2 out of every 3 Nifty stocks trade at steep valuation discount; top stock picks

Thanks to fourth straight month of decline for the market, Apollo Hospitals Enterprise Ltd, Bharti Airtel Ltd, Trent Ltd, Tata Consultancy Services Ltd (TCS), Maruti Suzuki India Ltd and ITC Ltd are among Nifty constituents trading at steep discount to their average long-term valuations.

Banks such as HDFC Bank and Kotak Mahindra Bank now trade at 41-43 per cent discount on price to book value basis, data showed. Net-net two out of every three Nifty stocks, mainly from private banks, consumer, technology, retail, and automobiles are trading at a discount over long-term averages, MOFSL said.  

In the case of Apollo Hospital, the stock at 47.5 times its trailing 12-month earnings is available at 39 per cent discount to its 10-year average PE of 77.7 per cent. Telecom operator Bharti Airtel at 27.9 times trade at 38 per cent discount to its 10-year average PE of 45.3 times. Tata group flagship TCS now trades at 15.2 times against its 10-year average PE of 24.5 times, down 38 per cent. Tata group companies such as retailer Trent, jeweller maker Titan Company, steel maker Tata Steel trade at discounts of 38 per cent and 12 per cent, respectively,   

The largest car maker Maruti Suzuki India at 21.3 times trade at 33 per cent discount while FMCG major ITC at 17.4 times quotes at 23 per cent discount. On price to book value basis, HDFC Bank, Kotak Mahindra Bank and Bajaj Finance trade at 34-43 per cent discount.

The month of March saw only four Nifty stocks settling higher. 

Top stock picks  

"We are OW on auto, PSU banks, diversified financials, technology, consumer discretionary, and capital goods, which are our key preferred investment themes. We are Neutral on telecom, cement, and healthcare, while retaining our UW stance on private banks, consumer staples, O&G, utilities, and metals within our model portfolio," MOFSL said.

Among Nifty stocks, MOFSL prefers Bharti Airtel, SBI, ICICI Bank, Lenskart, M&M, Titan, Bharat Electronics, Eternal, Tata Steel, Infosys, and InterGlobe Aviation.

Among largecaps as a pack, Axis Securities prefers Kotak Mahindra Bank, Bajaj Finance, Bharti Airtel, State Bank of India, Nestle India Ltd and Eternal Ltd, among others. 

Nifty target
Axis Securities values Nifty at 17 times, implying a December 2026 target of 23,865. While valuations may remain above average amid potential policy shifts under the Trump regime, persistent inflation in developed markets and historically elevated interest rates increase downside risks, it said.

"Uncertainty around currency movements, oil prices, and global trade is likely to weigh on export-driven growth in 2026. Additionally, concerns over global growth, exacerbated by tariffs and geopolitical tensions, could compress market multiples in the near term," it said.