SAMCO Securities in its Diwali note said Samvat 2081 is set to see many macro events including the US elections and further Fed rate cuts. It sees an uptick in corporate earnings and a rise in precious metals prices. It also hope for an end to the ongoing wars, bolstering investor confidence.
The domestic brokerage has recommended about a dozen shares, which it believes can deliver healthy returns in Samvat 2081. They include HDFC Bank Ltd, Persistent Systems Ltd, Deepak Fertilisers and Petrochemicals Corporation Ltd, Piramal Pharma and Cholamandalam Financial Holdings Ltd, among others.
Calling HDFC Bank a value pick, SAMCO said the largest private sector bank has maintained a robust 10-year profit CAGR of 21.74 per cent, operating with a NIM of 3.5 per cent and a low net NPA of 0.3 per cent. HDFC Bank's advances and deposits have shown steady growth, it said.
"Currently, the stock trades below its 10-year average price-to-book value and at a price-to-earnings ratio of 19, offering a favorable risk-reward profile with a substantial downside buffer," it said.
SAMCO called Piramal Pharma as positional trading pick and noted that the the Biosecure Act in the US was was passed by the House of Representatives on September 9, and is currently pending in the Senate.
When enacted, the Biosecure Act would prohibit US federal agencies from contracting with or procuring services and equipment from 'biotechnology companies of concern,' which includes several Chinese pharmaceutical companies.
"This legislation could create opportunities for Indian pharmaceutical companies, particularly Piramal Pharma, which has a significant presence in the US market, to increase the market share and boost its revenue and profits," it said while suggesting a stop loss for Piramal Pharma at Rs195.
Cholamandalam Financial Holdings too is a positional trading pick. The company reported strong financial performance in FY24 and aims to improve it further by building a strong franchise with a focus on growth and profitability. "It showed convincing growth potential, given a comfortable valuation. Also, around 40 per cent of the stake of the company is held by DIIs & FIIs, providing further confidence in the optimistic outlook of the company," SAMCO said.
Deepak Fertilisers shares have been in a strong uptrend since June 2024. The stock has consistently remained above the 50-day moving average, except for a few days last week. The stock is also showing momentum, outperforming Nifty 500 Index in the past year.
"Despite experiencing a price and volume breakout, the stock is trading at just around 2.65 times its book value, making it an attractive investment pick," SAMCO said.
Ramco Industries is a value pick. Over the past decade, sales for Ramco Industries grew at a 7 per cent CAGR, while the share price rose at a 14 per cent CAGR.
"Known for its financial stability, Ramco Industries boasts a low debt-equity ratio of 0.07 and has consistently paid dividends since FY17, currently yielding 0.31 per cent. The stock’s attractive price-to-book multiple of 0.5 offers a solid margin of safety, highlighting its investment appeal," the brokerage said.
Hikal Ltd, a comprehensive life sciences provider, is facing challenges from demand fluctuations and competition, but market conditions are expected to stabilise by Q3 or Q4FY25, SAMCO said. The CDMO segment continues to perform strongly, with high margins and increased client interest, it added. The stock is witnessing rising delivery volumes, indicative of investor optimism. SAMCO asked traders to buy the stock for a 3-month timeframe with the stop loss placed at Rs 273.44.
The brokerage called Persistent Systems as momentum pick with a six months view and a stop loss at Rs 4,537. The IT firm is almost a debt-free, trading at a Price-to-Earnings ratio of 72 times, which is much higher than its industry PE of 34 times and its 5-year Median PE of 40 times. That said, Persistent recorded highest ever revenues and PAT with a phenomenal growth of 20 per cent, and 23 per cent YoY, respectively, the brokerage said.