In October 2024, Indian markets saw a sharp decline, with the Nifty 50 index dropping by 1,605 points—its largest monthly fall in absolute terms since March 2020. While most major market indices in Asia, the U.S., Europe, and South America reported negative returns for the month (with Japan, Hong Kong, and Canada being exceptions), the Nifty 50 significantly underperformed globally, falling more than 6% month-on-month. Persistent selling by foreign portfolio investors (FPIs), driven by attractive opportunities in Chinese markets and high domestic valuations, played a major role in the market downturn. According to NSDL data, FPIs sold a net Rs.94,017 crore in equities in October, whereas domestic mutual funds bought Rs.90,770 crore.
Motilal Oswal’s interim earnings review reveals that the year-on-year earnings growth of 166 companies under its coverage, which reported results by October 31, declined by 8%, marking the lowest level in 17 quarters. This aggregate slowdown was largely impacted by a significant drag from global commodity sectors.
Meanwhile, 34 Nifty 50 companies reported flat earnings growth compared to the previous year, prompting a downward revision in Nifty 50 EPS estimates. The report notes that weak consumer demand and asset-quality issues within parts of the BFSI sector are contributing factors. “Overall Nifty EPS has been revised downward by 7% over the past six months, lowering the expected earnings growth for 2024-25 to just 5%—the slowest since 2019-20,” according to Motilal Oswal.
Experts suggest that the slowdown linked to election activities has continued, delaying the expected economic recovery. InCred Equities’ India strategy report, released in mid-October, points to factors such as reduced government capital spending, slowing credit growth, tepid e-way bill activity, and a decline in toll revenue as of September 2024, indicating a prolonged dip in economic momentum.
The report also highlights key short-term concerns, including rising consumer inflation, disappointing September earnings, and the significant growth required in the latter half of 2024-25 to meet the 7% GDP target. Analysts expect foreign portfolio investor (FPI) outflows to persist due to weak corporate earnings and high valuations. To mitigate risk, investors are advised to focus on financially robust companies, which can be evaluated through credit quality and overall financial stability.
Here are five stocks that are well-covered by analysts and currently present a potential for double-digit share price growth.
Stylam Industry
In the September quarter, the laminates producer experienced solid growth, reporting a 12% increase in revenue and a 15% boost in EBITDA compared to the previous year. This performance was driven by stronger export sales and improved product prices, with EBITDA further benefiting from a better product mix. Exports of laminates surged 25% year-on-year, though domestic sales dropped by 11% due to lower demand.
An HDFC Securities report is optimistic about the company due to its leading growth rates, strong EBITDA margins, solid balance sheet, and attractive return ratios. Revenue and earnings are projected to achieve a compound annual growth rate (CAGR) of 26% and 32%, respectively, from 2024-25 through 2026-27.
Engineers India
The engineering consultancy and EPC firm faced a challenging September quarter, with consolidated revenue down 13% year-on-year. The decline was primarily due to a weaker performance in its turnkey segment, though improvements are expected in the latter half of the fiscal year as project execution accelerates. Management maintains a margin forecast of 5-7% for this segment.
Order inflows for the quarter totaled Rs. 2,760 crore, reflecting a 141% year-on-year increase, and the company’s order book now stands at Rs. 11,150 crore, providing solid revenue visibility.
Finolex Cables
It is projected to show revenue growth of 12.6% and PAT growth of 20.8% in the September quarter, according to consensus estimates. This performance will be underpinned by strong B2B demand, particularly from the infrastructure sector, and growing exports.
The cables industry is expected to benefit from rising demand linked to infrastructure, construction, power transmission and distribution, and digitalization initiatives, including the Bharat Net project.
Hindustan Aeronautics
Hindustan Aeronautics is expected to report 11.8% revenue growth and 13.6% PAT growth in the September quarter, based on analyst estimates. At the end of 2023-24, its order book stood at Rs. 94,000 crore, providing strong revenue visibility.
While supply chain disruptions have slowed the delivery of a large Tejas MK I A aircraft order, performance is set to improve with the approval of a Rs. 26,000 crore order for 240 aero engines for SU-30 MKI aircraft. Additionally, the company will benefit from the government’s defense initiatives that prioritize domestic production.
Infosys
Small contracts saw strong double-digit growth, prompting an upward revision in revenue growth guidance for 2024-25, which now stands at 3.75% to 4.5% in constant currency.
Motilal Oswal recently gave a positive outlook for Infosys, anticipating benefits from increased IT spending in the medium term and projecting revenue and PAT growth of 8.1% and 10.4% in the second half of 2024-25.
Sarav 