Diwali 2023 Stock Picks: Bharti Airtel, Coal India among top 5 buys from Stoxbox

The Indian domestic market has delivered a robust performance since Diwali last year. While the Nifty 50 is up around 9 per cent year-to-date (YTD), the broader markets have sharply outperformed since last Samvat. With this, Samvat 2079 has seen the Nifty making new lifetime highs in an increasingly uncertain and volatile global environment. 

Going ahead, for Samvat 2080, the global geopolitical situation will remain grim as the Israel-Palestine war has added to the already crippled global order due to Russia-Ukraine war.

Analysts expect that in light of mounting fundamental tailwinds, the market is poised to sustain its prevailing bullish momentum into Vikram Samvat 2080. Global banks and financial institutions have also expressed optimism towards the Indian market. 

‘’The stage of a bullish scenario is being set by strong corporate performance, overwhelming domestic economic numbers, and growing expectations of the return of the Bharatiya Janta Party (BJP) at the ruling Centre,'' said Harjeet Singh Arora, Managing Director at Mastertrust.

In the current market scenario, domestic brokerage firm Stoxbox has released its top five Diwali 2023 stock picks for Samvat 2080. The brokerage has selected quality stocks on technical as well as fundamental parameters. The stocks have robust fundamentals and are well-placed to yield good returns for investors in the next one-year time frame, according to the brokerage.

Diwali 2023 Stock Picks by Stoxbox

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

1.Ashoka Buildcon | Buying Range ₹128-142; Target price ₹163

Ashoka’s geographically diversified order book, present across 20 states in India and in overseas markets, encompasses segments such as roads, power, EPC buildings, and railways.

As of September 30, 2023, the order book stood at Rs. 17,566 crore, 2.5x FY23 revenue. Its current balance order book for road EPC and road HAM stands at Rs. 5,802 crore and Rs. 1,455 crore, comprising around 33 per cent and 8.3 per centof the total order book, respectively. 

Moreover, divestments of the CGD business and road project SPVs would release capital locked in equity of the projects and reduce consolidated project debt by over Rs. 5,616 crore.

Ashoka Buildcon's robust order inflows, latest technology and innovative construction practices and better project execution, despite inflationary challenges could still deliver healthy financial performance, according to the brokerage.

‘’On the valuation front, We are thus positive about the long-term prospect of the company and value it at a P/E of 13x based on FY23 earnings to arrive at a target of ₹163 which is 21 per cent upside from current levels,'' said Stoxbox.

2.Bharti Airtel | Buying Range ₹920-940; Target price ₹1,106

Bharti Airtel remains on strong footing with industry-leading ARPU, higher focus on premiumization, a growing subscriber base and earlier tariff hikes. The industry pricing environment has become more favourable, raising expectations for regular tariff hikes. 

‘’We expect ARPU to improve led by increasing tariffs, 2G to 4G migrations, prepaid to postpaid conversions and rising data monetization. The India business continued on a strong footing, with the company consistently delivering healthy revenue growth,'' said the brokerage.

Other businesses, such as Fixed Broadband and Enterprise, are witnessing strong traction and will drive revenue growth in the medium term. Further, the company has an excellent track record in business execution and is expected to deliver robust performance led by broad-based growth across segments. 

‘’On the valuation front, We are thus positive about the long-term prospect of the company and value it at a P/E of 38x based on FY23 earnings to arrive at a target of ₹1,106 which is 19 per cent upside from current levels,'' said Stoxbox.

3.Coal India | Buying Range ₹305-315; Target price ₹370

CIL plays a significant role in achieving the nation’s energy security. Based on the demand projection in ‘Vision 2024’ for the coal sector in India and subsequent demand projection on CIL, a roadmap has been prepared wherein CIL has envisioned 1 billion tonne (BT) production in FY25-26 to meet the coal demand of the country. CIL has identified all required resources to achieve this target, including significant projects contributing to its 1 BT production plan. 

‘’Thus, we give a ‘buy’ rating to this mining company. On the valuation front, We are positive about the long-term prospect of the company and value it at a P/E of 8x based on FY23 earnings to arrive at a target of ₹370 which is 19 per cent upside from current levels,'' said Stoxbox.

4.Colgate - Palmolive (India) Ltd | Buying Range ₹2,080-2,120; Target price 2,500

Presently, the company’s 14 per cent of the oral care business and 25 per cent of the personal care business comprises premium products. The new management is keenly focused on increasing this contribution to drive future growth and enhance its margins. This includes investing heavily in whitening and launching its first-ever whitening pen, further accentuated by favorable industry tailwinds. 

The domestic oral beauty market is a vast opportunity for the company, evidenced from just 1 per cent oral beauty penetration in India compared to 43 per cent in the US. The management expects its personal care business to grow at double the rate of its oral care business by completely leveraging its Palmolive brand which has a 67 per cent brand awareness. 

In the quarter gone by, the business also saw green shoots in rural recovery and recovery in its volumes. Further, it is also looking for relevant opportunities from the global portfolio which can be introduced in the domestic markets. 

‘’On the valuation front, We are thus positive about the long-term prospect of the company and value it at a P/E of 50x based on FY23 earnings to arrive at a target of ₹2,500 which is 18 per cent upside from current levels,'' said Stoxbox.

5.Puravankara Ltd | Buying Range ₹140-150; Target price ₹176

The business recorded a stellar 109 per cent YoY growth in sales value to Rs. 2,725 crores in H1FY24 in comparison with ₹1,304 crore in H1FY23. 

The management expects EBITDA margins to improve to a range of 35-40 per cent for plotted development, 30-35 per cent in Puravankara, and 26-27 per cent in Provident Housing, with an increase in project deliveries in the coming quarters improving blended rate to about 27-28 per cent. The real estate sector is expected to expand to $5.8 trillion by 2047, contributing 15.5 per cent to the GDP from its existing 7.3 per cent share. 

This places companies like Puravankara in a favourable position that enjoys healthy sales book and collections. To drive future growth, the business is also focusing on scouting new acquisitions to expand further and enter new markets, according to the brokerage.

‘’On the valuation front, we are thus positive about the long-term prospect of the company and value it at a P/E of 20x based on FY23 earnings to arrive at a target of ₹176 which is 20 per cent upside from current levels,'' said Stoxbox.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.