If there is one thing that this pandemic has taught us, it is that saving and investing is crucial for survival. During the COVID-19 pandemic, many households were forced to depend on their lifelong savings as businesses were shut and there were mass layoffs across the corporate sector.
But with the economy getting back on track, many of us have finally received our bonuses, and this year, instead of splurging on a new iPhone or a car, the wiser option would be to invest in the 10 best stocks for Diwali to ensure that your financial future shines brighter.
With the SENSEX rallying 70% since its March 2020 lows, Samvat 2077 is already looking brighter than usual. The market has continued its momentum as it touched a lifetime high of 43,708 on 11th November 2020. This Samvat, you too can bring wealth and prosperity to your portfolio by investing in the 10 best stocks for Diwali 2020.
To help you plan for a sparkling financial future, Samco has expertly handpicked the top 10 stocks to buy in Diwali 2020. These 10 stocks have the potential to generate a 15% return in the next 12 months!
Let us take a look at the top 10 stocks to buy in Diwali 2020.
Marico is a robust FMCG player and one of the major beneﬁciaries of the unprecedented rise in the in-home consumption of products during the ﬁrst half of FY21. On an international front, its Bangladesh business is clocking hefty volumes and the company also plans to replicate the same strategy in Vietnam. All these factors bode well for shareholders who have been receiving an average ROE of 35% in the past 5 years and a dividend yield of 1.8%. Considering all the tailwinds, Marico seems like a good ﬁt from an investment perspective.
2. Pidilite Industries
Pidilite Industries is a leader in the domestic market for adhesives, sealants, and construction chemicals. A recent acquisition of the maker of Araldite is further expected to strengthen its leadership in the adhesive space. A unique moat enables it to deliver a robust financial platform with 18% CAGR growth in PAT over five years and rich cash flow generation with OFC at Rs. 1,280 crore and FCF at Rs. 827 crore seen in FY20. In all, a well-rounded company with brand presence and robust finances make Pidilite Industries a wealth generator for investors.
3. Ambuja Cements
Ambuja combined with ACC and the Holcim group is the second-largest cement player in India with an individual capacity of 29.7 MT. It has a strong hold in the North and Central markets and a respectable presence in the eastern markets which was the least impacted from the pandemic. Moreover, the company has also undergone stringent cost-cutting measures to deliver eﬃcient operational performance.
To summarize, Ambuja is a cheaply valued stock trading at a one-year forward EV/EBITDA of 7x with strong potential to beneﬁt from the upcoming infra boom in India.
4. HDFC Life Insurance
HDFC life is a strong contender in the life insurance space. HDFC life has surpassed its peers with a 21% YoY increase in new premiums in the second quarter. As a front runner in the protection segment through its banca channel, HDFC Life is efficiently leveraging its first-mover advantage. Amidst a pandemic, a 25 to 26% margin guidance of 2021 by the management team achievable hence HDFC life could be a strong compounding story.
5. Bharat Rasayan Ltd.
When most industries were impacted due to lockdowns, a few agri-businesses managed to escape. Bharat Rasayan, a leading maker of technical-grade pesticides in India, is one of them. Even amidst a challenging one scenario, it has a strong product portfolio, vast distribution network, and brand equity which enable steady performance. All these factors coupled with an attractive valuation enable strong returns to shareholders
6. Larsen & Toubro
L&T is a conglomerate with a wide gamut of businesses across Infrastructure, Defence, Power, IT and Finance. What guides L&T’s future is its magniﬁcent order book including a Rs. 24,985 Cr deal for developing a 237km-line for Mumbai-Ahmedabad bullet train with long term revenue prospects. The stock has taken quite the battering which makes it attractive from a valuation perspective and very limited scope for further downside. Attractive margins, stable free cashﬂows, robust order book, recovery in Engineering business, and large opportunities from the Defense segment make L&T a compelling addition to the portfolio.
7. Bharti Airtel
In the telecom sector’s largely duopoly environment, Bharti is well-positioned to serve the premium end of the subscriber base and continues to gain market share in top-end subscribers. The recently concluded fund raising of Rs. 5.5Bn via QIP/rights issue and a stake sale of the Africa business aided in making its balance sheet resilient to stressful times. With rising ARPUs, robust EBITDA performance, contained debt levels, a large asset base, Bharti seems to be in a sweet spot with a strong growth outlook from an investment perspective.
8. Kotak Mahindra Bank
Kotak is a high-quality liability franchise with a growing deposit base in the past several years. This bank has always maintained a very conservative stance and its actions such as providing for nearly 177% of its total net NPA reﬂects the same conservative approach which seems adequate amidst a contracting economy. RBI’s ruling on the restructuring of loans and deferment in NPLs post August will surely delay the true asset deterioration but even then, Kotak seems to have an upper hand in managing its assets well with prudent risk management. It seems to be hitting all the right nerves to be regarded as a strong contender to ride the Covid wave.
9. Housing Development Finance Corporation Limited
This NBFC mammoth has a long-standing track record of operations, adequate capitalization levels, strong resource raising ability, stringent underwriting standards and top-notch risk management procedures. In fact, the disbursements in October 2020 were the second Corporation Limited highest in HDFC’s history. The environment down the road seems conducive for the housing ﬁnance sector given the low-interest rates, softer property prices, reduction in stamp duty in certain states, and inherent strong demand for home loans, HDFC seems to be in a comfortable liquidity position to beneﬁt from these macros. It is undoubtedly a strong brand to hold in an investor’s portfolio.
10. Dixon Technologies India Limited
Dixon Tech is India’s largest electronic manufacturing player and is currently witnessing a conﬂuence of rising demand, import substitution and booster in the form of the PLI Scheme by the Government. Under the scheme, the company will get an incentive of 4% to 6% on incremental sales of goods manufactured in the country. The management also expects an eight-fold jump in its mobile revenues in FY22. Hence, Dixon can be looked at from a portfolio perspective.
These 10 stocks are a part of Samco’s exclusive ‘Diwali Rocket Portfolio – 10 Stocks to Buy in Muhurat 2020’ report and have the potential to generate a 15% return in the next 12 months.
Read our detailed coverage on the 10 best stocks to buy in Diwali 2020.
As we celebrate the spirit of Diwali, it is crucial for us to plan and build a safe and secure future by investing in the top 10 stocks for Diwali 2020 with Samco. So, welcome abundant wealth and prosperity this Samvat 2077, by opening a free Demat and trading account with India’s best stockbroker, Samco.
Have a Wealthy Diwali with Samco!