Invest in defence and hospitality stocks for high returns ahead of Diwali: expert recommendations

As markets remain volatile amid global uncertainties, analyst Vikas Sethi from Sethi Finmart has highlighted two promising stocks in the defence and hospitality sectors for potential short-term gains. Despite the prevailing foreign investor outflows and the resulting market correction, these stocks show promise for Diwali investors looking to capture significant returns.

Apollo Micro Systems: a defence sector pick with high growth potential

Vikas Sethi recommends Apollo Micro Systems, a defence-focused stock, as a strong buy at its current levels. With a short-term target price of Rs 110 and a suggested stop-loss at Rs 95, investors could see up to ten per cent returns in the coming months. Apollo Micro Systems is known for its expertise in electronic and electromechanical systems, particularly for the aerospace and defence sectors. The company serves high-profile clients like DRDO, the Indian Navy, and the Indian Army, and its client roster also includes giants such as Adani and L&T.

Apollo recently reported impressive Q2 results for FY24, with profit surging by one hundred forty per cent to Rs 15.9 crore compared to Rs 6.6 crore a year earlier. Revenue increased from Rs 87.16 crore to Rs 160.7 crore, marking robust demand in its core segments. Earnings per share rose from Rs 0.22 to Rs 0.52, while EBITDA climbed from Rs 18.4 crore to Rs 32.8 crore. This growth reflects Apollo's strong order book and its new 2.5 lakh square-foot defence electronics facility in Hyderabad, set to bolster its production capacity further.

 Royal Orchid Hotels: capitalizing on demand surge in hospitality

Sethi also suggests Royal Orchid Hotels as a lucrative short-term investment in the hospitality sector. He advises a target price of Rs 320 with a stop-loss of Rs 298. Royal Orchid, operating over eighty hotels with six thousand rooms in fifty cities, is expanding with an additional 1,900 rooms planned for FY25, addressing a rising demand driven by wedding season and high occupancy rates. The company's recent expansion into Nepal, where it opened a new hotel, is anticipated to support further growth and investor interest.

(Disclaimer: investment advice is based on expert opinion. Investors are advised to consult their financial advisor before investing.)