer: The views and investment tips expressed in this blog are for informational purposes only and do not constitute financial advice. Always consult with a certified financial expert before making investment decisions.