Amid the rising volatility in the broader markets, domestic brokerage firm SMIFS has shared eight stocks including Life Insurance Corporation of India Ltd, Tata Motors Ltd, Asian Paints Ltd and other with up to 172 per cent upside potential in them, despite the global economic environment remaining challenging, with relentless FIIs outflows, currency depreciation, and tighter financial conditions.
SMIFS believes that the Indian economy has remained resilient, it has not been immune to these pressures. According to the brokerage firm, private capex is experiencing a strong revival in the H2FY25, along with government-led policy measures to support economic activity.
BSE Sensex has dropped more than 15.5 per cent from its 52-week lows, while Nifty50 index has tumbled 16.4 per cent from its all-time high, hit in September 2024. BSE smallcap index is down 27 per cent from its all-time highs, while the BSE midcap index has shed 23.5 per cent from its recent peak, marking both the broader market indices to be in the bear grip.
The recent carnage in the markets for the last five months underscores the longest losing streak for Indian markets since 1996, as the headline indices settled in red. Rich valuations, fears of economic slowdown, muted corporate earnings and consistent FIIs outflows have been denting the sentiments at Dalal Street.
"Capex growth is projected at 21 per cent YoY in Q4FY25, reaching Rs 3.3 lakh crore, while the FY26 Union Budget estimates an 11 per cent increase to Rs 15.5 lakh crore. This surge in private investment is set to boost demand for capital goods, infrastructure, and industrial stocks, support credit growth for banks & NBFCs, and benefit EPC players," said SMIFS.
The increase in Capex will further drive economic expansion, strengthen the Indian rupee, improve corporate earnings, and provide a positive tailwind for Indian equities, particularly in industrials, construction, and financials, in H2FY25 and beyond, the brokerage added. "We have identified certain large-cap stocks that have declined due to recent market conditions but now present attractive valuation opportunities, making them strong candidates for re-rating as the economic recovery gains momentum."
SMIFS has picked LIC of India with a target price of Rs 1,984, suggesting an upside of 172 per cent from its previous close at Rs 729. LIC’s continued push towards non-par products, expansion in distribution channels, and innovation in digital and annuity offerings are expected to drive sustained profitability and margin expansion, said the brokerage firm.
It has also picked Samvardhana Motherson International Ltd (SAMIL) and Tata Motors with target price of Rs 210 and Rs 1,031, suggesting upside potential of 77 per cent and 66 per cent, respectively.
"Despite a moderation in global light vehicle demand, SAMIL continues to outperform, benefiting from increasing content per vehicle due to premiumization and hybridization trends. Its powertrain-agnostic portfolio, along with strong customer and geographic diversification, positions it well for sustained growth," SMIFS added.
Tata Motors’ revenue growth is expected to remain steady, driven by a favourable product mix, increasing volumes across segments, and continued strength in the JLR business, it said.
SMIFS also picked Coal India Ltd (Target Price: Rs 540), Asian Paints Ltd (Target Price: Rs 3,000), P I Industries Ltd (Target Price: Rs 3,750), Indian Oil Corporation Ltd (Target Price: Rs 170) and Tube Investments of India Ltd (Target Price: Rs 3,700), with an upside potential of 25-50 per cent in them from their previous close.