Diwali picks: Jayesh Bhanushali on 8 stocks he is betting on

"In cricket words, we have a team built of Laxman, Rahul, Dravid which are like ICICI and SBI; we do have Sehwag and Yusuf Pathans in our team where we have added Aptus Home Value as the smallcap in our portfolio where we are seeing a 32% CAGR growth in their loan books," says Jayesh Bhanushali, AVP-Research & Products, IIFL Securities

Can you start with largecap Diwali bets and then we discuss the midcap ones as well?
In largecaps, our top pick is ICICI Bank. The company has reported a broad- based loan growth. Overall there has been a loan growth of nearly 17% year on year. If you see how the company is driving its SME segments, we have seen a growth of nearly 20- 33% respectively and the overall book is also healthy and the growth has been 10%. We have a buy with a target price of Rs 980 on ICICI Bank.

The second largecap that we are bullish on is also in the banking space. It is the State Bank of India. If you see the credit growth in the economy and the rising bond yields scenario, these names are expected to rise. I believe that there is a very healthy chance that SBI may grow past Rs 620 as a target price by the end of next year.

The third pick in the largecap space is Cipla. In the ex-Covid India business, Cipla has clocked nearly 10% CAGR above our general estimates. There is a very high chance that during the next two-three years, they will be getting most of their product launches in the US which can clock nearly $30-50 million revenue for them per product. All this is indicating that in pharma if we play a defensive bet, Cipla is well placed to reach the target price of Rs 1,265 by next year’s Diwali.

The fourth pick in the largecap space would be Reliance Industries. We forecast Reliance’s consolidated earnings to grow nearly 29% to 14% over the FY23 and FY24 respectively, wherein the nearly $10 GRM could be seen for the company and even in Jio, the ARPU could rise by nearly 16% during next year. Overall, we believe that there is a very high chance of a 18-20% CAGR return in Reliance throughout the next one year. We believe that the company could reach the target price of Rs 2,800 by the coming Diwali.

The fifth largecap would be Ashok Leyland. It is the only investible pure play on recovery of MHCVs. Ashok Leyland has gained sustainable traction in LCVs, scaling to 11% market share in just 10 years and now the company is planning to widen its LCV offering which will bring in further market share gains.

We believe the company is well poised to reach Rs 180 levels during the medium to long term in a one-year horizon. One can buy the stock with a target price of Rs 176.

So these are the five largecap stocks that we are bullish on.

When it comes to the midcaps, you have three chemical names – Deepak Fertiliser, Deepak Nitrite and JB Chemicals. Can you run us through the thesis when it comes to the chemical space?
Definitely. Firstly, we are super bullish on Deepak Nitrite. If you see the valuations, it is fairly priced and it is trading at cheaper valuations historically if you compare it with its peers like Aarti, Navin Fluorine etc. So, Deepak Nitrite could be a dark horse with the target price of Rs 2,600.

The second midcap pick would be Deepak Fertiliser the company’s strategy of import substitution has been playing quite well and throughout its history, Deepak Fertiliser has focussed on products with potential for import substitution, helping it to build a dominant market share across the segment it is into. We believe that Rs 1,100 could be easily on the cards during the next one year for Deepak Fertiliser.

The third name which you said is JB Chemicals. I believe that the company is gaining a strong market share in the India segment with a product like Rantac performing well. I believe that Rs 2,380-2,400 could be on the cards for JB Chemicals during the next one year. These are the three safe midcap picks.

In cricket words, we have a team built of Laxman, Rahul, Dravid which are like ICICI and SBI; we do have Sehwag and Yusuf Pathans in our team where we have added Aptus Home Value as the smallcap in our portfolio where we are seeing a 32% CAGR growth in their loan books. I believe there is a good chance that it could gain great momentum going forward. So even in Aptus, we have a buy with a target price of at least Rs 360.


(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)