Top 10 Stocks to Buy This Diwali
Diwali 2024 is around the corner, and it’s time for investors to start thinking about where to park their money for the coming year. If you’re looking for solid returns, you’re in luck. HDFC Institutional Equities has just released its portfolio of 10 carefully selected stocks. These picks are expected to offer limited downside risk and superior upside potential by next Diwali. This portfolio includes two large-cap stocks, four mid-caps, and four small-caps, spread across various sectors to help you diversify and maximize your returns.
Let’s take a look at these stocks, their potential, and why they’re worth considering for your portfolio this festive season.
| Stock Name | Entry Price Range (Rs) | Target Price (Rs) | Growth Outlook |
|---|
| Bank of India | 96-106 | 132 | Strong capital adequacy, improved asset quality, attractive valuation. |
| JK Lakshmi Cement | 738-819 | 936 | Revenue, Ebitda, and PAT growth driven by capacity expansion and increased demand. |
| Jyothy Labs | 480-533 | 600 | 12% revenue growth, improved margins, and operating efficiency. |
| L&T Finance | 153-170 | 219 | 18% growth in advances, shift to retail financing from wholesale lending. |
| NALCO | 198-220 | 270 | Low-cost alumina producer, benefiting from rising aluminum prices and margin improvement. |
| Navin Fluorine International | 3,059-3,396 | 3,948 | 35% net profit CAGR from CDMO and specialty chemicals, margin expansion. |
| NCC Ltd | 273-303 | 363 | 16% revenue growth, benefits from infrastructure boom, strong balance sheet. |
| PNB Housing Finance | 893-991 | 1,160 | 18% CAGR in loan book, improved asset quality, and strong RoA. |
| Reliance Industries Ltd | 2,447-2,716 | 3,243 | Focus on 5G, AI, data centers, retail expansion, and renewable energy for future growth. |
| State Bank of India (SBI) | 733-813 | 960 | Strong liquidity, sustained growth, and stable loan-to-deposit ratio. |
1. Bank of India (BOI)
Bank of India stands out with its strong capital adequacy ratio, improved net interest margins (NIMs), and enhanced asset quality. With its gross and net non-performing assets (GNPA & NNPA) significantly lower, BOI is in a solid position.
- Entry Price Range: Rs 96-106
- Target Price: Rs 132 by next Diwali
- Why Buy?: The stock is trading at a very attractive valuation of 0.6 times its FY26 adjusted book value. As its financial performance continues to improve, so will its valuation. This makes it a low-risk, high-reward opportunity.
2. JK Lakshmi Cement
Cement demand is expected to pick up in the second half of FY25, and JK Lakshmi Cement is poised to benefit from this growth. The company is expanding its capacity and improving its operational performance, which will drive future growth.
- Entry Price Range: Rs 738-819
- Target Price: Rs 936
- Growth Outlook: Over FY24-26, revenue is projected to grow by 7.6%, Ebitda by 15.7%, and PAT by 13.9%. These numbers point to a robust future for the company and a strong potential for returns by next Diwali.
3. Jyothy Labs
Jyothy Labs has evolved from a single-product, region-centric company to a professionally managed, multi-product national player. Its revenue has grown at a compound annual growth rate (CAGR) of 12.7% from FY20 to FY24, and it continues to expand.
- Entry Price Range: Rs 480-533
- Target Price: Rs 600
- Why Buy?: With a focus on improving its product mix and operational efficiencies, Jyothy Labs is set to deliver revenue growth of 12%, Ebitda growth of 15%, and PAT growth of 17% by FY26. This makes it a solid pick for the upcoming year.
4. L&T Finance
L&T Finance has been transitioning from wholesale lending to a more diversified retail financing model, which is expected to drive future growth. This shift will reduce its dependence on riskier wholesale loans and stabilize its performance.
- Entry Price Range: Rs 153-170
- Target Price: Rs 219
- Growth Outlook: L&T Finance is expected to see an 18% growth in advances between FY24 and FY26. Despite some concerns over asset quality in wholesale lending, the company’s focus on retail finance makes it a promising pick.
