The relief rally seen in the markets in March 2025, according to a Kotak Institutional Equities (KIE) report was ‘an odd mix of fundamentals and sentiment’.
That said, the brokerage expects India’s reasonable macroeconomic situation, expectation of normal monsoons and a sluggish global outlook to provide some tailwind for the market.
“We can only speculate on the reasons for this odd rally – some investors may have found value in BFSI stocks, some may have rediscovered value in ‘narrative’ stocks, others may have taken solace from reducing FPI selling in the past month and inflows in the past week and FPIs may have returned to EMs with the ‘Trump’ trade disappointing,” the report said.
KIE expects Nifty EPS of ₹1007 in FY25E, ₹1145 in FY26E and 1314 in FY27E with the Nifty trading at 23.3x FY25E, 20.5 x FY26E and 17.9 x FY27E.
Fiscal year 2025-26 (FY26), it believes, will likely see more broadbased growth across sectors, with valuations still reasonable for banks and NBFCs.
Here are the six high conviction stock ideas from KIE that investors can latch on to from a long-term perspective:
Adani Ports and SEZ – Buy
Current market price (CMP): ₹1,183
Fair Value (FV): ₹1,570
Adani Ports and SEZ reported in-line 10 per cent domestic port Ebitda growth, with guidance for an improved print in Q4, defying seasonality.
“We expect EPS to grow by 19.2 per cent in FY26E & by 10.9 per cent in FY27E,” the report said. The stock is currently trading at 18.0x P/E FY27E earnings.
Apollo Hospitals – Buy
Current Market Price: ₹6,616
Fair Value: ₹8,180
Apollo Hospitals reported a fine Q3FY24, with healthy traction across hospitals, offline pharmaceuticals and AHL. The December 2024 quarter was the seventh consecutive quarter of sequential improvement in AHL’s margins.
“Its overall bed expansion in FY25-27E is still much lower than almost all peers. While we stay less sanguine on 24/7, continued sturdy offline FCF should Address any concerns; Maintain Buy.” said Kotak.
Piramal Pharma – Buy
CMP: ₹225
Target price: ₹300
KIE initiated coverage on Piramal Pharma with ‘Buy’ with a DCF-based FV of ₹300. Piramal Pharma has metamorphosed into a formidable CRDMO player with niche capabilities. The brokerage firm expects higher growth in innovation and differentiated projects.
“We expect earnings to grow by 375.1 per cent in FY26E & grow by 119.1 per cent in FY27E. The stock is currently trading at a valuation of 54.9x P/E FY27E EPS,” it said.
Union Bank – Buy
CMP: ₹126
Target Price: ₹155
“Union Bank of India had hosted an analyst meet to discuss the outlook for the bank. We came out of the meeting with a positive outlook on asset quality (delinquencies and bad loan recoveries) for the bank,” the Kotak report said.
While Net Interest Margin (NIM) and business growth might be weak in the medium term, the bank has room to preserve profitability in a healthy range through the lever on credit cost. Given the inexpensive valuations, we maintain ‘Buy’ with an unchanged fair value, it said.
Cummins India – Buy
CMP: ₹3,052
Fair Value: ₹3,700
According to KIE, Cummins’ sharp revenue beat reaffirms the health of end markets, strong execution capabilities and competitive positioning. Central Pollution Control Board (CPCB) IV being more of a medium-term opportunity versus a near-term threat. The company also benefited on accounts of higher localization & meaningful financial leverage.
“We believe that Cummins would be less hit on bottom-line profitability. We marginally cut estimates by 2-3 per cent & revise fair value (FV) to ₹3,700 (₹3,800 earlier), Buy stays,” the brokerage said.
Amber Enterprises – Add
CMP: ₹7,211
Target Price: ₹7,811
According to KIE, there are early signs of a favorable summer season for the room AC category, given the IMD forecasts above-normal maximum temperatures during Mar-May 2025 period.
“We expect revenues to see a CAGR of 27 per cent over FY2024-27E, driven by growth in components, electronics and Sidwal segments. We expect earnings per share (EPS) to grow by 72.4 per cent in FY26E and 26.5 per cent in FY27E. We revise our estimates by 1-2 per cent up and raise FV to ₹7,800 from ₹7,720; retain Add,” the brokerage said.
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