Concerns and the attraction of holidays such as Diwali is on everybody’s mind as the calendar approaches the end of the year. During this time of the year, individuals move out from their homes and do festive purchases, which ultimately helps in increasing sales of such companies. With improvement in the sales, the stock prices of these tend to increase. Therefore, right now, individuals continue focus on top stock picks for the ongoing festive season.
Apart from fostering community and familial bonds, these colourful celebrations lay the groundwork for the increase in business activity. With the ongoing celebratory mood, all eyes are on the hunt to spot the special investment opportunity. In other words, investors try to spot the best stocks which are well-placed to benefit from higher sales because of festive season.
With online retail gaining popularity, there are billions of people who continue to gravitate to this momentum. This is because they provide convenience and excellent offers and discounts. However, some individuals believe that nothing can surpass the satisfaction which offline retail provides. This holds true for both brands and consumers. If we talk about the business perspective, offline retail helps in directing the consumer behaviour, mainly in the tier-II and tier-III cities.
In the current environment, where the connections between bricks and clicks continue to blur, offline retail stores have realigned the business strategies. The focus of this realignment is to thrive in competitive market. This momentum is further boosted when the festive season arrives.
With this in mind, we will now have a look at top stock picks for the ongoing festive season.
1. Khadim India Limited
The company was established in December 3, 1981 in the name of S.N. Footwear Industries Private Limited, which is the private limited Company under the Companies Act, 1956, with ROCs. It operates through 2 distinct business verticals i.e., Retail and Distribution. Each of the company’s business division has its own customer base, sale channels and product range.
This stock tops the list of “Top picks for the ongoing festive season”, as everyone wants to step into the world of celebration with their new shoes.
Khadim’s financials are quite promising. Even though the company’s revenue in March 2023 quarter saw only the slight increase, the net profit of the company for the year saw an increase of ~66% year-on-year. This hints to the company’s solid financial foundation and the potential for extreme growth in the future.
The company continues to focus on its expansion plans for the future. Plans are there to make investment in the range of INR 120 billion-INR 130 billion in the form of capex for FY24. Over upcoming 2-3 years, the company plans to open ~100-120 new stores. These stores are expected to open in western and northern markets, and the focus is on Exclusive Brand Outlets (EBOs), Brand Outlets (BOs), and COCO stores. Apart from these plans, the company’s focus is on expanding presence in e-commerce while, at the same time, targeting to enhance its offline customer touchpoints.
The analysts are quite optimistic about the company’s strategy to focus on premiumisation. This means launching premium-priced shoe ranges and then reframing their value proposition. Therefore, this has attracted the consumers who are looking for high-quality, fashionable footwear options in the ongoing festive season.
Therefore, the company seems to be the strong contender which should benefit as the ongoing festive season runs on full pace.
2. Hero MotoCorp
Hero MotoCorp, which has been categorised as the world’s largest manufacturer of 2-wheelers, continues to see resurgence in sales as individuals exchange gifts in this festive season.
The ongoing festive season has resulted in a surge in demand for the 2-wheelers, mainly in the rural areas. While the growth momentum still continues, the company’s stock is expected to see an increase till the festive season lasts. Because the COVID-19 pandemic impacted the festive demand in the previous years, Hero MotoCorp is all set to make a comeback and exploit the expected rebound in sales.
The company announced a range of strategic initiatives at the EICMA 2023, which includes extensive growth plans to enhance its footprint in electric mobility, make an entry in new ICE vehicle categories and expand its presence in Europe. The company announced that it plans to enter Europe and is quite optimistic about the EV brand VIDA.
The company expects to start its commercial operations in the middle of the calendar year 2024. In due course, it will start to bring premium range of ICE motorcycles and scooters.
This is one of the top picks for the ongoing festive season as the company sold ~574,930 units in the month of October 2023. It saw double-digit growth of ~26% year-over-year, where it sold ~454,582 units in October 2022. Much of this growth stemmed from the ongoing festive season.
The company anticipates demand at higher levels as a result of recent product launches in premium segment and ongoing festive season. October 2023 has been tagged as the action-packed month for the company.
3. Aditya Birla Fashion & Retail
The company forms part of the Aditya Birla Group, which is the global conglomerate, in the league of Fortune 500.
It saw 5% year-over-year growth with revenue coming at INR 3226 crores for 2Q24. Muted revenue growth was seen because of tough market conditions and the shift of the festive season to 3Q. Therefore, expectations are there that the company can see healthy growth in 3Q as a result of strong festive demand.
Consolidated EBITDA for 2Q24 came in at INR 369 crores, with EBITDA margin coming at 11.4%. The company’s store network grew to more than 4050, adding ~48 stores in 2Q24. The company continues to see growth due to product innovation and category extensions.
The above stocks are some of the top stock picks for the ongoing festive season, as individuals’ spending capacity goes high during this time of the year. Much of the growth in the above companies are expected to come through new product launches, enhancement in customer interactions and experience, expansion throughout channels and markets, etc.