Indian equity markets have delivered robust returns to investors since Diwali 2023. Where the benchmark BSE Sensex advanced 25% since November 12, 2023, the BSE Midcap and BSE Smallcap indices soared 47% and 45%, respectively, during the same period.
Market watchers believe that robust domestic inflows mainly supported market sentiment. For Diwali 2024, Chola Securities has unveiled its top 5 stock recommendations for Samvat 2081-2082, offering investors a roadmap to make the most of the festive spirit and market momentum. This year, the special one-hour Diwali Muhurat trading session will be held on November 1, Friday at 6.15 pm to 7.15 pm. Let’s dive into the stocks that could light up your portfolio this Diwali.
Hindustan Aeronautics (HAL): The company is a pioneering aerospace and defence company based in India. Established in 1940, HAL has played a pivotal role in shaping the nation’s aerospace capabilities. With a rich heritage of designing, manufacturing and maintaining a wide array of aircraft and aerospace systems, HAL stands as a cornerstone of India's defence and aviation sector. Shares of the company closed at Rs 4446.85 on October 11.
The company stands at a total order book of Rs 1,20,000 crore, where around Rs 26,000 crore has been won in FY25 so far. A strong book-to-bill ratio of 4x which is likely to go up on expected additional orders to the tune of Rs 2,00,000 crore over the next 1.5 to 3 years. • Make in India is a key driver of the order book. The recent cost rationalisation coupled with greater indigenisation of components and backward integration will continue to aid in attaining high operating margins.
Ircon International (IRCON): The company, established in 1976 under the Ministry of Railways as Indian Railway Construction Company Limited, is a leading public sector undertaking (PSU) in India specialising in comprehensive infrastructure projects. Initially, focused on railway construction, IRCON diversified from 1985 into an integrated engineering and construction company handling large-scale and technologically complex projects across various sectors, including railways, highways, bridges, tunnels and metro systems.
The company stands on a strong order book stands of Rs 26,784 crore as on September 30, 2024, having a book-to-bill ratio of 2.24x. It has strong financials with an ROE of 17%, debt to equity of 0.44x and has compounded profit at a CAGR of 16% over the last 5 years. The surge in infrastructure spends on railways by the government augurs well for the company. They are setting up a 500 MW grid-connected solar power plant under CPSU Scheme Phase –II with a private JV partner. Further, it plans on participating in other renewable projects such as hydropower. The scrip settled at Rs 226.20 on October 11, 2024.
Bank of India: The bank has demonstrated robust business performance in Q2 FY25, achieving a 12% year-on-year increase in total business, driven by its extensive branch and ATM network. In Q1FY25, the credit deposit ratio improved significantly by 412 basis points YoY, reaching 78.53%, compared to 74.41% in Q1 FY24, indicating enhanced utilisation of deposits for lending. The RAM (Retail, Agriculture, MSME) loan book showed impressive growth of 18.8% YoY in Q1FY25, with retail advances up 20% YoY, agriculture loans increasing by 22.2% and MSME advances growing by 16.1%. This diversification, which comprises 56% of total domestic advances, positions the bank well to capitalise on India's increasing credit demand. The management's guidance for credit growth of 13% to 14% and deposit growth of 11% to 12% in FY25 is consistent with the strong performance observed in Q1 FY25 and expected for Q2 FY25. Shares of the lender closed at Rs 105.50 on October 11.
Life Insurance Corporation of India: LIC holds a strong position in the Indian life insurance market, with a market share of 64.02% in premiums and 66.54% in policies as of Q1 FY25, making it the largest insurance company in India by gross written premium (GWP).
As a brand LIC is ranked as the 14th strongest global insurance brand, with 26.85 crore individual policies in FY24 and coverage for 8.5 crore lives under group insurance. For FY24, the solvency ratio has increased by 11 bps YoY as it stood at 1.98, as compared to 1.87 in FY23. LIC is actively investing in a digital transformation program named DIVE, by collaborating with Infosys to develop a NextGen Digital Platform.
This integrated solution aims to enhance customer service and streamline operations, positioning LIC to compete effectively in an increasingly digital marketplace. Additionally, the company is planning to inorganically expand its business in health insurance segment, by acquiring some stake in standalone health insurance companies.
As the life insurance penetration in India is still relatively low compared to global standards, there is substantial growth potential in the sector. LIC is well-positioned to capitalise on this trend, driven by rising awareness of digitalisation and demand for life insurance products. Shares of LIC were hovering at around Rs 949 on October 11.
Narayana Hrudayalaya: The company is one of the best-trusted names in super specialty healthcare, having a significant market share in cardiology, oncology and nephrology. It is dominantly present in East and Southern India. It’s the cheapest hospital chain available when compared to peers. It is trading at a PER of 31x (TTM basis) and EV/EBITDA of 21x (TTM basis) as compared to the peer set average 80x PER and EV/EBITDA of 37x which is almost at a 50% discount to its peer set.
It has delivered best-in-class EBITDA CAGR (85%) over FY21 to FY24 and PAT CAGR (52%) over the last 2 years. Way better than most of its peers, NHL enjoys strong cash flow, sufficient to take care of guided capacity expansions and capex outlay of around Rs 4,000 crore over the next 3 to 4 years. The benefits of the last 10 years of hard work have started trickling in. It’s a technology-focused hospital chain, highly sensitive to patients costs (striving for world-class treatment at optimal cost). Faster technology adoption is a key enabler for better-operating margins, which not only brings down ALOS but also creates room for more patients to be served.
Sensing the need and underlying opportunity in fast expanding Indian healthcare industry, management has outlined capex guidance of around Rs 4,000 crore over the next 3 to 4 years. Elbow room for this aggressive capex outlay comes from healthy and fast swelling cash flows and stable operating margins aided by better asset sweating. At present, NHL is generating an operating cash flow of around Rs 1,000 crore per annum. The scrip was trading at Rs 1,230 on October 11.