Diwali 2023 Picks: Reliance, GAIL, Dr Reddy’s among top 10 buys from HDFC Securities

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Equitas Small Finance Bank, GAIL (India), Godrej Industries, Grasim Industries, Gujarat Alkalies & Chemicals Ltd Chemicals, Indian Oil Corporation, Kalpataru Projects International, Reliance Industries and United Spirits. These stocks have robust fundamentals and some margin of safety in their valuation to offer superior returns to investors, HDFC Securities Retail Research said. HDFC Securities expects Dr Reddy’s US business to grow at a CAGR of 11% over FY23-25E including gRevlimid sales.

Overall, it estimates 10% CAGR in sales led by strong growth from US and domestic formulation business. Operating margin is expected to remain at around 26.5-27.5% on the back of niche opportunities in the US piece. Net profit is expected to see 16.5% CAGR led by healthy revenue and strong operating performance over the same period.

The brokerage recommends ‘Buy’ on Dr Reddy’s Laboratories in the band of ₹4,850-5,400 for target price of ₹6,250 per share till next Diwali. Also Read: Samvat 2080: Sharekhan suggests 15 stocks including DLF, Tata Motors to buy this Diwali; check complete list The brokerage has envisaged 24% CAGR in net interest income (NII) and 31% in net profit over FY23-25E, while the loan book is estimated to grow at 27% CAGR over the same time frame. As the collection efficiencies have improved and economic activities have picked momentum, the asset quality has seen immense improvement.

ROAA is estimated to improve to 2% by the end of FY25E. It could display steady improvement in return ratios driven by growing advances and contained slippages, said the brokerage house. It recommends investors to buy the stock in the ₹82-92 band for a target price of ₹112 per share.