Axis Direct highlights how the year has been a volatile one, with US-China trade tensions, rising crude prices, depreciating rupee, and debt market liquidity crisis dominating cues that are responsible for a correction in the market
Reliance Industries, ICICI Bank, Hindustan Unilever, Cipla and Bajaj Finance are among 12 names that Axis Direct has named as its Diwali picks for Samvat 2075. The brokerage house sees an upside between 10 and 43 percent in these names.
In its report, Axis Direct highlights how the year has been a volatile one, with US-China trade tensions, rising crude prices, depreciating rupee, and debt market liquidity crisis dominating cues that are responsible for a correction in the market. Further, it adds that the gains made in the last year have been wiped off in the last two months.
Axis Direct also said the impact of these issues is likely to continue to take a toll.
Going forward, a heavy political calendar due to the state elections and general elections will make the market move in a range. This is likely till some clarity emerges on leadership trends at the Centre.
“We would suggest investors to use the opportunity given by the correction in the market to load up on marquee growth-oriented stocks backed by proven management,” analysts at the firm wrote in their report.
A stronger economy, consistent monsoons and reforms by the government are likely to boost the market in the long term.
Here is a list of 12 recommendations made by the brokerage house as Diwali picks.
Ashok Leyland | Target: Rs 154 | Upside: 38 percent
The brokerage is betting on factors such as growth in commercial vehicles segment, positive effect on margins due to change in product portfolio, capacity expansion and improvement in margins based on increasing levels of utilisations to help the stock.
Bajaj Finance | Target: Rs 2,642| Upside: 27 percent
Its investment rationale is based on factors such as continued growth expectations along with steady improvement in return on asset. Along with this, it is betting on stable asset quality and the fact that it has better asset liability management structure among non-banking financial companies (NBFCs).
Cipla | Target: Rs 744 | Upside: 19 percent
Axis Direct is betting on the stock based on parameters such as strong growth in India and South Africa, along with better US sales, sustained operating margins as well as strengthening presence through partnerships.
Hindustan Unilever | Target: Rs 1,724 | Upside: 10 percent
The brokerage house believes reasons such as double-digit volume growth guidance augurs well for the company, going forward. Further, price hikes and cost savings done to protect margins are likely to help the firm.
ICICI Bank | Target: Rs 372 | Upside: 16 percent
The bank is a bet for Axis Direct based on factors such as rising strength of liability franchise and increase in proportion of non-interest income. Moreover, it sees a moderation in its stress recognition which works well on the asset quality front.
L&T Infotech | Target: Rs 2,139 | Upside: 26 percent
Strong deal wins in the second half of last fiscal as well as the first half of this fiscal, along with healthy margins will bode well for the stock, it said. Further, it sees growth across verticals and bets on the company as it is focused on client mining.
Minda Industries | Target: Rs 393 | Upside: 27 percent
Minda Industries is a bet on the back of new regulations in the automotive industry. Further, it expects rising premiumisations to add value to the stock. It also expects sustainable demand to help improve margins for the company.
Mold-Tek Packaging | Target: Rs 345 | Upside: 32 percent
Axis Direct believes the company’s leadership in in-mold label packaging to be a game changer and expecting it to continue to drive revenue and earnings growth. Additionally, strong clientele, higher contribution to food and FMCG segment being a margin driver could add to the stock’s growth.
Reliance Industries | Target: Rs 1,346 | Upside: 28 percent
RIL is a bet based on factors such as further growth from its retail business, acquisition of Hathway and Den Networks being a big boost, profit growth due to petcoke gasification, as well as, its trump card Jio.
Disclaimer: Reliance Industries Ltd., which owns Jio, is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.
Steel Strips Wheels | Target: Rs 1,425 | Upside: 43 percent
The brokerage house is placing its bet on the stock based on its capacity expansion plan, improved utilisation due to higher utilisation of commercial vehicle lines, import duty on Chinese wheels by the US and improvement in margins.
Titan Company | Target: Rs 929 | Upside: 19 percent
Its investment rationale includes parameters such as better growth for the jewellery segment despite a weak environment along with jewellery revenue growth at 20 percent CAGR and improved performance in watches segment.
Trident | Target: Rs 86 | Upside: 36 percent
The research firm believes strong performance of paper segment, improvement in margins due to operating leverage and deleveraging activity will boost the stock.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.