Diwali 2024 Stock Picks: Tech Mahindra to BEL—Bajaj Broking lists top 5 stocks to buy for Samvat 2081

Diwali 2024 Stock Picks: The Indian stock market created history in Samvat 2080 by hitting several milestones. The Nifty 50 surpassed 26,250 and the BSE Sensex surpassed 85,900 in September 2024, with both indexes gaining around 25 per cent during Samvat 2080. On the broader front, the BSE Midcap and Smallcap Index outperformed and gained 45 per cent and 50 per cent respectively.

The market movement was exceptional, considering geopolitical tensions, global weakness, and elevated interest rates. Globally, the easing of inflation and resilience of global commerce make investors optimistic about the global economy. There is a solid degree of confidence that the US has turned a corner on inflation with a 50 bps cut, potentially two more cuts coming this year and 100 bps in 2025.

After a 19.8 per cent earnings growth in FY24, analysts expect the Nifty 50 index's net profits to grow by 6.7 per cent in FY25 and 17.3 per cent in FY26. At 24,700 level, the Nifty 50 index trades at 23.7x FY25E and 20.2x FY26E. FY25 will likely witness more broad-based growth across sectors.

In the current market scenario, domestic brokerage firm Bajaj Broking has released its top five Diwali 2024 stock picks for Samvat 2081. The brokerage has selected the quality stocks which are expected to do well in the next 12 months, based on technical and fundamental parameters.

Diwali 2024 Stock Picks by Bajaj Broking

Let's take a look at the top five technical and fundamental stocks for Diwali by brokerage Bajaj Broking:
 

1.Tech Mahindra: Buying range ₹1,680-1,730, Target ₹2,120

Fundamentals

- Steady progress for long-term metrics and transformation focus: The brokerage noted that accounts exceeding $20 million are accelerating growth, achieving 1.5 times the overall growth rate, thanks to the Turbocharge program. The company focuses on enhancing its capabilities for large deals and aims to decrease the share of subcontracting revenue.

-This includes investments in new talent and training to improve profit margins. Management emphasizes margin improvement over pursuing large deals. Regarding the transformation through generative AI, approximately one-third of the IT workforce utilizes GitHub Copilot and integrates AWS and Google as part of the organization's transformation efforts.

Technicals

- Tech Mahindra share price is in a steady upward trend and has recently generated a breakout above the last 30 months' range (1575-945), signalling a structural reversal of a trend.

-The monthly RSI is in a strong up trend, thus supporting the positive bias. Analysts expect the stock to extend up move and head towards ₹2.130 levels in the coming year, being the measuring implication of the range breakout (1,575-981)

2.Bharat Electronics (BEL): Buying range: ₹264-274, Target ₹358

Fundamental information

-Strong Order Pipeline: The management has maintained its guidance for FY25, expecting around 15 per cent revenue growth, gross margins of 40-42 per cent, and EBITDA margins of 23-25 per cent. Additionally, BEL anticipates an order inflow of approximately ₹250 billion in FY25 and FY26.

Key orders expected in FY25 include an air defence fire control system, an electronic warfare suite for Mi17 V5 (currently in the final stages of trials), and ground-based electronic warfare systems. Each order is valued between ₹10 billion and ₹25 billion. Due to vendor supply issues, Indian Railways has approached BEL to develop a prototype over the next 18 months. This presents a business opportunity worth ₹200-300 billion over the next 5-6 years.

Technical Outlook

Bharat Electronics share price is in a long-term structural upward trend. We believe the last four months' corrective decline offers a fresh entry opportunity from a long-term perspective. Stock is taking support at the 52-week EMA and trendline support. “We expect the stock to resume up move and head towards 354 levels in the coming quarters being the 123.6 per cent external retracement of the current breather (340-265),” said Bajaj Broking.

3.CESC: Buying range ₹ ₹180-190, Target 248, Upside 34 per cent

Fundamental Information

-Renewable Energy Expansion: CESC's aggressive strategy for renewable energy growth, with a planned capital expenditure of approximately ₹12,000-13,000 crore, positions it favourably in light of declining renewable energy costs, strong growth potential, and expected improvements in ESG ratings.

-The company has established a framework agreement with Inox Wind and Suzlon Energy to supply wind turbines, which are set to be commissioned over the next 2-4 years. Additionally, CESC's subsidiary has been awarded a contract to establish a green hydrogen production facility with a 10,500 tonnes per annum capacity in India.

Technical Outlook

-The share price of CESC earlier during the year has generated a breakout above the long-term supply line joining highs of the last 16 years and is seen sustaining above the same signalling strength and acceleration of the up move.

-The breakout is supported by rising volume, highlighting larger participation. “We expect the stock to head towards 248 in the coming year, being the measuring implication of the previous rally (122-212) as projected from a recent low of 180,” said the brokerage.

4.Antony Waste Handling Cell: Buying range ₹700-745, Target ₹990, Upside 38 per cent

Fundamental Information

-Provider of end-to-end solutions: Antony Waste ranks among the top five companies in the Indian MSW management industry, boasting a solid track record of over 19 years. The company operates across the country, delivering a full spectrum of services, which include solid waste collection, transportation, and processing and disposal.

-Currently managing 25 contracts (with 19 operational), the company demonstrates its ability to secure new growth contracts. Additionally, increasing processing volumes at the Kanjurmarg facility and the commercialization of the PCMC waste-to-energy plant will further support future growth.

Technical Outlook

-The stock generated a strong breakout in July from the rising trendline, joining highs since CY21. It forms a base above the breakout area, signalling a Polarity change as previous resistance has reversed its role and is acting as support.

-"We expect the stock to form a base above the breakout area and resume a move towards 990 levels in the coming months, which is the 138.2 per cent external retracement of the current decline (902-667).

5.Agro Tech Foods: Buying range ₹910-970, Target ₹1,230, Upside 32 per cent

Fundamental Information

-Wide range of Products: The company sells a wide range of products under its 2 brands i.e. Act-II (Foods Business) & Sundrop (Edible oils Business). The company's brand Act-II popcorn captures 90 per cent market share in the organized home popcorn category in India (as of FY19).

Technical Outlook

- Agro Tech Foods share price is at the cusp of breaking the last two years' falling channel, signalling the resumption of a move and offering a fresh entry opportunity from a long-term perspective.

The monthly MACD has generated a buy signal, thus supporting a positive bias. We expect the stock to head towards ₹1,230 in the coming quarters, which is the 123.6 per cent external retracement of the entire breather (1,144-645).

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.