Sharad Avasthi’s Bold Stocks Call: Three Picks for Wealth Creation in 12–18 Months
In a recent segment on Market Today by Business Today TV, Sharad Avasthi, Head of Research (PCG) at SMIFS, shared an optimistic outlook for the Indian stock market, stating, “It’s difficult to find stocks that won’t make you money in the next 12–18 months.” His confidence stems from a favorable economic environment and strong fundamentals in select companies. Avasthi highlighted three stocks—Reliance Industries, Tata Motors, and LIC—as high-conviction picks with the potential to generate significant wealth over the next 12 to 18 months. Below, we dive into why these stocks are considered prime opportunities for investors.
1. Reliance Industries: A Multi-Sector Powerhouse
Target Price: ₹1,800–₹1,850
Reliance Industries, a conglomerate with interests in energy, retail, telecom, and green energy, is one of Avasthi’s top recommendations. The stock’s appeal lies in its diversified business model and strong growth catalysts. According to Avasthi, Reliance looks attractive on a Sum of the Parts (SOTP) basis, which values its various business segments individually. Key triggers include:
- Jio and Retail Listings: Potential IPOs for Jio (telecom) and Reliance Retail could unlock significant value, providing a boost to the stock price.
- Green Energy Push: Reliance’s aggressive investments in renewable energy, including solar and wind projects, align with global sustainability trends and position the company for long-term growth.
- Robust Financials: With a diversified revenue stream and a strong balance sheet, Reliance is well-poised to capitalize on India’s economic growth.
Avasthi’s target of ₹1,800–₹1,850 reflects confidence in these catalysts driving upside over the next 12–18 months. Investors seeking exposure to multiple high-growth sectors through a single stock may find Reliance a compelling choice.
2. Tata Motors: Undervalued with Strong Fundamentals
Target Price: ₹1,000
Tata Motors, a leading player in India’s automotive sector, is another of Avasthi’s bold calls. Despite concerns surrounding its Jaguar Land Rover (JLR) division, Avasthi believes the stock’s valuations are attractive, and its diversified business verticals are performing well. Key factors supporting this pick include:
- Resilient Performance Across Segments: Tata Motors has shown strength in its commercial vehicle, passenger vehicle, and electric vehicle (EV) divisions, with EVs gaining traction in India’s rapidly growing market.
- JLR Recovery: While JLR has faced challenges, improving global demand and cost optimization efforts are expected to bolster profitability.
- Attractive Valuations: At current levels, the stock is seen as undervalued, offering a margin of safety for long-term investors.
Avasthi’s target price of ₹1,000 suggests significant upside potential, making Tata Motors a strong candidate for investors looking for value and growth in the automotive space.
3. LIC: An Undervalued Gem with Long-Term Potential
Target Price: Not Specified
Life Insurance Corporation of India (LIC), the country’s largest insurer, rounds out Avasthi’s trio of wealth-creating stocks. Described as an “undervalued gem,” LIC offers strong cash flow potential and a dominant position in India’s insurance market. Avasthi’s optimism is driven by:
- Strong Market Position: LIC’s extensive distribution network and brand trust give it a competitive edge in India’s underpenetrated insurance sector.
- Cash Flow Potential: The company’s ability to generate consistent cash flows makes it a stable long-term investment.
- Undervaluation: At current prices, LIC is seen as a bargain, with room for appreciation as the market recognizes its intrinsic value.
While short-term volatility may persist, Avasthi emphasizes that LIC is a solid long-term bet for patient investors, particularly those seeking stability and growth in the financial sector.
Avasthi’s Investment Philosophy: Patience and Quality
Avasthi’s stock picks align with his broader investment strategy, which emphasizes quality stocks and a long-term perspective. In a volatile market environment, he advises retail investors to adopt a staggered investment approach—deploying 25% of funds for every 500-point dip in the Nifty—to mitigate risk and capitalize on market corrections. He also recommends building a diversified portfolio of 10–11 quality stocks, with equal allocation to minimize risk. For new investors, large-cap stocks like Reliance, Tata Motors, and LIC offer stability, while seasoned investors may explore mid- and small-cap stocks for higher returns.
Market Outlook: Why Now Is the Time to Invest
Avasthi’s bullish outlook is underpinned by several macroeconomic factors. He expects market clarity to improve in the coming months, driven by potential rate cuts and positive developments following state elections in Maharashtra and Jharkhand, as well as the U.S. elections. Additionally, post-monsoon activity and the festive season are likely to boost economic activity, supporting corporate earnings in Q3 and Q4. Avasthi predicts a potential 20–22% market rally in the next 3–5 months, making this an opportune time to invest in high-quality stocks like the ones he recommends.
Risks to Consider
While Avasthi’s picks are backed by strong fundamentals, investors should be mindful of potential risks:
- Reliance Industries: Delays in Jio or Retail listings or slower-than-expected progress in green energy could impact performance.
- Tata Motors: JLR’s recovery is contingent on global demand, and any downturn could weigh on the stock.
- LIC: Short-term market volatility and regulatory changes in the insurance sector could pose challenges.
Investors should conduct their own research or consult a financial advisor to ensure these stocks align with their risk tolerance and investment goals.
Conclusion
Sharad Avasthi’s bold stock calls—Reliance Industries, Tata Motors, and LIC—offer a compelling mix of growth, value, and stability for investors with a 12–18-month horizon. Backed by strong fundamentals and favorable market conditions, these stocks have the potential to create significant wealth. By adopting a disciplined, long-term approach and focusing on quality, investors can position themselves to capitalize on Avasthi’s optimistic outlook for the Indian market. As always, thorough due diligence and a diversified portfolio remain key to navigating the dynamic world of equity investing.
Disclaimer: Stock investments are subject to market risks. Past performance is not indicative of future results. Please consult a financial advisor before making investment decisions.
Sources: Business Today TV’s Market Today segment, April 7, 2025.
