Stocks to buy: The Indian stock market underperformed over the last year due to a confluence of factors, including US tariffs, heavy foreign capital outflows, weak earnings, and stretched valuations.
The Nifty 50 has been flat over the last year compared to a nearly 14 per cent rise in the S&P 500.
The Samvat 2082 is expected to be better for the Indian stock market due to India’s resilient growth momentum.
“Policy tailwinds include a 50 bps CRR cut, 100 bps rate reduction, improved bank liquidity, RBI dividend transfer, budget consumption boost, rising government capex, and GST 2.0 reforms—positioning the economy at an inflexion point. Markets will track the US trade deal progress and the earnings growth trajectory this year,” said HDFC Securities.
“Double-digit FY27 earnings growth could deliver strong market returns, with mid and small caps gradually improving. Strong fundamentals—above-normal monsoons, healthy reservoir levels, services momentum, stable employment, and GST rationalisation—should counter external pressures, including US tariffs,” the brokerage firm added.
HDFC Securities has picked 10 stocks for Diwali 2025, including Bharti Airtel, Larsen and Toubro (L&T), and IDFC First Bank.
” We maintain a predilection for domestic consumption-oriented businesses, financials, and the power and engineering sectors. Our meticulously constructed portfolio of ten stocks—comprising four established mega-caps and six emerging companies—presents compelling investment opportunities underpinned by robust fundamentals and attractive valuations, positioned to generate superior returns,” HDFC Securities said.
Stock picks for long term
Bharti Airtel | Buying range: ₹1,935-1,985 | Add on dips : ₹1,787 | Red flag: ₹1,643 | Target price: ₹2,244
Bharti Airtel has established its market position in the Indian telecom industry, supported by an attractive market structure featuring two strong players and two weaker players, along with favourable regulations.
“Bharti Airtel may report a consolidated revenue, EBITDA and PAT CAGR of approximately 15 per cent, 14 per cent and 17 per cent, respectively, over FY25-27E. We recommend investors to buy the stock with a target price of ₹2,244 (35.5 times FY27E EPS) till next Diwali,” said HDFC Securities.
Larsen and Toubro (L&T) | Buying range: ₹3,760-3,818 | Add on dips: ₹3,484 | Red flag: ₹3,190 | Target price: ₹4,243
HDFC Securities believes L&T is set for strong growth, backed by a robust ₹6.1 lakh crore order book and a healthy pipeline of large domestic and international projects.
“Its business mix has evolved, with international orders, especially from the Middle East, now forming nearly half the backlog. We remain positive on the stock given its solid balance sheet, improving infrastructure margins, better subsidiary performance, and rising public capex in the energy transition,” said HDFC Securities.
The brokerage firm expects a consolidated revenue, EBITDA and PAT CAGR of approximately 17 per cent, 21 per cent and 26 per cent, respectively, over FY25-27E.
IDFC First Bank | Buying range: ₹73-75 | Add on dips: ₹65 | Red flag: ₹59 | Target price: ₹88.5
According to HDFC Securities, IDFC First Bank’s management has reiterated that NIMs are likely to bottom out in Q2, with a lower 10-15 bps decline versus Q1 compression, and recover to nearly 5.7 per cent from Q3FY26 onward as repricing benefits start accruing. It has guided for 5.8 per cent Q4FY26 exit margins.
“IDFC First Bank continues to improve on its performance, driven by its reutilisation strategy, with wholesale book share declining to 19 per cent. The new retail products would provide strong support to NIMs, and a reduction in borrowing and credit costs would aid PAT expansion,” said HDFC Securities.
Happy Forgings | Buying range: ₹910-944 | Add on dips: ₹848 | Red flag: ₹729 | Target price: ₹1,083
According to HDFC Securities, Happy Forgings has announced capital expenditure (capex) plans of ₹650 crore to establish advanced forging capabilities for heavy-weight forged and machined components in diverse industrial applications.
“Given Happy Forgings’s expanding scale of operations and an ample addressable global opportunity, we believe it has significant room for growth,” said HDFC Securities.
JSW Energy | Buying range: ₹538-555 | Add on dips: ₹487 | Red flag: ₹428 | Target price: ₹639
The brokerage firm noted that JSW Energy’s management remains focused on achieving its EBITDA targets and ensuring the timely commissioning of upcoming projects, while maintaining net debt at prudent levels.
