Brokerage firms have released a list of new Diwali gifts for investors this festive season. JM Financials and HDFC Securities have selected stocks that are not only at comfortable valuations but also have the potential to deliver strong returns in the coming months due to earnings improvement, strong demand and regional favorable conditions. Many of these stocks are undervalued or at attractive levels after recent declines, while some companies offer a structural growth story. According to the brokerage, these eight stocks have a growth potential of 15% to 32%.
IIFL Finance target ₹600 (up 24%)
HDFC Securities says IIFL Finance’s AUM growth is expected to lead to strong improvement in EPS and ROE in the coming quarters. The company’s valuations are currently at comfortable levels, which could create an opportunity for revaluation along with earnings improvement. Additionally, continued rise in gold prices will improve the quality of the company’s gold loan portfolio and positively impact earnings estimates.
Lloyds Metal & Energy – Target ₹1,680 (up 26%)
Although the stock’s performance has been a bit weak in recent months, the company’s earnings outlook remains strong. Production growth continues, and EBITDA growth in Q2FY26 is expected to be 163% YoY and 12% QoQ. The brokerage believes that this level could be a good entry point for long-term investors after the recent decline. The expected increase in iron ore production in the third quarter could improve both revenues and margins.
Brainbees Solutions (FirstCry) – Target ₹460 (28% upside)
Brainbees (FirstCry), India’s leading baby and kids products platform, is expected to achieve 22% compound annual growth rate (CAGR) in its segment over the next three years. The company plans to add 90-100 COCO stores by FY2026, which could accelerate the pace of growth. According to the brokerage, the company is currently focused on margin improvement and revenue growth, and revenue growth is expected to be around 15% in FY26.
Eureka Forbes – Target ₹715 (up 32%)
According to the brokerage, the company continues to maintain its leading position in the water purifier and home appliances sector. Despite the arrival of many new brands, the company has gained a large market share. The penetration of water purifiers in India is still low, which will provide significant growth opportunities for the company in the coming years. Financial performance is expected to improve due to volume growth and marketing spend.
Happy Forgings – Target ₹1,083 (up 20%)
The company has a strong position in the international market and significant potential for export growth. Large orders received in FY25 will be completed over the next 5-8 years, thereby maintaining revenue visibility. The company is implementing a capital expenditure plan of approximately ₹650 crore, aimed at continued capacity expansion. The brokerage believes the stock has a strong growth story for long-term investors.
Pidilite Industries – Target ₹1,717 (up 15%)
Pidilite has a strong balance sheet and has recorded a compound annual growth rate (CAGR) of 12.5% between FY 2020-25. The company’s pricing power and margins have reached above pre-Covid levels and are expected to remain stable going forward. Stable raw material prices and continued market share gains make it a preferred large-cap option for brokerages. Pidilite is also rapidly expanding into new categories, further enhancing its long-term growth potential.
Sheela Foam – Target ₹837 (up 25%)
The company is directly benefiting from changing lifestyles, urbanization and rising per capita income. It has 30% market share in India and 40% market share in Australia. The company’s growth strategy focuses on deeper rural penetration, aggressive channel expansion and acceleration of e-commerce. Continued focus on profit growth and margin improvement is expected to drive better performance in the upcoming financial year.
Northern Arc – Target ₹333.5 (up 27%)
According to the brokerage, the company has a strong presence in the rural market and is driving diversified growth through its multi-channel offerings. The company’s conservative lending policy and excellent asset quality (GNPA/NNPA 1.1%/0.6%) make it a reliable asset in the financial sector. Cut in interest rates and favorable monsoon will boost both credit growth and credit demand in the coming months.
