Top 5 Stocks to Buy After October Market Correction for Long-Term Gains

October saw a significant correction in the Indian stock market, with the NSE benchmark Nifty dropping by 6%. Some stocks have fallen over 15% from their 52-week highs, creating potential entry points for investors looking for long-term value.

Top 5 Stocks to Buy After October Market Correction for Long-Term Gains

JM Financial on Suzlon Energy has recently surged the target price to the amount of Rs 81 against Rs 71 in recent times. In a positive direction for investors, the renewable energy titan has had JM Financial initiate its ‘Buy’ recommendations with Suzlon Energy’s robust order book and a strong bid pipeline as well as a strengthening balance sheet. Nuvama Institutional Equities has advised a more cautious approach with a ‘Hold’ rating, with an estimated target price of Rs 67. Let’s look at what is driving these recommendations and why Suzlon might be an attractive pick for investors.

1. IndusInd Bank Ltd

Overview: It is partly the pressure on the microfinance institution book, which has been putting the pressure on IndusInd Bank in recent times, and Emkay feels that is a transitory issue and not a full-scale down-cycle. The bank remains conservative with focus more on the credit standards than the rate of growth, and that would probably help it out in the long run.

Investment Rationale :

Temporary MFI Pain: The MFI-related issues are likely to ease off soon, and the auto loan book of the bank is likely to pick up in the second half of FY25.
Deposit Franchise Stable: Even in a challenging environment, the deposit franchise of IndusInd has been healthy for the last 12 months, which speaks to strength.
Valuation Opportunity: With a PBV of 1.2 times one-year forward, the stock will see significant rerating when asset quality and growth stabilize.
Emkay Global feels that with the ease in liquidity conditions by Reserve Bank of India, IndusInd Bank’s growth should improve. It makes a good stock for long term investors.

2. Saregama India Ltd

Overview: The latest loss of a bid by Saregama India to acquire Dharma Productions dented the stock price at the outset. Emkay Global finds this an auspicious development since the asset-heavy business model of Dharma would have further stressed Saregama’s balance sheet.

Investment Rationale

Focused Music Business: There is a sound core of music licensing businesses at Saregama which has healthy growth potential as all the increasing users are moving into paid platform. Today less than 3% of its users come on paid platform. And that is some amount of scope for growth in this itself.
Consolidated Financial Performance: The stock dropped 26% from its peak. Still, Roic has remained north of 20%. At the same time, OC to EBITDA stands steady at 60%.
Valuation at Saregama: It currently is quoting at a multiple of 30 times its one-year forward. The same thus should be good times to reprice down the share, which means great long-term entry into this equity story.
The reason why Emkay Global still has an ‘add’ rating on Saregama is its lean business model and prospects as music streaming grows.

3. Escorts Kubota Ltd

Summary The sale of its Railway Equipment Division to Sona BLW has not left Escorts Kubota’s stock price totally immune. The valuation of the deal may not have had anything better suited for most investors. For that matter, this incidentally happens to be a buy, according to Emkay Global, based on an upbeat agricultural outlook and surging likely in rural demand in H2FY25.

Investment Logic:

Agricultural Tailwinds With much better than normal monsoons, rural demand shall pick up well over H2 FY25. These are helpful to the agricultural as well as the tractor market.
Strategic Initiatives Escorts have always inducted new products while reinforcing its distribution networks. That and exports that have recently scaled up and Kubota procuring more from India shall continue to help in growth for the mid as well as long term period.
The Attractive Multiples: This stock is trading at 24 times the estimated price to earnings, September 2026. That is more than a tad lower compared to Mahindra & Mahindra’s price to earnings of 27 times and boasts an EPS CAGR of 16 percent for FY25–27.
Escorts Kubota may emerge as an excellent buy for those investors seeking opportunities to gain some sort of exposure to the Indian agriculture and rural growth theme.

4. Hero MotoCorp Ltd

Summary : In the Indian two wheeler market, which is leading out of the down cycle over the last five years, there is tremendous scope Hero MotoCorp can capture, incremental business picked up during the recovery with emphasis, in the rural segment as well.
Investment thesis

Conclusion: Resurgence of Two wheeler Demand and emergence of Hero Motocorp.
A decent festive season would set growth in the second half of FY25; Q2 was just a blip.
Valuations also look interesting as it trades at 18 times its one-year forward earnings, thus giving Hero MotoCorp’s investors an entry point to ride the momentum in the two-wheeler market recovery.
Emkay Global believes Hero MotoCorp is a good long-term bet given its market position and cyclical upswing in the two-wheeler space.

5. Mahindra & Mahindra Financial Services Ltd

Mahindra Finance is in the midst of a positive cycle with the CEO Raul Rebello looking to reinforce credit delivery and risk controls. The stock had corrected lately because of loan book cleaning. Emkay Global, however, expects good rerating for the stock.
Investment Rationale:
Improving ROA: Emkay Global feels that ROA will get there sooner at 2.5%.
Diversification: Mahindra Finance is diversifying into diversified financial services, which will stabilize its returns and overall volatility.
Valuation Attractiveness: This stock after sell-off now offers attractive valuations of 1.5 times the price-book value, hence a possible entry point for investors targeting long-term growth in the financial services industry.
With the strategic focus of bringing volatility down and growth up, Mahindra Finance promises an attractive prospect to a patient investor.

Conclusion

It may seem that the Indian market is coming back from a correction in October, with these five stocks picked up by Emkay Global being interesting buys for the long-term investor. Here, each share has definite strengths and appears well-placed to ride industry-specific tailwinds. For instance, IndusInd Bank and Saregama India have emerged to be resilient and hold out much promise of growth. Escorts Kubota, Hero MotoCorp, and Mahindra Finance have been stalwarts in their respective genres.
Now is probably the time for those investors who want to make a kill out of the correction in the market, considering such stocks. This is because the said stocks are likely to regain their strength and even thrive under stable market conditions.

Disclaimer:

All above recommendations are of the market analysts. Neither the author, nor the brokerage firm, nor Stockstoday.in will be responsible for any loss arising out of any such decision taken based upon this information. All users are cautioned to take their own expert advice prior to making any investment decision.

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