Diwali Muhurat Trading: HDFC Securities' top stock picks this Samvat 2079

Aster DM Healthcare: The brokerage recommends investors to buy the stock at ₹242 and add more on dips at ₹211 for a target price of ₹278 till next Diwali. It expects Revenue/EBITDA/PAT to grow at a CAGR of 9%/7%/10% over FY22-24E. The stock trades at an attractive valuation of ~9x FY24E EV/EBITDA, which represents a significant discount to its Indian peers, noted HDFC. It believes such a high discount is unwarranted, given the stable operating performance and increase in share from the India business as more hospitals reach maturity, while being supported by a steady growth outlook in GCC. The divestment and restructuring of the GCC business remain on track and could unlock value, it added.

Bharat Dynamics: HDFC Sec recommends investors to buy the stock at ₹858 and add more on dips at ₹774 for a target price of ₹1,022 till next Diwali. As per the brokerage, the company benefits from the GOI’s thrust on indigenous guided weapon system production, supporting a healthy order pipeline and revenue visibility. With a focus on indigenisation and a strong vendor network, BDL has established a strong market position that makes a case for consistent order flow, it noted. topline. Strong revenue visibility, backed by a robust pipeline, large projects being awarded and a focus on indigenisation and internal efficiency is likely to fuel earnings growth, said HDFC. It expects revenue/EBITDA/PAT to grow at a CAGR of 26.7%/18.8%/17.7% over FY22-24E.

Bharat Electronics: The brokerage recommends investors to buy the stock at ₹101 and add more on dips at ₹87 for a target price of ₹123 till next Diwali. The brokerage noted that BEL, one of India’s largest defence PSUs and is emerging as a key beneficiary of the increase in defence capital expenditure. BEL continues to enjoy an advantage over its competitors due to its leading market position, proven track record and association with the armed forces along with strong R&D capabilities, it added. HDFC further stated that the firm's financial profile remains strong. BEL generated a 10% revenue CAGR over a decade and reported a margin in the range of 19-23% over the last six years. It expects the company to report a revenue CAGR of 14% from FY22 to FY24E. BEL reported a net profit CAGR of 11% over the last one decade, and HDFC expects a 9.7% PAT CAGR from FY22 to FY24E.

Birla Corporation: HDFC Sec recommends investors to buy the stock at ₹896 and add more on dips at ₹784 for a target price of ₹1,069 till next Diwali. The brokerage believes various cost-saving initiatives taken by the company, increase in clinker capacity and coal extraction from captive mines would aid revenue and margin growth. The ramp-up of its newly commissioned greenfield integrated plant at Mukutban, with access to captive limestone and coal mines, would further improve operational efficiencies in the near term, it added. It thinks both these could become more favourable to BCL from H2FY23 onwards.

Cipla: The brokerage recommends investors to buy the stock at ₹1,109 and add more on dips at ₹992 for a target price of ₹1,283 till next Diwali. Its complex generics portfolio continues to scale up strongly, said HDFC. It further noted that the One India business registered a strong 15% CAGR in revenue over FY19-22. It expects a mid-single-digit CAGR in domestic formulation revenue on a high base of FY22. The US business is likely to generate a strong 18% CAGR over the next 2 years. Overall, it estimates 9.5%/19% CAGR in revenue and net profit over FY22-24E.

Deepak Fertilizers: HDFC Sec recommends investors to buy the stock at ₹895 and add more on dips at ₹791 for a target price of ₹1,058 till next Diwali. As per the brokerage, in FY22, the company reported 32% YoY growth in revenue, along with record-high profitability. It projects a 14% revenue CAGR, led by strong growth in both segments. It also estimates an EBITDA margin in the range of 18-20% over the next two years. Strong revenue and a steady margin could drive a 17.5% CAGR in net profit over the same period. Some of the key positives include strong growth high regulatory entry barriers, improving capacity utilisations, and a strong uptick in return ratios, it said.

ICICI Bank: The brokerage recommends investors to buy the stock at ₹870 and add more on dips at ₹773 for a target price of ₹999 till next Diwali. HDFC believes that the Indian banking industry is at the cusp of a credit upcycle. To ride the growth, it feels that ICICI Bank is one of the best-placed large private sector banks. Over the years, the lender has consistently focused on de-risking its loan book by reducing its corporate portfolio and focusing on the high-margin, less risky retail segment, it noted. The balance sheet is now more resilient and its lower exposure to contextually vulnerable segments will help the bank become even stronger, it added. Its subsidiaries, which are leaders in their respective fields also add good value to the overall valuation, said HDFC.

Rail Vikas Nigam: HDFC Sec recommends investors to buy the stock at ₹36.8 and add more on dips at ₹32.75 for a target price of ₹42.25 till next Diwali. As per the brokerage, RVNL has an asset-light business model, which helps keep its fixed assets lower, enabling it to keep its balance sheet stress free, and resulting in lower inventory days. Its experienced management and execution teams give it a competitive advantage, said the brokerage. HDFC further pointed out that the company has a robust balance sheet and is available at an attractive dividend yield of 5%. The execution of larger projects on a low base could propel growth higher in coming years, it added. Looking at the strong prospects, HDFC believes the stock is available at a reasonable valuation.

Sun TV Network: The brokerage recommends investors to buy the stock at ₹536 and add more on dips at ₹468 for a target price of ₹624 till next Diwali. Sun TV has reported strong profit margins/accruals in the last several years, aided by its scale of operations, strong vertical integration with a presence across the value chain, high bargaining power and negligible finance costs, noted HDFC. Sun TV could report revenue growth of 11.2% CAGR from FY22-24E, predicted the brokerage. Healthy liquidity, with net cash of over ₹1,100 crore offers room to increase investments in the linear and OTT spaces; this, along with its reasonable valuation, offers support, explained HDFC. Taking into consideration future growth and healthy cash balance, HDFC has a positive view of the stock.

TCI Express: HDFC Sec recommends investors to buy the stock at ₹1,890.4 and add more on dips at ₹1,640 for a target price of ₹2169 till next Diwali. Given its wide network of branches and balanced mix of large corporates, TCIE is well positioned to capitalise on growing market opportunities and deliver long-term sustainable growth through its asset-light and comprehensive express offerings, said HDFC. Since its listing, TCIE has a track record of consistently delivering steady growth in top-line and continuously improving margins and profitability, it added. Over FY17-22, the company’s revenue, EBITDA and PAT have grown at a CAGR of 8%, 23% and 28%, respectively. HDFC expects the company to report 18%/25%/25% CAGR growth in sales/EBITDA/APAT over FY22-24E, though our margin expectation remains lower than the management’s guidance.