Ambit Capital lists 5 deflation-resistant retail ‘Buy’ recommendations with up to 30% upside potential

Against that backdrop, Ambit Capital picked five stocks across jewellery, value retail, beauty, and footwear as its top ‘Buy’ ideas, with upsides ranging from 12% to 30%. FSN E-Commerce Ventures, Titan Company, Trent, Vishal Mega Mart, and Metro Brands made the cut.

Ambit Capital on Titan Company: ‘Buy’

Ambit Capital set a target price of Rs 5,257 on Titan Company, implying an upside of around 26% from its current level.

Titan ranked at the top of Ambit Capital’s revised FY27 pecking order for large caps.

Jewellery, Titan’s core business through Tanishq, remained the category Ambit Capital was most constructive on through FY27 and FY28. The brokerage cited cultural demand from weddings and gifting, along with gold’s role as a savings vehicle.

Tanishq reported same-store sales growth of 50% in the fourth quarter of FY26. The brokerage expects same-store sales growth to be 14% in FY27. The stock traded at 66 times FY27 price-to-earnings. It expects return on equity to remain at 25% in FY27.

Ambit Capital said, “Jewellery is resilient as weddings, gold’s savings role, etc., provide a cultural floor absent globally.”

Ambit Capital on Trent: ‘Buy’

Ambit Capital set a target price of Rs 5,020 on Trent, implying an upside of around 24% from its current level.

Trent was Ambit Capital’s top near-term pick within large-cap buys for FY27. The brokerage ranked it ahead of Titan because of a favourable base effect.

Ambit Capital called Trent the clearest inflation-resistant name in apparel. The brokerage said that despite gross margin compression during inflationary periods, Trent historically protected or expanded its earnings before interest, tax, depreciation, and amortisation margin (EBITDA).

It attributed this to pre-booked fabric costs, faster inventory turns, and the benefit Zudio receives from consumer downtrading.

The brokerage expects revenue in FY27 to reach Rs 23,870 crore and grow around 20% year on year. It sees EBITDA reaching Rs 4,246 crore, while net profit is expected to reach Rs 2,140 crore. The stock traded at 68 times FY27 price-to-earnings.

Ambit Capital said, “Trent remains the clearest inflation-resilient name in apparel. It was able to protect or expand EBITDA margin despite gross margin pressure, helped by pre-booking fabric costs, fast inventory turns due to customer stickiness.”

Ambit Capital on FSN E-Commerce Ventures (Nykaa): ‘Buy’

Ambit Capital set a target price of Rs 314 on FSN E-Commerce Ventures, the parent company of Nykaa, implying an upside of around 15% from its current level.

Nykaa ranked third in Ambit Capital’s large-cap preference order for FY27. The brokerage said the company remains a structural beneficiary of trends that it expects will continue through a slower demand environment.

It expects the online channel for beauty and personal care to continue gaining share from offline formats. It also said Nykaa demonstrated an ability to protect margins by raising free-shipping thresholds as fuel costs rise instead of absorbing the increase.

It added that Nykaa and Avenue Supermarts remain relatively insulated at the gross margin level because they operate as third-party retailers and do not own product inventory in the same way branded businesses do.

The brokerage expects revenue in FY27 to reach Rs 12,404 crore, rising around 23% from FY26. It sees EBITDA at Rs 1,082 crore. It expects return on equity to expand to 25% in FY27 from 14% in FY26.

Ambit Capital said, “We expect players operating in newer channels and growing categories like Nykaa and Lenskart to continue delivering accelerated growth.”

Ambit Capital on Vishal Mega Mart: ‘Buy’

Ambit Capital set a target price of Rs 137 on Vishal Mega Mart, implying an upside of around 12% from its current level.

Vishal Mega Mart ranked fourth in Ambit Capital’s large-cap order and remained the brokerage’s preferred value retail name for FY27.

Ambit Capital said value apparel historically outperformed mid-premium fashion in India during slower periods. The brokerage drew comparisons between Vishal Mega Mart and global value retailers, including Pepkor, Ross Stores, and Shimamura.

Ambit Capital also classified the company in Q1 for both financial strength and quality in its factor-based framework. The brokerage said that the combination positions it among a limited set of mid-cap names that may perform better during a slowdown.

It expects revenue in FY27 to reach Rs 15,314 crore, increasing around 18% from FY26. It sees EBITDA reaching Rs 2,194 crore, while profit after tax is expected to be Rs 977 crore.

Ambit Capital said, “Growth-first players like Trent and Vishal Mega Mart absorb near-term gross margin pressure, gaining market share through scale.”

Ambit Capital on Metro Brands: ‘Buy’

Ambit Capital set a target price of Rs 1,353 on Metro Brands, implying an upside of around 30% from its current level, the highest among the five stocks.

During FY11, when crude oil increased nearly 24%, and in FY22, when polyvinyl chloride prices rose nearly 72%, Metro Brands maintained an EBITDA margin in the range of 17% to 23%.

The brokerage attributed this performance to premium ticket sizes and the company’s asset-light franchise model. It said customers absorbed moderate cost increases more easily, while the operating model kept fixed costs lower.

Metro Brands was also classified in Q1 for both financial strength and quality in its factor framework, which it described as uncommon among mid-cap companies.

The brokerage expects revenue in FY27 to reach Rs 3,260 crore and grow around 16% from FY26. It sees EBITDA at Rs 989 crore, while profit after tax is expected to reach Rs 466 crore. It expects return on equity to be 20% in FY27 and rise to 22% in FY28.

Ambit Capital said, “Metro Brands stands out as the most inflation-resistant business in footwear. Its higher ticket sizes mean consumers easily absorb moderate cost inflation, while its asset-light franchise model keeps fixed costs low.”

Conclusion

Ambit Capital’s central argument is that India’s consumption cycle has entered a tougher phase. The brokerage believes the businesses most likely to hold up are those with pricing power, balance sheet strength, and formats that benefit when consumers become more selective in spending..

Disclaimer: The investment ratings, target prices, and growth projections discussed in this report are based on institutional research analysis and do not constitute direct buy, sell, or hold recommendations for retail investors. Consumer discretionary and retail stocks are subject to market volatility, shifting consumer preferences, and macroeconomic risks, meaning individual portfolio performance can vary. Readers are strongly advised to consult a SEBI-registered investment advisor or qualified financial professional before making specific equity allocation decisions.

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