Get rich: Top 10 stocks you must buy this Diwali

Angel Broking is expecting the Sensex EPS to post a growth of 9.6% for financial year 2014 and a healthier 15.4% for financial year 2015. According to the brokerage, the Sensex is likely to hit target of 22,600, implying an upside of 8.8% from the current levels.

As an investment strategy, Angel recommends rate-sensitives, IT, pharma and metals.

“Although expensive, defensives like FMCG stocks are also likely to continue to outperform in the current environment,” it says in a report.

So, here are top 10 picks for you to buy this Diwali:

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1. Wipro

Target Price: Rs 567

Upside: 15%

Rationale: Wipro has identified four momentum industry verticals: 1) BFSI, 2) energy & utilities, 3) retail and 4) lifesciences and healthcare; these verticals account for 65% of the company’s revenue.

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2.ICICI Bank

Target Price: Rs 181

Upside: 15%

Rationale: ICICI Bank’s strategic transformation over the past five years has expectedly resulted in a significantly better balance sheet and earnings quality. CASA ratio, which was 29% at the end of FY2009, has improved to around 43% as of 1QFY2014.

3. Hindustan Zinc

Target Price: Rs 156

Upside: 16%

Rationale: Zinc-lead/ silver volumes to grow at a CAGR of 5.8%/6.2% over FY2013-15. Also, HZL is expanding its mining capacity at the Kayar mine, which has 11mn tonne of high-grade reserves. The company expects to increase its capacity from 1.0mn tonne to 5.0mn tonne over the coming five years.

4. Axis Bank

Target Price: Rs 1392

Upside: 15%

Rationale: Axis Bank has aggressively expanded its branch network at around 30% CAGR over the past ten years (~2,250 branches now), which has not only aided the bank in steadily growing its retail liabilities profile (CASA ratio stands at 43% and share of domestic CASA & retail deposits to total deposits at 73%), but has also laid a strong platform for building up a sustainable retail assets portfolio (share of retail advances to total advances at 30%).

5. Cipla

Target Price: Rs 504

Upside: 19%

Rationale: Exports contributed 53% to the total turnover of FY2013, with Africa, US and Latin America constituting more than 60% of total exports. In the US, Cipla has entered into a partnership with more than 22 players and has a strong product pipeline of ANDAs, of which 47 have been launched, out of the 76 approved. With the Medpro acquisition, the company now has a front end in the fast growing African market.

6. Tata Steel

Target Price: Rs 390

Upside: 16%

Rationale: Tata Steel completed its 2.9mn-tonne expansion program at the Jamshedpur plant during FY2013. We expect this expansion to contribute Rs 2,000 crore per annum to the company’s consolidated EBITDA as the new plant reaches optimum utilisation over the coming two years.

7. Cadila

Target Price: Rs 894

Upside: 35%

Rationale: The company enjoys a leadership position in the CVS, GI, women’s healthcare and respiratory segments, and has a sales force of 4,500 medical representatives. Going forward, the company expects these segments to grow at above-industry rate on the back of new product launches and field force expansion. While FY2014 sales would be lower, however FY2015 should witness a strong sales growth.

8. United Phosporus

Target Price: Rs 225

Upside: 46%

Rationale: It figures among the top five generic agrichemical players in the world, with a presence across major markets such as the US, EU, Latin America and India.

9. Aurobindo Pharma

Target Price: Rs 271

Upside: 25%

Rationale: It has increased its filing (ANDAs and dossiers) dramatically from 313 in FY2008 to 1,647 in FY2013, as it proposes to scale up from SSP and Cephs to NPNC products. It has entered into long-term supply agreements with Pfizer (March 2009) and AstraZeneca (September 2010), which provide significant revenue visibility going ahead. It is also in discussion with other MNCs for more supply agreements.

10. Crompton Greaves

Target Price: Rs 115

Upside: 17%

Rationale: It is among the leading players in the power transmission & distribution equipment business. It is a globally diversified company, deriving more than 50% of its order backlog from international operations as of FY2013.

(The views and recommendations featured in this story are that of Angel Broking. There is a risk of loss in trading. Please consult your financial advisor before taking any position in the stocks mentioned)