MOFSL said Indian stock markets have corrected 11-12 per cent from the top over September-November highs, due to a variety of factors including earnings moderation and elevated valuations, along with global factors, such as a fragile geopolitical backdrop in the Middle East and a strengthening dollar index after the Trump victory.
It believes the correction has cooled off the valuations in largecaps, even as mid and smallcaps trade at expensive multiples. Nifty-50 is now trading at 19.6 times FY26E EPS against 30 times for midcap index and 23 times for smallcap index on one-year forward PE basis. It suggested 10 winners and high-conviction ideas post Q2 results and also highlighted five laggards. The winners included State Bank of India, Larsen & Toubro, Sun Pharma, Mahindra & Mahindra, Indian Hotels and Page Industries, among others. IPCA Labs, Amber Enterprises, Atul and Angel One are other four high conviction stock ideas, MOFSL said. The brokerage said Tata Motors Ltd, Asian Paints Ltd, Avenue Supermarts, ABB India and IndusInd Bank are five Q2 laggards.
On SBI, it said the PSU bank remains the market leader in credit growth, with the management guiding 14-15 per cent YoY advances growth and a stable RoA of 1 per cent. Its diversified lending portfolio and strong deposit base provide ample support for continued expansion. The bank’s leadership in corporate credit and retail lending ensures that it captures growth opportunities across sectors, it said.
"Despite its stellar performance, SBI’s valuation remains attractive at 1.1 times FY26E P/ABV, offering favorable risk-reward. We expect a CAGR of 12 per cent in PAT over FY24-26, driven by steady NII growth, cost control, and robust subsidiary performance," MOFSL said.
On M&M, MOFSL saidthe incremental capital allocation would be focused on delivering long-term value creation for shareholders. While M&M has already exceeded its target 18 per cent RoE in FY24, it maintains this target going forward as it aspires to balance between strong growth and healthy returns. "At an implied core P/E of 23 times/20 times FY25/FY26 EPS, M&M remains a good investment bet over the long term. We have a BUY rating on MM, with a target price of Rs 3,420, based on Sep’26E SOTP," MOFSL said.
In the case of L&T, despite muted ordering trends in FY25 so far, MOFSL sees a strong order book sustaining healthy revenue growth, an expected revival of domestic order inflows after state elections, bottoming out of margins, fairly stable working capital, and attractive valuations of 21 times FY26 EPS for the core EPC segment. L&T’s near-term performance may be influenced by narratives surrounding state elections and Middle East tensions, it said.
"However, our long-term thesis on the company stays intact. We expect L&T core E&C revenue CAGR of 15 per cent PAT CAGR of 22 per cent over FY24-27E," MOFSL said.
Sun Pharma, MOFSL said, continues to implement efforts toward sustainable levers of growth, such as adding products for specialty portfolio, clinical development of differentiated products, and new introduction in the branded generics market.
It expects 10 per cent revenue, 14 per cent Ebitda and 17 per cent PAT CAGRs for Sun Pharma over FY25-27. It values the Sun Pharma stock at 35 times 12-month forward earnings to arrive at a target price of Rs 2,280.
On IHCL, MOFSL said the company’s strong operational performance, portfolio diversification, and focus on sustainability will provide a robust foundation for its ambitious 2030 goals. It expect IHCL to deliver a CAGR of 18 per cent sales, 24 per cent Ebitda and 26 per cent adjusted PAT growth compounded annually over FY24-27. MOFSL suggested a Buy rating with a target price of Rs 880 (based on FY27E SoTP).
"With Page Industries' strong execution history and a large market opportunity, we expect an uptick in the earnings cycle and the valuation will also see quick re-rating. BUY with a revised target price of Rs 54,000, premised on 60x Mar’27E EPS," MOFSL said.
Considering a 27 per cent earnings CAGR and an anticipated improvement in the return ratio to 16 per cent over FY25-27, MOFSL values IPCA at 36 times 12-month forward earnings to arrive at a target price of Rs 1,930. MOFSL maintained its positive stance on Amber on account of its ability to grow other segments beyond RAC. It sees revenue growth at 26 per cent and PAT growth at 63 per cent over FY24-27 for Amber and suggested a 'Buy' rating with a target price of Rs 7,350.
On Angel One, MOFSL suggested a 'Buy' and a one-year target price of Rs 3,600. On Atul, the target price is Rs 10,260. The upside risk for this stock could be a faster-than-expected rampup of new projects and products.
Meanwhile, Q2 laggards included Tata Motors. While JLR posted impressive performance in FY24, there are clear headwinds ahead, which should put pressure on margin for the company, MOFSL said. Given this margin pressure and its capex imperatives, there is a risk that debt may start rising from hereon, it added.
"Further, the outlook for India PV and CV businesses remains weak. Given the lack of near-term triggers, we have a Neutral rating with Sep’26E SOTP-based TP of Rs 840," MOFSL said.
MOFSL said the Asian Paints stock has massively underperformed (down 18 per cent in the last three years) and is not likely to offer respite in the near term. Industry volume recovery and competitive strategy on pricing/incentives will be key monitorables. It maintained its Neutral rating on the stock with a target price of Rs 2,650.
It the case of DMart, the stock has corrected sharply (down 32 per cent in last two months) and now trades at 66 times FY26E EPS against 100 times average long-term one-year forward PE. MOFSL said the risk-reward on DMart seems attractive after the recent correction. It has a 'Buy' rating on the stock with a target price of Rs 5,300.
IndusInd Bank shares remain susceptible to execution risks, competitive pressures, and macroeconomic uncertainties. Asset quality recovery, especially in the MFI business and margin pick-up particularly as the rate cycle turns, are key near-term indicators for a potential re-rating, MOFSL said.
"We maintain our positive stance on ABB based on its ability to benefit from the high growth segments with its wide offerings and deeper penetration network. We do expect the near-term execution velocity to be affected by slower-thanexpected growth in order inflows and a shift of order book toward longergestation projects. However, with higher value-added content in large-sized order inflows, we expect margin performance to remain healthy," MOFSL said on ABB India.