Prabhudas Lilladher’s 6 Bluechip Diwali Picks for 2023: Hindalco, ICICI Bank, Maruti Suzuki, Titan, Siemens, Max Healthcare

Prabhudas Lilladher, an investment advisory firm, has identified six stocks that it believes could see a boost in their values during the 2023 Diwali season. These picks include Hindalco Industries, ICICI Bank, Maruti Suzuki, Titan Company, Siemens, and Max Healthcare.

Hindalco Industries Ltd | CMP: Rs475 | TP: Rs 557 |

Prabhudas Lilladher rates Hindalco Industries as a ‘buy’ due to several key factors. The company’s subsidiary, Novelis, which accounts for 70 percent of the consolidated EBITDA, is expected to achieve strong EBITDA growth in the near term. The company has made strategic investments in greenfield capacity in the US to cater to the domestic flat rolled products (FRP) market. It is also anticipated to benefit from reduced thermal coal prices and the opening of captive coal mines for its India business. The focus on high-margin downstream products, such as FRP expansion, is expected to drive domestic volume growth. Prabhudas Lilladher values the company at an EV multiple of 5.1x/4.6x FY25/FY26 EBITDA.

ICICI Bank Ltd | CMP: Rs 933| TP: Rs 1,280 |

Prabhudas Lilladher has retained a ‘buy’ rating for ICICI Bank based on its robust financial performance. The bank has shown significant growth in its core pre-provision operating profit (PPoP) with a strong CAGR of 22.5 percent from FY19 to FY23. The bank’s balance sheet features a decreasing share of lower-rated assets, provisions at 1.2 percent, and solid capital adequacy ratios. The core return on assets (RoA) and return on equity (RoE) for FY25/26 are estimated to be 2.0 percent and 17.0 percent, outperforming competitors. ICICI Bank offers attractive valuation multiples, making it an appealing investment.

Maruti Suzuki India Ltd | CMP: Rs 10,285| TP: Rs 12,485 |

Maruti Suzuki is expected to achieve a robust revenue CAGR of 13 percent between FY23 and FY26, driven by steady industry demand, successful product launches, and enhancements in the supply chain. The company’s strategic focus on expanding its SUV lineup and integrating smart hybrid technology strengthens its competitive standing. Maruti Suzuki holds a dominant 70 percent market share in the CNG segment and plans to introduce its first electric vehicle in FY25. Prabhudas Lilladher anticipates an impressive compound annual growth rate of approximately 25 percent in earnings per share (EPS) from FY23 to FY26 for the company.

Titan Company Ltd| CMP: Rs 3,275 | TP: Rs 3,312 |

Prabhudas Lilladher retains an ‘accumulate’ rating for Titan Company, owing to its strategic positioning as a beneficiary of the consumer trend towards organized players in various segments. The company’s consolidation in the jewellery sector and expansion into eyewear, dress material, and wearables provide a strong foundation for growth. Titan is expected to benefit from favorable conditions like soft gold prices and an approaching wedding season in the second half of 2024. The company’s premium valuations are justified by its promising growth prospects, with an estimated 17 percent compound annual growth rate in EPS from FY23 to FY26.

Siemens Ltd | CMP: Rs 3,368| TP: Rs 4,241 |

Prabhudas Lilladher has given an ‘accumulate’ rating for Siemens Ltd due to the company’s focus on decarbonization and energy efficiency solutions in growing sectors. Siemens’ commitment to localizing its products and optimizing costs is expected to increase its profit margins. With a strong presence across various industries, a strong balance sheet, and a positive outlook for capital expenditures, Siemens presents an attractive long-term investment opportunity.

Max Healthcare Institute Ltd | CMP: Rs 577| TP: Rs 610 |

Prabhudas Lilladher assigned a ‘buy’ rating for Max Healthcare Institute, setting a target price of Rs 610. The company’s growth trajectory is expected to continue with expansion strategies, including the addition of over 1,100 extra beds and improvements in laboratory facilities. Max Healthcare has demonstrated operational efficiency, particularly in competitive regions like the National Capital Region (NCR). The analysis predicts a 15 percent EBITDA compound annual growth rate from FY23 to FY25 for the company, with a valuation of 27x EV/EBITDA, based on FY25 estimates.

These stocks have been identified as potential investment opportunities for the upcoming Diwali season, considering their strong growth prospects and market positioning.