5. NALCO (National Aluminium Company Ltd)
NALCO, one of the world’s lowest-cost producers of alumina, is set to benefit from rising global aluminum prices and increased coal production at its Utkal D and E mines. This will boost margins and drive profitability.
- Entry Price Range: Rs 198-220
- Target Price: Rs 270
- Why Buy?: NALCO is well-positioned for growth with an expected revenue growth of 9.7%, Ebitda growth of 32.8%, and PAT growth of 29.2% over FY24-26.
6. Navin Fluorine International
Navin Fluorine has a strong growth outlook, especially in the CDMO (Contract Development and Manufacturing Organization) and specialty chemical segments. Although the company faced challenges in FY24, it’s expected to recover and deliver solid performance in the coming years.
- Entry Price Range: Rs 3,059-3,396
- Target Price: Rs 3,948
- Growth Outlook: Over FY24-27, revenue is expected to grow at a 23.5% CAGR, with a net profit CAGR of 35%. Margin improvements and increased focus on high-growth segments make this a high-potential stock.
7. NCC Ltd
With the government’s increased focus on infrastructure development, NCC Ltd is in a prime position to benefit. The company has a strong balance sheet, an all-time high order book, and a diversified business model, making it a compelling pick for the future.
- Entry Price Range: Rs 273-303
- Target Price: Rs 363
- Why Buy?: NCC is expected to see a revenue growth of 16%, Ebitda growth of 21%, and PAT growth of 39.6% over FY24-26. Its robust balance sheet and diversified order book make it a great choice for investors looking to tap into India’s infrastructure boom.
8. PNB Housing Finance
PNB Housing Finance is projected to see a steady 18% growth in its loan book over the next two years. With an improved return on assets (RoA) and strong earnings growth, this stock offers solid upside potential.
- Entry Price Range: Rs 893-991
- Target Price: Rs 1,160
- Why Buy?: PNB Housing Finance’s focus on improving its asset quality and growing its loan book makes it a smart buy for Diwali 2024.
9. Reliance Industries Ltd (RIL)
Reliance Industries, with its ambitious plans for growth in retail, telecom, and new energy, is a stock to watch. The company aims to double its Ebitda in the next five years, driven by 5G, AI, data centers, and renewable energy projects.
- Entry Price Range: Rs 2,447-2,716
- Target Price: Rs 3,243
- Why Buy?: With a projected revenue CAGR of 19%, Ebitda CAGR of 14%, and PAT CAGR of 16%, RIL is expected to continue its stellar performance across multiple sectors.
10. State Bank of India (SBI)
SBI is India’s largest bank, and it’s well-equipped to sustain growth thanks to its surplus liquidity and comfortable loan-to-deposit ratio. While some margin compression is expected due to the rate cycle, SBI remains a stable long-term bet.
- Entry Price Range: Rs 733-813
- Target Price: Rs 960
- Why Buy?: With strong fundamentals and growth potential, SBI is one of the safest picks for investors looking for reliable returns over the next year.
Frequently Asked Questions (FAQs)
Reliance Industries and State Bank of India are the two large-cap stocks recommended by HDFC Institutional Equities for Diwali 2024.
Bank of India is expected to reach a target price of Rs 132 by next Diwali, offering a solid return from its current price band of Rs 96-106.
Navin Fluorine International, with a projected net profit CAGR of 35% over FY24-27, is the stock with the highest growth potential in this list.
NALCO is one of the lowest-cost producers of alumina globally, and with rising aluminum prices and improved margins, it’s expected to perform well in the coming years.
The recommended stocks cover a wide range of sectors including banking, finance, cement, aluminum, chemicals, infrastructure, and retail.
Disclaimer
The information provided in this article is for educational and informational purposes only and should not be considered as financial or investment advice. Stock market investments are subject to market risks, and past performance is not indicative of future results. The recommendations mentioned are based on the research and analysis of HDFC Institutional Equities and do not guarantee any specific returns or outcomes. Investors are encouraged to conduct their own research, consult with financial advisors, and consider their risk tolerance before making any investment decisions. The author and publisher are not responsible for any losses or gains incurred from following the advice provided in this article.
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