The markets are poised at an interesting juncture, and most investors are looking out for potential bargain buys at this point. In case you are confused about which stocks to invest in, here is a list of 3 stocks that leading international brokerage house, CLSA is bullish on. It has an ‘Outperform’ rating on these three stocks with as much as 22% upside in select counters.
Here is a detailed analysis of CLSA’s top ‘Outperform’ picks and the investment rationale for them-
CLSA on HDFC Bank: NIM has bottomed out
CLSA has maintained its ‘Outperform’ rating. They have raised the target price on HDFC Bank to Rs 1,200 per share from Rs 1,150. This implies over 19% upside from current levels for the HDFC Bank share price. Over the medium-term, CLSA expects HDFC Bank’s return on equity to cross 14% and forecast the largest private sector bank to “deliver 11% loan growth in FY26 and 14-15% thereafter. We expect 7 bps NIM moderation in FY26 Vs FY25, with a recovery in FY27 and FY28.”
Similar to ICICI Bank and Axis Bank, HDFC Bank’s gross/net slippage ratios improved sequentially and YoY. Upgradation of an NPL account of erstwhile HDFC helped cap the slippages. While the account got upgraded, the management chose not to reverse provisions on that account and, instead, made a contingent provision of Rs 1,600 crore. HDFC Bank’s fee income has been a bit disappointing over the past few quarters, growing only 9% YoY Vs high-teens a year ago. According to CLSA, HDFC Bank “has done a good job controlling costs. Opex growth in the past four quarters has been only in mid-single digits.”
Asset quality was stronger as well for HDFC Bank with slippages down QoQ and YoY and recoveries up. If there is no further repo rate cut, CLSA believes that the “NIM has bottomed out and should improve 5-7 bps each quarter.” They have kept the FY26-FY28 estimates largely unchanged.
CLSA on ICICI Bank: Long-term bet
The other private sector bank with an Outperform rating is ICICI Bank. CLSA has kept its estimates largely unchanged (+/-2%) with a price target of Rs 1,700 per share. This implies close to 22% for the ICICI Bank share price. They see the stock as a “steady compounder for long-term investors.” Over the next two years, CLSA expects “ICICI Bank to deliver 15% loan growth with a 2.2% ROA and 16% ROE. Over the past six months the stock has been rangebound, and we believe this is a good entry point for long-term investors”
Contrary to consensus expectations, the core NIM for ICICI Bank actually improved 3 bps QoQ to 4.3% driven by a 20 bps reduction in deposit costs. CLSA “expected a 12-13 bps deposit cost reduction and believed the higher reduction would be because a higher-than-expected quantum of term deposits matured during the quarter. This is probably why management guided for NIM to be largely stable over the next two quarter, as compared to other banks.”
CLSA on RIL: New energy ramp-up, Jio key triggers
The other big Index heavyweight Reliance Industries also has an ‘Outperform’ recommendation from CLSA. The brokerage house reiterated the rating on the back of attractive risk-reward, with a target price of Rs 1,650. This implies nearly 11% upside for the RIL share price from current levels.
According to the brokerage house, “the ramp-up of new energy projects and a Reliance Jio IPO are triggers over the next 12 months even as progress in businesses like FMCG, media, quick commerce and AI could be new tailwinds for Reliance’s valuation.”
Reliance Industries’ Q2FY26 consolidated EBITDA/EBIT was 4%, “above our forecast driven by a beat in telecom as well as retail even as O2C was inline with our estimate,” CLSA added. The brokerage house pointed out that it was “another quarter of strong KPIs for the media as well as FMCG businesses, while progress on quick commerce and new energy remains encouraging.”