7 Stocks to Buy This Diwali & Get 20-40% Returns

Diwali Picks 2021

Stock Recommendations
by 5paisa Research Team Last Updated: 2021-11-02T12:44:47+05:30 IST

Samvat 2077 has given investors multiple reasons to cheer. Both the benchmark indices – Sensex and Nifty surged over 50% each, gazing beyond the transitory pain arising from the pandemic. Broader markets, however, outperformed the benchmark indices. Unlike previous rallies, retail investors too reveled in this party, as reflected by opening of record number of Demat Accounts. Market performance was driven by factors such as high liquidity, improving economic growth and enhanced profits of India Inc.

As we welcome Samvat 2078, near-term challenges such as surging prices of energy and commodities, higher valuations and possible unwinding of the accommodative monetary policy in both US and India await us. On the flip side, presence of long term catalysts such as continued improvement in the domestic economy and improving earnings growth of India Inc lend comfort. In this scenario, we bring you 7 stocks which could give stellar returns over the next one year.

 

In this scenario, we bring you 7 Diwali Stocks which could give stellar returns over the next one year.

Diwali Picks 2021 -

Stock

CMP (As on Oct 26)

Target Price

Upside (%)

Hindustan Unilever

₹ 2,436.15

₹ 2,950

21%

HDFC Life

₹ 690.15

₹ 980

42%

L&T (Larsen & Toubro)

₹ 1,794.45

₹ 2,192

22%

Tech Mahindra

 ₹ 1,562.90

₹ 1,900

22%

Inox Leisure

₹ 419.70

₹ 530

26%

Max Healthcare Institute

₹ 343.70

₹ 475

38%

Bata India

₹ 1,988.85

₹ 2,380

20%

 

Lets look at these stocks in detail –

1. Hindustan Unilever

CMP (October 26, 2021): Rs. 2,436.15

Target Price: Rs. 2,950

Upside: 21%

HUL needs no introduction. Every Indian uses several products from HUL’s stable ranging across the categories of home and personal care to foods and refreshments. The company is looking to optimize its portfolio and the value offered to customers, besides driving digitalization across its channels. While HUL has a strong reach in every nook and cranny of the country, it is now focusing on hyper-localization through its Win in Many India’s (WiMI) strategy. Focus on premiumization of its brands is likely to augur well for HUL, and resonate well with mid-premium to value consumers. Growing investments in Artifical Intelligence and Machine Learning capabilities will help HUL personalize customers’ experiences while driving cost optimization for distributors and other business partners.

 

2. HDFC Life

CMP (October 26, 2021): Rs. 690.15

Target Price: Rs. 980

Upside: 42%

HDFC Life Insurance Company, a joint venture between HDFC Ltd. and Standard Life Aberdeen, is a leading private life insurer in India. Growing distribution reach is a key internal growth driver for the company, with highly underpenetrated life insurance market being an external one. Post-acquisition of Exide Life, HDFC Life will become the second largest private life insurer with a market share of ~16.5% in total new business APE (Annualized Premium Equivalent). Improving product portfolio, customer-centricity, solid financial profile and growing protection business will drive the company’s future performance. Rising share of annuity and protection products, coupled with strong operating leverage should support consistent margin expansion for HDFC Life.

 

3. Larsen & Toubro

CMP (October 26, 2021): Rs. 1,794.45

Target Price: Rs. 2,192

Upside: 22%

Larsen & Toubro or L&T is a large Indian conglomerate present in several sectors including technology, engineering, construction, manufacturing and financial services. It is a proxy play on the Indian economy, given its vast presence in the infrastructure sector. Company has a robust order book and management is confident of strong order inflows in the foreseeable future. Water, Heavy Engineering, Power T&D and Transportation infra are likely to drive order inflows and market share gain for L&T, given the government’s continued emphasis on these segments. L&T’s ability to execute its order book efficiently, reduce working capital, drive cost optimization and leverage digital technologies make it stand out from its competitors. Robust prospects of its IT subsidiaries (L&T Infotech, L&T Technology Services and Mindtree) also augur well for the consolidated entity.

 

4. Tech Mahindra

CMP (October 26, 2021): Rs. 1,562.90

Target Price: Rs. 1,900

Upside: 22%

Part of the prestigious Mahindra Group, Tech Mahindra is one of India’s leading IT services company. After languishing its peers in terms of growth as well as profitability for quite some time, the company seems to have achieved high visibility and consistency on these fronts. Robust deal wins (especially in key verticals of telecom and enterprise), resilient margins and enhanced capital allocation are some of its key strengths. Management expects to clock in double digit growth in revenues during FY22 and maintain margins at ~15%. The stock, though, continues to trade at a sharp discount to peers (~30%) and can catch up significantly from here on.

 

5. Inox Leisure

CMP (October 26, 2021): Rs. 419.70

Target Price: Rs. 530

Upside: 26%

Inox Leisure is one of the largest multiplex chains in India and had 156 multiplexes and 658 screens in 70 cities, as of October 2021. The company is one of the worst hit from the pandemic as multiplexes remained closed for the longest time. Hence, it is one of the key beneficiaries from reopening of multiplexes across the country. Inox Leisure plans to take its total screen count to 692 by March 2022. As restrictions around vaccinations ease and good content releases across languages, occupancies and ticket prices can reach pre-pandemic levels. Company is also focusing on non-movie revenues (live sporting events, corporate events, games, etc.) to reduce seasonality of the business. Its strong position and net debt-free balance sheet are some of the other key positives.

 

6. Max Healthcare Institute

CMP (October 26, 2021): Rs. 343.70

Target Price: Rs. 475

Upside: 38%

Max Healthcare Institute (MHI) is the second largest listed healthcare provider in India and operates 17 healthcare facilities (total 3,400 beds). MHI enjoys dominant position in northern India. The company is also present in preventive & pre/post-hospitalization care at home and diagnostics services segments. Its focus on premium markets (Mumbai, Delhi NCR) augurs well for its Average Revenue Per Occupied Bed (ARPOB). MHI enjoys better ARPOB than peers owing to more number of operational beds. Its plans to add another 1,630 beds by FY28 lend high visibility to future growth. Company is also looking for strategic inorganic opportunities. Overall, it is well placed to capture emerging opportunities in the healthcare space.

 

7. Bata India

CMP (October 26, 2021): Rs. 1,988.85

Target Price: Rs. 2,380

Upside: 20%

Bata India is one of the oldest players in the Indian footwear market and offers products across all categories (men, women, kids) and price points (mass market to premium). The company’s nationwide footprint (over 1,500 stores) and strong brand recall are its key strengths. Additionally, it has scaled up focus on e-commerce which contributed 15% to FY21 revenues. Its omni-channel solutions provide superior experience to customers. Company’s strategic focus areas include change in product mix towards casual footwear, cost optimization, expanding reach through the asset-light franchisee model and enhancing potential of omni-channel. It is on the right path to improve growth as well as profitability in the future.

 

Before concluding, I leave you with a thought-provoking quote from none other than the ‘oracle of Omaha’- Warren Buffet: “The stock market is designed to transfer money from the active to the patient.” So, follow a disciplined, patient approach to investments.

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58,853.07
465.14 (0.80%)
17,525.10
17,525.10
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38,237.40
316.80 (0.84%)

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