JM Financial picked three stocks with a Buy call: IEX, ICICI Prudential Life, and JK Cement. The brokerage firm sees an upside potential of up to 15% in these stocks. Read the in-depth analysis from JM Financial with key reasons behind the bullish outlook on these top stock picks. Here’s the list of three stocks of JM Financial-
IEX: JM Financial’s pick for India’s growing power market
JM Financial initiated coverage on the Indian Energy Exchange with a 14% upside in the stock. According to the brokerage house, the short-term power market is growing at 18% as compared to the demand growth of 5-6%. This is poised for significant growth driven by burgeoning power demand (>6% during FY24-30E), increasing share of variable renewable energy (RE), and new market instruments like virtual PPAs.
IEX, with 84% market share, has consistently adapted to market dynamics by consistently introducing new products, providing a superior technology platform and expanding its participants’ base, making it a ‘Buy’ choice for JM Financial. “We expect the trading volume to grow at a CAGR of 13% during FY25- 28, which will drive growth in IEX’s revenue and PAT at a CAGR of 16% and 14%, respectively,” said JM Financial.
ICICI Prudential Life Insurance: Why JM Financial sees 15% upside
The brokerage house has maintained a ‘Buy’ recommendation on ICICI Prudential Life Insurance, with a potential upside of 15% at a target price of Rs 730. The brokerage firm said that the overall expenses ratio was largely stable, even as commissions continued to rise at the expense of operating expenses. In individual business, the insurer’s on-book risk retention increased as the company raised retention limits post Covid-19.
Coming down to the group business, its retention has reduced. JM Financial believed it to be a weakness in the microfinance institutions (MFI) segment, where the company would normally underwrite smaller risks, and hence, retain them on its books.
“As peer bank-led insurers see slowing growth in bancassurance (HDFC Life 10.3% and SBI Life 9.6% in H2 FY25), we believe IPRU can outperform in 2HFY26, as the base of high ULIPs comes off,” said JM Financial.
JK Cement: Doubling capacity & driving growth, a top midcap pick
JK Cement remains the top pick in the midcap stocks of JM Financial. The analysts recently talked to the company’s management. Prashant Seth, President- Business Information & IR of JK Cement, reiterated the company’s target to double grey cement capacity to 50 metric tons by FY30 (15% CAGR, which is 2.5 times more than the industry forecast). Plus, the management stood confident over the fact that it has enough levers for structural cost improvement of Rs 100 per tonne over the next couple of years. This is in addition to savings of Rs 40 per tonne.
Adding to that, the company is expecting an incentive income of Rs 300-330 crore to continue over the next few years. Talking about the leverage, the company’s net debt to EBITDA ratio is expected to remain below 2x even after the next phase of expansion. However, as not everything is rosy, the competitive intensity remains high in the putty segment for JK Cement. The brokerage firm maintained its ‘Buy’ rating on JK Cement and target price of Rs 5,850.