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HDFC Securities has released its Diwali 2024 stock picks, highlighting 10 stocks that investors should consider. Since last Diwali, the Nifty 50 index has increased by about 28%. The brokerage expects moderate returns and higher market fluctuations in the upcoming year. The recommended stocks include Bank of India, JK Lakshmi Cement Ltd, Jyothy Labs Ltd, L&T Finance Ltd, National Aluminium Company Ltd, Navin Fluorine International Ltd, NCC Ltd, PNB Housing Finance Ltd, Reliance Industries Ltd, and State Bank of India.
HDFC Securities believes that specific stocks and sectors will continue to present opportunities for smart investors in the coming year.
Overview of Diwali Stock Picks
Let’s take a closer look at the valuations and prospects of the 10 stocks suggested by HDFC Securities.
1. Bank of India
The bank shows strong financial health with a good capital adequacy ratio, better net interest margins (NIMs), and improved asset quality. Its current trading position is at a price-to-book (P/B) ratio of 0.6x for FY26 estimated adjusted book value (ABV). The bank is expected to improve its valuation due to better financials and outlook. HDFC Securities recommends buying shares in the range of ₹96-106, with a target price of ₹132 (0.75x FY26E ABV) by next Diwali.
2. JK Lakshmi Cement Ltd
HDFC Securities expects cement demand to rise in the second half of FY25. The company is expected to perform well due to its increased capacity and operational efficiency. The firm anticipates revenue, EBITDA, and profit after tax (PAT) to grow at rates of 7.6%, 15.7%, and 13.9%, respectively, from FY24 to FY26E. Investors are advised to buy shares in the ₹738-819 range, targeting ₹936 (18x FY26E EPS) by next Diwali.
3. Jyothy Labs Ltd
Jyothy Labs has transformed into a well-managed, multi-product company. The firm has seen a revenue growth of 12.7% annually from FY20-24. Improved product mix and operational efficiencies are boosting its margins. The expected CAGR for revenue, EBITDA, and PAT from FY24-26E is 12%, 15%, and 17%, respectively. HDFC recommends buying shares in the ₹480-533 range for a target price of ₹600 (43.75x FY26E EPS) by next Diwali.
4. L&T Finance Ltd
The company is focusing on reducing its reliance on wholesale lending while growing its retail finance business. HDFC expects an 18% growth in advances from FY24 to FY26. Despite some concerns about asset quality, the stock is seen as reasonably valued. HDFC suggests buying shares in the ₹153-170 range, targeting ₹219 (2.0x FY26E ABV) by next Diwali.
5. National Aluminium Company Ltd (NALCO)
HDFC anticipates aluminum prices to rise due to limited global supply and increased demand. NALCO, known for its efficient alumina production, is positioned to benefit from strong alumina prices. The expected CAGR for revenue, EBITDA, and PAT from FY24 to FY26E is 9.7%, 32.8%, and 29.2%, respectively. Investors can buy shares in the ₹198-220 range, aiming for a target of ₹270 (15x FY26E EPS) by next Diwali.
6. Navin Fluorine International Ltd
The firm is expected to see a 23.5% CAGR in revenue from FY24 to FY27E due to strong growth in the CDMO and Specialty Chemical segments. Although FY24 saw a drop in performance, strong sales growth and better margins are projected in the coming years. HDFC recommends buying shares in the ₹3,059-3,396 range, with a target price of ₹3,948 (40.5x FY26E EPS) by next Diwali.
7. NCC Ltd
NCC has a diverse order book and strong execution capabilities. HDFC expects a CAGR of 16% for revenue, 21% for EBITDA, and 39.6% for PAT from FY24 to FY26E. Investors should consider buying shares in the ₹273-303 range, targeting ₹363 (18x FY26E EPS) by next Diwali.
8. PNB Housing Finance Ltd
HDFC forecasts an 18% CAGR for the loan book from FY24 to FY26, along with expected growth of 16% in net interest income (NII) and 15% in profit after tax (PAT). The company’s return on assets (RoA) is projected to increase to 2.2% by FY26. Investors are advised to buy shares in the ₹893-991 range, with a target price of ₹1,160 (1.7x FY26E ABV) by next Diwali.
9. Reliance Industries Ltd
Reliance’s Retail, Telecom, and new energy divisions are expected to drive growth in the next few years. The company plans to double its EBITDA within five years by leveraging 5G opportunities, investing in AI and data centers, and expanding in Retail and New Energy. HDFC recommends buying shares in the ₹2,447-2,716 range, with a target price of ₹3,243 (23.5x FY26E EPS) by next Diwali.
10. State Bank of India
State Bank of India has strong growth potential due to its substantial liquidity (₹3.7 trillion) and a satisfactory loan-to-deposit ratio (LDR) of 76.5%. Although a slight net interest margin (NIM) compression is anticipated, the outlook remains positive. HDFC suggests buying shares in the ₹733-813 range, targeting ₹960 (1.8x March-26 ABVPS) by next Diwali.
With a selection of stocks across different categories, HDFC Securities believes these recommendations can help investors find opportunities in the market as Diwali approaches.
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