stocks

10 The Economic Times Wealth October 21-27, 2019

The stocks to consider for

this year’s mahurat trading
We select eight stocks that offer high upside potential as the possible buys for this festive season.
by Narendra Nathan

I
nvestors consider it auspicious to
buy equity shares during Diwali—
especially on Laxmi Pujan day. To
meet this demand, stock exchanges
organise Muhurat trading every
year and this year’s event will take place
on Sunday, 27 October. One may ask if it
is safe to mix religion with investing. It
is, provided you follow the principles of
investing religiously. One such principle
states that in order to make money from the
stock market over the long term, investors
should buy fundamentally sound stocks
only. So, we look at a clutch of such stocks
that you can consider buying this year.
How were the stocks chosen? First, we
collected top picks from several research
houses. It is easy to ‘manage’ the results of
unlisted companies and it usually takes at
least a year to start getting normalised re-
sults. So we selected only stocks that have
completed a year of trading history. Since
a minimum return is needed for a year’s
holding, we also dropped the recommenda-
tions with less than 15% upside potential
from current market price. Given below is
UMA KADAM

the final list of stocks we finally arrived at.

No special preference has been given to any
particular stock.

Axis Bank Berger Paints Deepak Nitrite

Axis Bank, India’s third largest private bank, is witnessing
steady normalisation of earnings. Despite its exposure to
stressed assets that led to its gross NPA hitting 6.8% in 2017-
18, its asset quality is now manageable and its gross NPA
ratio is expected to be around 4% by 2020-21. In addition to
taking strong measures to recover loans, Axis Bank’s focus
on strengthening its loan portfolio of SMEs will also improve
the asset quality matrix. Due to reduction in NPA write-off
and reversal of bad loans written off earlier, Axis Bank is
expected to report 50% plus annualised net profit growth
between 2018-21. Its recent raising of capital shows it is
keen on future growth with strong fundamentals.
CURRENT TARGET POTENTIAL
RESEARCH HOUSE
PRICE (`) PRICE (`) UPSIDE
ICICI Direct 690 865 25.36%
The paints industry has been on a structural upswing the past
few years. With the trend continuing, the industry is expected
to outperform other building material and consumer goods
segments in the coming years. In addition to penetration in
smaller cities, reduction in gaps between repainting is also
helping players like Berger. Due to new dealer additions and
increase in sales force, Berger is equipped to capitalise on this
emerging growth story. Research houses are getting bullish
on the counter because technical factors are also in its favour.
For example, recently the stock moved out of its 11 month
consolidation and is on a sharp upswing now. Historically,
Berger has generated good returns after breaking out of a
consolidation range and the same is expected this time also.
CURRENT TARGET POTENTIAL
RESEARCH HOUSE
PRICE (`) PRICE (`) UPSIDE
Deepak Nitrite enjoys a leading market position in basic
chemicals, fine & speciality chemicals and performance
products in the domestic and global markets. Due to
supply side challenges, price of diamino stilbene sisulfonic
acid (Dasda) is on an upswing now and this should help
Deepak Nitrite report strong numbers by its performance
products division in the coming quarters. Despite having a
number of plants in several states, most are working at high
capacity utilisations, helping Deepak Nitrite show improved
profitability. Its integrated business model—Deepak Nitrite
plans to use around 30% of its upcoming phenol and acetone
capacity for captive consumption to produce derivatives—is
another driver for better margins.
CURRENT TARGET POTENTIAL
RESEARCH HOUSE
PRICE (`) PRICE (`) UPSIDE

JM Financial 690 850 23.19% Edelweiss 478.30 700 46.35% HDFC Sec-Retail 299.35 `348.00 16.25%
140 140 140
BERGER DEEPAK
AXIS BANK PAINTS 130 NITRITE
130 130
117.19 164.51 120
119.50
120 120
ET BANKS ET FMCG 110 ET CHEM.
110 110.96 110 109.72 100 115.64
100 SENSEX 100 SENSEX 90 SENSEX
90 109.51 90 109.51 80 109.51
16 Oct 2018 15 Oct 2019 16 Oct 2018 15 Oct 2019 16 Oct 2018 15 Oct 2019

PE PBV DIV YIELD M-CAP (` CR) PE PBV DIV YIELD M-CAP (` CR) PE PBV DIV YIELD M-CAP (` CR)

36.39 2.87 0.13 1,94,511 86.34 18.79 0.40 46,448 18.26 3.81 0.67 4,083