Top 5 Stock Picks for Dussehra

What is Dussehra? 

Dussehra is considered to be an auspicious festival in India. On this day, Lord Rama has killed Ravana. This festival signifies the victory of good over the evil. Similarly, an investor can overcome their loss-making investments by adding the right stocks in their portfolio. Based on research, fundamentals and valuations, we recommend the following stocks for investment this Dussehra.

Why to invest in Dussehra?

Investing during Dussehra, also known as Vijayadashami, is considered highly auspicious in India. This festival symbolizes the victory of good over evil, making it an ideal time to start new ventures and investments. Many people believe that investments made during Dussehra will bring prosperity and success due to the blessings of Goddess Lakshmi.

Additionally, Dussehra often coincides with the festive season, which is a period of high consumer spending. This can lead to attractive discounts and offers on various investment options, including real estate and gold2. Property developers frequently launch new projects and offer special deals during this time, making it a favorable period for property investments3. Similarly, buying gold during Dussehra is a long-standing tradition, believed to bring good fortune and financial stability.

Overall, the combination of cultural significance, market incentives, and the auspicious timing makes Dussehra an excellent period for making investments.

Overview of the Stock to Invest in Dussehra 2024

Mahindra & Mahindra Ltd

One of India's most varied automakers, Mahindra & Mahindra Ltd. offers tractors, earthmovers, PVs, CVs, 3-wheelers, and two-wheelers. Through its subsidiaries and group firms, it is also present in the financial services, automotive components, hotel, infrastructure, retail, logistics, steel trading and processing, IT enterprises, agribusiness, aerospace, consulting services, defense, energy, and industrial equipment sectors.

Continued focus on product launches and capacity expansion to meet growing demand. Emphasis on technology-driven improvements in customer experience and operational efficiency. Long-term strategy remains aligned with market leadership in core segments, particularly in SUVs and tractors.

Electric Vehicle (EV) Strategy: The company is committed to increasing its EV penetration, with expectations of reaching 100% by 2030. Current regulatory landscape for hybrids is uncertain, with a clear focus on EVs as the primary growth driver moving forward.

HDFC Life Insurance Company Ltd

The HDFC Life Insurance Company is involved in the life insurance industry. A variety of individual and group insurance options are provided by the company. The portfolio includes a range of financial and insurance products, including savings, pensions, and protection. In India, less than 3% of people have life insurance. Given the favorable demographics, expanding wealth, rising family income, and growing awareness of the need for financial protection, there is a significant chance to increase the life insurance market.

Manappuram Finance

Manappuram Finance is an NBFC, offering gold loans, microfinance, housing loans and commercial vehicle loans. Its AUM comprised of gold loan (81.4%), microfinance (13.14%), housing finance (2.2%) and others (1%) in FY17. We expect income to grow at 28% CAGR over FY17-FY19E on account of pickup in gold segment. The company is strongly focusing on short-term gold loans owing to current volatility in gold prices.

Manappuram is also focusing on housing finance and microfinance and targets to derive 50% of revenue from these segments in next three years. We expect AUM to grow at 20% CAGR over FY17-FY19E. We expect GNPA to remain flat at 0.8% in FY18E. We expect an upside of 18% from CMP of Rs 95 over a period of 1 year.

Titan

Titan Company is India’s leading player in branded jewellery, watches and precision eyewear. Its revenue consists of Jewellery (78%), Watches (15%), Eyewear (3%) and others (4%) in FY17. We expect 42% revenue CAGR over FY17-FY19E on account of sub-brand Rivaah in wedding jewellery segment. With this, Titan targets to reach 40% market share in FY21E vs 22% in FY17E. Additionally, the entry in high value studded jewellery will also support the revenue growth.

Recently, the government has fixed a GST rate of 3% (expected 5%) on gold which bodes well for the company. We expect EBITDA margins to improve by 90bps over FY17-FY19E on account of cost saving initiatives by the company. Titan is a debt-free company which lends financial stability. We expect 60% PAT CAGR over FY17-FY19E. We expect an upside of 15% from CMP of Rs 587 over a period of 1 year.

Asian Paints Ltd

Asian Paints is the largest paint manufacturer in India with market share of 53% in decorative paints and has a strong dealer network of ~45000 dealers. We expect revenue CAGR of 14% over FY17-FY19E on account of strong demand for decorative paints due to shorter repainting cycle (repainting forms 65% of the decorative paint demand). ASL is working on 2 Greenfield projects (Mysuru-6,00,000 KL and Vishakhapatnam- 5,00,000KL) to expand its decorative paint capacity.  The first phase of both the capacities- 3,00,000 KL will be completed by FY19E.

GST will reduce the tax arbitrage for the unorganized segment (30% of industry) and will provide additional benefit to the organized players in the long run. We expect EBITDA CAGR of 14% over FY17-FY19E due to shift from distemper to external emulsion (high margin) in decorative paint business. We expect PAT CAGR of 11% over FY17-FY19E. We expect an upside of 15% from CMP of Rs 1161 over a period of 1 year.

Overview of the Performance of the Best Dussehra Stocks 2024

Data as of 4 Oct 2024

Conclusion

During Dussehra, break out from the suggested financial routines and go on a fresh financial adventure that will lead to financial prosperity. Make this holiday season a financial turning point, and let success be your ultimate reward.