“This balanced approach highlights JSW Energy’s commitment to sustained growth and financial stability in the future. We expect revenue, EBITDA, and PAT to grow at a CAGR of 49.3 per cent, 62.3 per cent and 26.4 per cent, respectively, over FY25-FY27E,” said the brokerage firm.
MSTC | Buy range: ₹525-548 | Add on dips: ₹463 | Red flag: ₹418 | Target price: ₹673
HDFC Securities underscored that MSTC benefits from strong government backing as a central public sector enterprise under the Ministry of Steel. This association ensures policy support, credibility, and a steady flow of business from various government departments and public sector undertakings.
MSTC operates on an asset-light business model, focusing primarily on service-based offerings, such as e-auctions and e-procurement, rather than owning heavy physical assets. This approach enables the company to maintain low capital expenditure while scaling operations efficiently, said HDFC Securities.
It also enhances profitability and return on capital, as MSTC leverages its digital infrastructure and domain expertise to generate revenue with minimal operational overhead, the brokerage firm added.
“MSTC’s nearly monopolistic status positions it well in the emerging area of vehicle scrapping. The company is expected to report a consolidated revenue, EBITDA and PAT CAGR of approximately 14 per cent, 12 per cent and 20 per cent, respectively, over FY25-27E,” said HDFC Securities.
Associated Alcohols and Breweries | Buying range: ₹1,008-1,035 | Add on dips: ₹918 | Red flag: ₹807 | Target price: ₹1,182
HDFC Securities noted that Associated Alcohols and Breweries’ gross margins have been under pressure over the past couple of years due to a sharp increase in raw material prices.
However, the company has been able to mitigate this to some extent by passing on the prices to its customers, given its long-term relationships with them.
Given the correction in raw material prices in recent quarters, coupled with improving realisations, there may be gross margin improvement.
“With growing alcohol consumption, foray into new geographies and move towards premiumisation, management expects the premium line of products to grow at 18-20 per cent,” said HDFC Securities.
“Resultantly, IMFL (proprietary) is likely to grow in the range of 15%-18% and IMFL (licensed) is expected to register 12-15 per cent growth. Margins are expected to sustain in the mid-double digits. At current levels, we believe that the company is attractively priced,” said the brokerage firm.
Northern ARC Capital | Buying range: ₹265-277 | Add on dips: ₹244.5 | Red flag: ₹209.5 | Target price: ₹333.5
“Northern ARC Capital follows a conservative credit policy for the unsecured segment, wherein the company completely writes off accounts beyond 90 days. Consequently, it has demonstrated robust asset quality with GNPA and NNPA at 1.1 per cent and 0.6 per cent, respectively,” HDFC Securities said.
The company’s management has highlighted improving macro indicators, including RBI rate cuts and a favourable monsoon, as tailwinds for H2FY26. An increased share of D2C lending and higher placement volumes would enhance fee income, driving an expansion of RoA, said the brokerage firm.
Pidilite Industries | Buying range: ₹1,500-1,550 | Add on dips: ₹1,401 | Red flag: ₹1,289 | Target price: ₹1,717
According to HDFC Securities, Pidilite Industries has achieved a 12.5 per cent CAGR in volume growth over the last four years, driven by resilient domestic demand across sectors, higher retail sales backed by strong brand recall in the domestic market, rising new construction activities following a new real estate upcycle, and an expanding distribution reach.
The brokerage firm believes these factors will contribute to double-digit volume growth for the company, and expects it to register revenue growth of 11.2 per cent and PAT growth of 13.5 per cent CAGR between FY25-27E.
Sheela Foam | Buying range: ₹678-698 | Add on dips: ₹608 | Red flag: ₹539 | Target price: ₹837
“We expect Sheela Foam to register revenue, EBITDA and PAT CAGR of 9 per cent, 26 per cent and 39 per cent, respectively, over FY25-28E. It would be driven by synergy benefits from the acquisition, change in business mix and stable raw material prices. Sheela Foam has a clear focus on improving its margin profile and not chasing growth at the expense of profitability,” said HDFC Securities.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the broking firm, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
