BSE Smallcap index declined 9 percent, BSE Midcap index down 2 percent, while BSE largecap index added 10 percent in last one year.
Market remained highly volatile in the last one year amid domestic, as well as international, cues including general election outcome, Union Budget, RBI policy, corporate rate cut, US-China trade talk, Brexit Deal etc.
Nifty touched its all-time high of 12,103.05 while Sensex touched a high of 40,308 on June 3 on the intraday basis.
From the last Muhurat trading session (November 7, 2018), the Nifty rose 1,131.85 points (10.75 percent) while Sensex added 4,306.47 points (12.31 percent).
IndiaNivesh expect the economy to be back on track from FY21 onwards as benefits of the recent tax reforms will play out in full throttle.
BSE Samllcap index declined 9 percent, and BSE Midcap index down 2 percent while BSE largecap index added 10 percent in last one year.
Below are the top ten stock picks for Samvat 2076 (Diwali 2020) with 20-84 upside:
Brokerage: Aditya Birla Capital
Dr. Lal PathLabs | Upside: more than 20 percent
Dr. Lal PathLabs' revenue and profit has grown at a CAGR of 16 percent and 21 percent respectively over the past five years. With strong brand equity, solid business model and an ongoing industry shift from unorganised to organised players, the company is expected to grow at a faster click as compared to the overall industry.
The company trades at a reasonable valuation (given its higher growth profile) of 38x on its FY21E earnings which we believe should sustain because of low capex requirements in the future & sustained Free Cash Flow generation. We expect the stock to deliver 20 percent+ over the next 12 months.
HDFC Bank | Upside: 20 percent
HDFC Bank is well-positioned to grow credit and PAT at ~20 percent CAGR for next couple of years. It earns strong NIM of ~4.3 percent mainly owing to high yielding retail credit book. CoF to remain relatively on lower side considering the strong business model and provide further edge to the bank as competition struggles. RoA of ~2 percent is among the best in industry.
Rich valuations are to be maintained considering the steady growth, superior NIM and ROA generating capabilities of the bank. Expect stock to deliver ~20 percent return in 1 year time-frame.
HDFC Life Insurance Company | Upside: 20 percent
HDFC Life Insurance Company is well-positioned to grow its APE, VNB and profitability on steady state basis. Market-leading digital capabilities and ability for innovative, customer oriented products like HDFC Sanchay, shall enable the company to maintain its leading position in life insurance market.
Owing to high protection mix, the company earns superior VNB margin of 25 percent+ which enables it to earn healthy RoE of ~25 percent and dividend payout of ~25 percent, thereby keeping valuations rich. Seasoned leadership guided by an independent and competent board keeps the company’s governance at highest standard while maintaining business performance. Expect the stock to deliver ~20 percent return in 1 year time-frame.
Hero MotoCorp | Rating: Accumulate | Upside: 27 percent
We believe the management conviction of growth picking up from H2FY20 will hold. A l ower interest rate scenario, good monsoons and stable input prices augur well. The entry into e-vehicle and premium segment will be a blended realization accretive. Conservatively valuing the company at a PER of 16x FY21e, we arrive at a target price of Rs 3,376, implying an upside of around 27 percent from current levels. We recommend ‘Accumulate’ on Hero MotoCorp.
JK Paper | Rating: Accumulate | Upside: 50 percent
The company is trading at a PER of 4.30x on a TTM basis. A healthy balance sheet, considerable reduction in debt along with improving operating margins make the risk-reward ratio quite favourable. Operating margins have improved to 27 percent (FY19) from 8 percent in FY14. Debt/equity ratio has reduced to 0.76x in FY19 from 2.42x in FY14.
We expect the revenue of 15 percent CAGR for the next couple of years. Conservatively valuing the company at a PER of 6x FY21E, the target price is Rs 174 per share, with an upside of around 50 percent from current levels. The company has scope for potential re-rating. We recommend ‘Accumulate’ on JK Paper.
