Stocks to buy for long term: Pankaj Pandey of ICICI Securities picks Tata Steel, ITC Hotels and more
Investors now await the Q1FY26 results of Indian corporates. Healthy earnings growth will boost market sentiment, driving it to fresh record highs.
Apart from Q1 results, the India-US trade deal, the progress of the monsoon and macro indicators in the US will be key factors that will influence the Indian stock market in the near term.
Pankaj Pandey, the head of research at ICICI Securities, remains constructive on the Indian stock market.
"In the backdrop of major economies witnessing higher inflation, higher bond yields and lower growth, India's growth-inflation dynamics stands out with lower inflation, lower bond yields and improving/stable growth, supporting positive equity outlook going forward," said Pandey.
Pandey expects Nifty EPS to grow at a CAGR of 11.8 per cent over FY25-27E.
"Upgrading our multiples (function of downward interest rate cycle & inclusion of new age businesses in Index), we retain our 12-month rolling Nifty target at 27,000, which is nearly 22 times PE on FY27E. Corresponding Sensex target is pegged at nearly 90,000, offering steady upside potential," said Pandey.
Pandey has picked five stocks to buy for the next one to two years. Take a look:
Tata Steel, the second-largest crude steel producer in India, is aligning its growth path in line with the government's target to achieve 300 MT steel capacity by 2030.
After Kalinganagar's 5 MT expansion, it aims to increase its steel capacity from 26.6 MT to nearly 40 MT by 2030.
'With a strong profitability outlook at its Indian operations post-domestic steel price hike following safeguard duty imposition, a benign raw material price outlook (coking coal), and cost optimisation initiatives envisaged at its European operations, it is well poised to clock record profitability of 28 per cent CAGR EBITDA over FY25-27E,' said Pandey.
ITC Hotels is the second largest hotel company in India with 140+ properties and 13,382 rooms.
The company is planning to increase its room inventory to 20,000+ with 220+ properties by 2030 under asset-light strategy (owned: managed mix will be 30:70).
Average occupancy stands at 73 per cent versus 78-80 per cent for large hotel companies.
The favourable food and banquet mix at 60:40 and strong presence in the luxury hotel segment will help ITC Hotels achieve revenue and PAT growth of 15 per cent and 29 per cent, respectively, over FY25-28E.
ABREL is the real estate arm of Aditya Birla Group. The company has grown its pre-sales at a CAGR of 62 per cent over FY22-FY25.
It is targeting annual pre-sales of ₹ 15,000 crore in FY28 at 23 per cent CAGR over FY25-FY28.
The same is expected to be achieved through its project pipeline of over ₹ 52,600 crore and potential project additions over the next three years.
'The divestment of its paper business, which had been reeling under tough times, is expected to help in a single-minded focus on expanding its realty business, apart from bringing operational efficiency, manpower management, fixed cost reductions, etc.,' said Pandey.
HEG, a leading graphite electrode manufacturer in India with a capacity of 1 lakh tonnes, stands to benefit from industry tailwinds, including more than 100 million tonnes of EAF capacity addition globally (excluding China), which is expected to drive incremental demand for graphite electrodes.
Recent plant closures by global peers are also likely to support electrode prices in the near term.
Furthermore, HEG's entry into the emerging graphite anode market bodes well for its future growth.
'We maintain a positive view of HEG, supported by the global shift towards EAF-based steelmaking and ongoing industry consolidation,' said Pandey.
PSP Projects is likely to be a key beneficiary of Adani Group orders.
'We expect PSP to emerge as an EPC vehicle for the buildings segment, with strong growth visibility,' said Pandey.
PSP expects over ₹ 10,000 crore orders from Adani Group over the next two years, including its intention to participate in Dharavi redevelopment EPC and Navi Mumbai Township.
'Given the robust pipeline and inflow potential, we expect a strong revenue CAGR of nearly 22 per cent over FY25-27E. We expect margins to inch up to 8.9 per cent and 9.5 per cent in FY26 and FY27, respectively. Strong topline growth with stable margins and lower interest expense is likely to drive 82.2 per cent earnings CAGR over FY25-27E,' said Pandey.
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Read more stories by Nishant Kumar
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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