Diwali top picks 2024 for Muhurat Trading: 5 stocks with up to 40% upside potential

Indian equity, have faced some jitters in last one month, amid the heavy FII selling of close to Rs 1 lakh crore amid escalated geopolitical tensions and talks of incremental flows into China given the stimulus. Nonetheless, positive catalysts such as a) robust corporate earnings (likely to grow at 14% CAGR over FY24-26) and b) favorable growth inflation dynamics of India (6-7% sustainable GDP growth with comfortable inflation of sub 5%), continues to present Indian equity as superior proposition in this global backdrop, says ICICI Direct Research. Our one year forward, Nifty target is at 27,500 (22x FY26 EPS) with sectoral preference towards capital goods/infra, private banks (and AMCs) and select auto, IT and pharma pack. Keeping the key filter of quality and growth visibility, we continue to see reasonable opportunities across the market spectrum. Investors are advised to utilise equities as a key asset class for long term wealth generation by investing in quality companies with strong earnings growth and visibility, stable cash flows, RoE and RoCE, adds ICICI Direct Research.

The stock exchanges, NSE and BSE, will hold their annual Diwali Muhurat trading session on Friday, November 1, 2024, from 6:00 PM to 7:00 PM. This special trading session marks the beginning of the Hindu calendar year, Samvat 2081. While the regular stock market will be closed on Diwali, this one-hour evening session allows investors to participate in auspicious trading. Here are top picks for Muhurat trading 2024 from ICICI Direct Research.

Sansera EngineeringCMP: Rs 1,580
Buying range: Rs 1,490-1,590
Target price: Rs 2,000
Potential upside: 27%
ICICI Direct Research: We have a positive view on Sansera and assign BUY rating on the stock with a target price of Rs 2,000 i.e. 28x PE on FY26-27E avg EPS.
Risk: 1) Slower than expected sales growth due to geopolitical issues affecting exports 2) Margins Pressure due to fluctuation in commodity cost.

PCBLCMP: Rs 447
Buying range: Rs 435-470
Target price: 600
Potential upside: 34%
ICICI Direct Research: We have positive view on PCBL and assign BUY rating amid (i) profitable organic growth at its base carbon black business (ii) turnaround in sight at Aquapharm (iii) big opportunity in sight in Nano Silica. We expect Sales/PAT at PCBL to grow at a CAGR of 21%/27% over FY24-27E. We value PCBL at Rs 600 i.e. 26x P/E on FY26-27E avg. EPS.
Risk: (i) delay in expansion plans (ii) pressure on margins amid rise in competition.

NCC
CMP: Rs 286
Buying range: Rs 275-300
Target price: 400
Potential upside: 40%
ICICI Direct Research: Given the strong order book visibility and improving balance sheet strength, it is poised for healthy growth ahead. We Value NCC at Rs 400, at 18x FY26 P/E.
Key risks: lower than expected order inflows, heightened competitive intensity impacting margins.

Tech MahindraCMP: Rs 1,735
Buying range: Rs 1,680-1,750
Target price: Rs 2,000
Potential upside: 15%
ICICI Direct Research: We have valued the company at 25x P/E on FY27E EPS to assign a target price of Rs 2,000.
Key Risks: a) Continued weakness in Top 5 telecom heavy clients; b) Lower than expected margin expansion under Project Fortius

Tata PowerCMP: Rs 437
Buying range: Rs 410-450
Target price: Rs 530
Potential upside: 21%
ICICI Direct Research: We believe Tata Power as attractive opportunity to play the entire power value chain in India and coupled with the strong renewable capacity addition targets. We value it on SoTP basis and arrive at a fair value of ₹ 530 per share. Key Risks: a)Slower capacity renewables addition b) Change in regulations