Escorts | Rating: Accumulate | Upside: 35 percent
Escorts is trading at a PER of around 16x on TTM basis. It usually trades at a higher multiple of 25-27x on TTM basis. We believe the company will not only gain market share from its competitors but is also well placed to capitalize on the future economic revival. It appears poised for a re-rating. Valuing the company at a PER of 18x FY21E, the target price is Rs 810 per share, implying an upside of around 35 percent from current levels. We recommend ‘Accumulate’ on Escorts.
Godrej Consumer Products | Upside: 26 percent
The stock is presently trading at a PER of 30x on TTM basis. Usually, it trades at a PER of 40-45x (TTM basis) during the last five years. We expect FY20 to end with de-growth of around 3-5 percent on top and bottom line. However, a pickup in revenue and profitability is expected from the onset of FY21. Conservatively valuing the company at a PER of 35xFY21E, we arrive at a target price is Rs 875 per share, implying an upside of around 26 percent from current levels.
LIC Housing Finance | Upside: 84 percent
The stock is presently available at a P/BV ~1.15x on TTM basis. Usually, it has traded at a P/BV 1.5 to 1.75x (TTM basis) during the last five years. We expect a profit CAGR of over 20 percent for the next couple of years. Conservatively valuing the company at P/BV of 1.5x on FY21E, we arrive at a target price of Rs 681 per share, implying an upside of around 84 percent from current levels.
Axis Bank | Upside: 26 percent
Looking at the weekly chart, Axis Bank has been in a consolidation phase for nearly four years and formed an ‘Ascending Triangle’ pattern. On January 11, 2019; stock eventually confirmed its breakout from said triangle pattern. The break of such resistance led to an acceleration of bullish momentum as a result stock rallied and hit an all-time high of Rs 827. Subsequently, the stock corrected in the past few months in line with its peers. However, selling pressure exhausted near Rs 640-620 zone which earlier acted as a strong resistance and post-breakout it reversed its role and provided immediate support (change of polarity rule).
Also, the 61.8% Fibonacci retracement of its entire move from the bottom of Rs 534 to the top of Rs 827 comes near Rs 640. The weekly RSI (14) came near 40 levels and signaled ‘Bullish Divergence’ which indicates that the stock is likely to form its base. Considering the above technical evidence, we believe that the recent fall was merely a pullback and is likely to resume its uptrend soon. Hence, we advocate traders to accumulate this stock in a range of Rs 710 to Rs 690 with a price target of Rs 925. Stoploss should be placed at Rs 595 below which our bullish view will be negated.
ITC | Upside: 46 percent
Looking at quarterly chart, ITC hit an fresh all-time high of Rs 354 during September, 2017 from there onwards stock has seen a sharp decline. Subsequently, the stock witnessed broad consolidation of Rs 235 on the down side and Rs 320 on the upside. Recently, the stock is oscillating near its lower band of its trading range. Broadly speaking, the all-time high of Rs 354 failed to confirm by the RSI (14) momentum indicator which signaled ‘Bearish Divergence’ pattern.
The impact of such development was seen in terms of sharp sell-off during September, 2017 quarter. However, looking at the quarterly chart, the lower band of its recent consolidation precisely coincided with the 61.8% Fibonacci retracement of its entire move from the bottom of Rs 165 to the top of Rs 354. Also, the previous resistance of December 2014 and March 2015 had reversed its role post breakout and continued to act as an immediate support. Considering the above evidences, we believe that the recent underperformance will sooner or later will turn into outperformance. Hence, we recommend investors to buy ITC in a range of Rs 240 to 230 with an upside price target of Rs 365. Stop loss should be placed below Rs 190.Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.LIVE NOW... Video series on How to Double Your Monthly Income... where Rahul Shah, Ex-Swiss Investment Banker and one of India's leading experts on wealth building, reveals his secret strategies for the first time ever. Register here to watch it for FREE.