Eternal, Maruti, ICICI Bank, Oil India: Top-18 stock picks that may rally up to 50-100%

Domestic brokerage firm JM Financial has suggested 18 high conviction ideas from its research universe. The brokerage firms asked its analysts to suggest their top picks from each sector, ignoring the marketcap with explicit instructions that largecap, midcap and smallcap ideas should have the potential to achieve 50 per cent, 75 per cent and 100 per cent returns over the next 3 years.

Overall it bullish on consumption, turning incrementally more positive on real estate & hotels, consumer, internet and auto, which will continue to benefit from the GoI and RBI’s measures to boost consumption. However, it continues to stay negative on banks and insurance.

The analysts have preferred the returns depending on compounding of either EPS or Ebitda, at 14.5 per cent, 20.5 per cent and 26 per cent for largecaps, midcaps and smallcaps respectively, rather than multiple expansion. However, multiple expansion was okayed if the stock was extremely cheap).

From the banking space, it has picked ICICI Bank. "We expect ICICI Bank to continue generating healthy return ratios, with RoA around 2.3% and RoE at 16% over FY26E-FY28E. Trading at 2.3x FY28e BVPS, the stock has a potential upside of 50 per cent from its current valuation over the next 3 years," it said.

From auto and infra sectors, JM Has picked Maruti Suzuki and Adani Ports. Maruti's revenue may grow at 14 per cent CAGR over FY25-28E, driven by 8 per cent volume CAGR and 6 per cent ASP expansion, while Adani Ports may further deleverage, in the absence of large acquisitions. JM has a target price of Rs 1,795 derived on DCF basis.

Other top largecap include Eternal from internet sector, and Shriram and Chola Finance from financial services space. "We suggest looking at the trading multiples of Zomato on EV/Ebitda (Reported) and PER basis hereon since the company is profitable," it said.

Margins of Chola Finance are likely to improve, aided by a decline in borrowing costs through the repricing of repo-linked and bank borrowings, with sustained momentum in used vehicle financing should also support margins to inch up in the near term, notes JM. "We value Shriram at 2 times FY28E BVPS in return for average RoA/RoE of 3.2 per cent/16 per cent over FY26E-28E. It can give over 50 per cent returns in the next 3 years."

Oil & gas sector, consumer discretionary and real estate & hotels have been given names like Oil India, Vishal Mega Mart and Phoenix Mills, respectively, which come from the midcap space.

"We have 'buy' on Oil India with one-year target of Rs 515 and expect its EPS to grow at a robust 16 per cent CAGR over the next 3-5 years. We value Phoenix Mills on SOTP basis with 82 per cent of NAV being derived from retail business, while sees Vishal Mega Mart to register robust revenu, ebitda and PAT CAGR of 20 per cent, 27 per cent and 31 per cent led by area addition at 10 per cent CAGR and low-double-digit SSSG," it adds.

JM's top picks from Infra & ports, Insurance, AMC, IT Services, financials, Real Estate & hotels, industrials, textiles and auto ancillary includes names like Aegis Vopak, Star Health, Nuvama, Sagility, PNB Housing, Chalet Hotels, Ajax Engineering, Gokaldas Exports and SJS Enterprises, respectively. All these stocks are from smallcap basket.

JM Financial has a target price of Rs 340 from Aegis Vopak, while it said that Star Health has corrected over the last year as it saw higher claims as a result of medical inflation and reclaimed Rs 480-500 levels with improving trajectory in claims ratio in H1. Ajax is trading attractively at 22 times/18 times FY27/28E EPS and arrive at a price target of Rs 780.

The brokerage firm sees Nuvama stock to double in next three years considering its discount from its peers, while Sagility's stake sale overhang of promoter could be over by 2-3 years, helping converge multiples with peers. Headroom for re-rating for Gokaldas Exports, given the strong growth profile.