Seasonal industry means the group of companies belonging to a particular business category, that earns a major portion of income during limited number of weeks or months in each calendar year. Therefore, investing in the top Seasonal Stocks tends to be opportunistic. Investors are required to be quite quick at the time of investing in top seasonal stocks. Annual business cycle for such firms is, more or less, predictable. Seasonal industries tend to have a peak season or seasons at the time of which activity levels are pretty high. As a result of this, rest of the year is off-peak or low season. That is to say that activity is significantly lower or non-existent. Simply put, seasonal stocks are characterised by increased demand during different times of the year. For instance, the company which is focused on designing and manufacturing snowsuits might experience higher demand in the winter season. 

Seasonal stocks are the ones in which prices fluctuate in different parts of the economy. For example, gas prices might rise at the time of holiday season. At times, air plane tickets might rise on the holidays or during special events. This means that investors who are planning to buy seasonal picks might prefer to buy airlines stocks during holiday season. Airlines perform better because of general demand going up or down during certain periods across the year. This is referred to as price seasonality. If investors want to earn a healthy amount of return and that too in a short period of time, investing in the top seasonal stocks can be considered as the best option. 

Let us now have a look at top seasonal stocks for our readers.

1. Khadim India Limited 

The company was established in December 3, 1981 as S.N. Footwear Industries Private Limited. This was the private limited Company under The Companies Act, 1956 with the Registrar of Companies. Through the next many years, it was involved in whole-selling and distribution of branded utility footwear. From the year 1993, the company forayed into retailing and it emerged as the popular fashion footwear brand.

In 1Q24, the company’s revenue came in at INR1,580 million, exhibiting a decline of 5% year-over-year and the company was able to maintain growth in its retail business during 1Q24. Gross margin for the quarter came in at 45%, exhibiting a rise of 360 basis points year-over-year as higher contribution from retail helped in favourable product mix.

The company’s focus on cost optimization and brand premiumization resulted in EBITDA margin for 1Q24 of 11.6%. PAT in 1Q24 was INR16.5 million which de-grew by 51% year-over-year. Store network grew by addition of 13 retail stores during 1Q24 which took total retail presence to 848 stores. Distribution network continues to grow strong as it was able to add 44 new distributors in 1Q24, taking total count to 732. 

While inflation is still the concern in the short-term, medium and long-term growth enablers of organised retail footwear industry are healthy. Favourable factors including higher discretionary income, increasing middle class, and shift towards branded products should support industry growth. 

2. Hero Motocorp Ltd.

The New Delhi headquartered Hero MotoCorp has been categorised as world’s largest manufacturer of motorcycles and scooters in terms of unit volume sales as the single company since 2001. Over past decade, it has rapidly expanded capacity, geographic footprint, customer reach and R&D capabilities. 

The company was able to dispatch ~488,717 units in August 2023 and, in the corresponding month of the previous year, it sold 462,608 units. 

It expects increased demand heading into the festive season. Apart from this, better monsoon throughout most parts of the country and sound agricultural activity should contribute to positive customer sentiments. August was a strong month for the company which saw new exciting additions to its product portfolio. Hero MotoCorp augmented its premium motorcycle segment as it launched Karizma XMR at introductory price of INR 1,72,900/- (ex-showroom Delhi).

The company has released its financial performance for the first quarter (April-June 2023) of the FY24. Revenue from operations for the quarter came in at INR8,767 Crore as against INR8,393 Crore and its total income was INR8,989 crore (vs INR8,446 crore). Because of softening of commodity costs, a quick pick-up in savings programs, and judicious price increases, EBITDA margin for 1Q24 came in at 13.8%, exhibiting an improvement of 250 bps. Underlying EBITDA margin for ICE Business was 14.5%, excluding EV business impact.

The company expects to see more launches of new models in premium segment over upcoming quarters as it plans to win big in premium segment. EV presence continues to scale up and the company is on track to cover 100 cities by December 2023. 

3. Bajaj Electricals Limited

Bajaj Electricals Limited has been categorised as a globally renowned and trusted company which has a turnover of INR4,813 crores (FY22). It is a part of the Bajaj Group. Business portfolio of the company spans across consumer products (such as appliances, fans, cookware), lighting (including consumer and professional lighting), and EPC (i.e., power transmission and distribution).

For 4Q23, the company saw revenue from operations of INR1,490 crores against INR1,334 crores, exhibiting a rise of ~11.7% against 4Q22. For the quarter, it made profit before tax and profit after tax of INR79 crores and INR52 crores respectively. For the year ended March 31, 2023, it was able to generate positive cashflow from operations of INR450 crores and its cash equivalents and surplus investments were at INR412 crores.

Order book as on 1st April, 2023 was at INR1,761 crores, comprising INR1,026 crores for transmission line towers, INR612 crores for power distribution, and INR123 crores for illumination projects. 

Conclusion

First-time investors should exercise caution at the time of investing in the top seasonal stocks as it takes an in-depth knowledge as to which stocks are seasonal and which are not. Apart from this, investors are required to be proactive while investing as they need to sell their holdings when seasonal stocks exhibit a downtrend. More often than not, this will happen during off-peak season.

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