MUMBAI: India’s small- and mid-sized stocks have had a fantastic run this year, and analysts are sticking to this pocket of the nation’s $3.7 trillion market while picking potential winners for the festival of Diwali this Sunday.
The day marks the start of the new Hindu year and India’s stock exchanges hold a special one-hour session where investors and traders make ceremonial purchases.Property developers as well as leading producers of cement, cables, and chemicals are among the picks this season.
Small- and mid-cap stocks have trounced their larger peers this year amid bets that domestic-facing names will benefit more from the nation’s economic growth that is among the world’s fastest. The S&P BSE MidSmall Cap Index has surged 30% since Jan. 1, more than four times the gain in the benchmark S&P BSE Sensex Index.
Here are some of analysts’ top picks for the festival season:
SBI Securities
Polycab India Ltd
The maker of cable and wires has expanded its presence in the electrical goods business in recent years and has also won contracts for rural electrification projects
The electrical goods business forms about 15% of its revenue and is expected to make a profit on an operating basis starting 2025
Polycab has set a revenue guidance at 200 billion rupees by March 2025, about 40% more than in fiscal year 2023. But with the turnaround in the company’s consumer business, analysts at SBI expect the number to be raised in the next two-to-three quarters
Kolte-Patil Developers Ltd
The realty firm’s shares have rallied more than 70% this year, outperforming a 50% rise in BSE Ltd.’s sector gauge. SBI analysts expect the company to benefit from its strategy to expand into multiple markets, mainly via apartment redevelopment projects in Mumbai
The company plans to foray into afforable housing category in Pune, the western Indian city that continues to drive its major projects.
HDFC Securities
Gujarat Alkalies and Chemicals Ltd
The caustic soda and chlorine products maker has completed the majority of its capex including its joint venture with National Aluminum, the benefits of which will start to flow in the coming quarters
The company is a part of firms controlled by the western state of Gujarat and will abide by its rules for return of capital that includes paying out 30% of net income — or 5% of networth — as dividend
Gujarat Alkalies paid a dividend of 23.55 rupees, or a payout of 42%, for 2023 versus 10 rupees in the preceding year, and is expected to keep the payout at 30%-35%
Kalpataru Projects International Ltd
The company has a presence across power transmission, oil & gas, and civil infrastructure businesses and holds orders more than three times its revenue for the latest year.
Kalpataru has indicated a strong bidding pipeline of about 1 trillion rupees and will be tapping global projects as companies’ push for renewables will lead to requirements for new transmission lines
Nirmal Bang Institutional Equities
Cipla Ltd
The North American market accounts for about 25% of Cipla’s revenue, giving the company a smaller share than its peers. The generic drugmaker plans to focus on the respiratory segment there, where it faces less competition
CCL Products India Ltd
The company is the country’s biggest exporter of coffee and will continue to benefit from the ongoing crisis in Europe as the region is expected to import more from India and Vietnam, where CCL has factories
CCL’s ability to offer multiple blends in higher volume and its diverse sourcing capabilities are the differentiating factors besides its strong thrust on R&D and technology
Kotak Securities
Dalmia Bharat Ltd
The cement maker has a strong balance sheet and limited leverage and this allows its expansion, including inorganic growth opportunities. The company has a strong presence in eastern and southern parts of India and the regions have seen sharp price hikes, which will aid margins in the coming quarters
Canara Bank
The lender’s ratio of bad debts has shrunk to a multi-year low, but the stock with a 16% surge this year has trailed peers such as Indian Bank and Bank of Maharashtra, which have rallied more than 40%
The bank has seen a drop in credit costs in recent quarters, which has helped it improve return-over-equity ratio even though it continues to trade at a discount to peers.

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