Diwali Picks | TCS, Bajaj Auto, ACC, Granules India among Choice Broking's favourite bets
Analysts at Choice Broking like Global Health, Bajaj Auto, ACC among 7 other stocks that serve as investment opportunities for the Diwali season of 2024.
Bajaj Auto: The brokerage remains optimistic about Bajaj Auto’s growth trajectory in the medium to long term, supported by several key factors: 1) a growing focus on exports to drive sales; 2) increasing demand for the 125cc 2W “Freedom”; 3) strong demand for the 2W EV “Chetak”; and 4) an aggressive marketing push for CNG-based 2-wheelers and electric variants. 5) With the rising contribution of premium products like Triumph, solid growth in the EV portfolio (2W+3W), and improving profitability from “Chetak.”
2/10
Bharat Dynamics: The outlook for Bharat Dynamics Limited (BDL) is positive, as the company plays a crucial role in meeting the strategic requirements of the Ministry of Defence and Indian armed forces. It holds a unique position as the sole domestic supplier of both offensive and defensive systems. Several major projects are expected to begin from FY25, further boosting growth prospects. Additionally, export opportunities are expanding, with ongoing discussions with four to five allied nations. BDL's diverse product portfolio across different branches of the military and a robust order book of approximately Rs 195 billion as of April 1, 2024—equivalent to 8.2 times its FY24 revenue—will support the company's growth trajectory.
3/10
ACC: India's cement demand is expected to maintain a growth rate of 7-8%, largely propelled by investments in infrastructure and extensive residential housing projects. The company is targeting to double its capacity to 140mnt by FY28E, a significant increase from its current capacity of 89 mnt. The company's strategy revolves around cost optimization, with a concerted effort to reduce costs to fuel its growth trajectory. As per the brokerage's FY26E estimates we expect Revenue/EBITDA to grow at a CAGR of 5.7%/13.1% respectively over FY24-FY26E.
4/10
Somany Ceramics: The tiles industry expected to grow by 13.6% over CY23 to CY25E to Rs 707bn and Exports account for 30% of this market, approximately Rs 179 bn. Exports anticipated to double by CY25 to Rs 304b. SOMC expects double-digit revenue growth for coming years, significantly outpacing the industry's growth by 5%. Margins to improve by 1-1.5% due to higher utilization of new max plant and better product mix driven by a greater contribution from high-margin GVT Tiles. The Bathware segment is also expected to see double-digit growth, contributing to overall revenue.
TCS: Demand outlook continues to remain cautious as seen in the last few quarters. Key business themes seen across industries are cost optimization, vendor consolidation, customer experience transformation, supply chain modernization, risk and resiliency. Management is confident of FY25E to be better than FY24. The company is investing significantly to create a large footprint in emerging growth markets. A near all-time high TCV and client interest in GenAI shall provide growth.
6/10
HCL Technologies: The Services business delivered impressive performance with a 5.9% YoY growth in cc, while digital revenue increased by 7.8%, driven by cloud transformation and cybersecurity, making up 38.5% of services revenue. The firm is well-positioned to capitalize on emerging opportunities in the GenAI sector with its AI Force digital suite, which enhances workflow optimization, operational flexibility, efficiency, and service quality for clients. The company remains committed to achieving business growth in a sustainable and responsible manner. Their deal pipeline is robust, featuring opportunities in Data & AI, Digital Engineering, SAP migration, and efficiency-driven programs.
7/10
EFC: The firm operates through 3 major verticals: Office Rentals, Interior and Furniture & Fixture Trade It has recently forayed into Furniture manufacturing, in which will complement its existing managed office business and also supply to third parties. EFC’s plan to scale up all 3 business verticals will establish itself as an integrated player with diverse revenue streams and also able to capitalize on the cross synergies from these 3 verticals. The furniture manufacturing division starts contributing meaningfully from Q2FY25 as the large capacities go live and will be scaled up in FY26. With the market already for EFC as 60-70% capacity utilization will be met from internal furniture requirement only and then will start pursuing the B2B model.
8/10
Granules India: It operates through three segments: Active Pharmaceutical Ingredients, Pharmaceutical Formulations Ingredients, and Finished Dosages, with a diverse portfolio across various therapeutic areas. Granules is expected to benefit from its strategic shift towards the FD segment, stabilizing Paracetamol API sales in Europe, backward integration efforts, the operationalization of its new FD facility, and new product launches, particularly in North America.
Global Health: The organization operates a network of numerous hospitals under the "Medanta" brand, including ones in Gurgaon, Indore, Ranchi, Lucknow, and Patna, as well as one hospital that is currently being built in Noida. Choice Broking forecasts that Medanta's revenue and EBITDA will grow at a CAGR of 21.6% and 23.0%, respectively, for FY24-26E. The company is in a capex phase, planning to invest INR 1,000-1,200 crore over the next two years, which may impact margins, when the Noida facility begins operations.
10/10
UGRO Capital: The firm has demonstrated impressive growth, with its Assets Under Management (AUM) reaching Rs 9,047 crore in FY24, reflecting a Compound Annual Growth Rate (CAGR) of 80% from FY20-24. The company is well-positioned to continue its robust growth, targeting an AUM of Rs 17,896 crore by FY26E. UGRO Capital is well-positioned to capture the growing demand for MSME credit, with its scalable and techdriven business model driving sustainable growth. The company’s diversified revenue streams, combined with its strong focus on capital efficiency through co-lending partnerships, provide a solid foundation for long-term profitability.
![Global Health: The organization operates a network of numerous hospitals under the "Medanta" brand, including ones in Gurgaon, Indore, Ranchi, Lucknow, and Patna, as well as one hospital that is currently being built in Noida. Choice Broking forecasts that Medanta's revenue and EBITDA will grow at a CAGR of 21.6% and 23.0%, respectively, for FY24-26E. The company is in a capex phase, planning to invest INR 1,000-1,200 crore over the next two years, which may impact margins, when the Noida facility begins operations](https://images.moneycontrol.com/static-mcnews/2024/10/20241022084611_samvat_choicebroking9.jpg "Global Health: The organization operates a network of numerous hospitals under the "Medanta" brand, including ones in Gurgaon, Indore, Ranchi, Lucknow, and Patna, as well as one hospital that is currently being built in Noida. Choice Broking forecasts that Medanta's revenue and EBITDA will grow at a CAGR of 21.6% and 23.0%, respectively, for FY24-26E. The company is in a capex phase, planning to invest INR 1,000-1,200 crore over the next two years, which may impact margins, when the Noida facility begins operations")
