The brokerage firm, JM Financial has recommended buying four stocks in its latest report, saying they could offer returns of up to 27.5%. These stocks come from different sectors and include HDFC Life Insurance, Just Dial, ICICI Lombard General Insurance, and ICICI Prudential Life Insurance.
According to the brokerage, each of these companies has strong growth potential, backed by steady performance, improving margins, or attractive valuations.
Let’s take a closer look at why JM Financial is bullish on these stocks –
HDFC Life Insurance
JM Financial has reiterated its Buy rating on HDFC Life, revising its target price to Rs 855 from Rs 850, indicating a 12.9% upside from current levels.
According to the brokerage, HDFC Life reported 13% growth in individual Annualized Premium Equivalent (APE) for the quarter, well ahead of the private industry average of 8.3%. While margins were flattish YoY at 25.1%. The company managed to maintain an overall growth trajectory despite a dip in non-par APE.
JM Financial further in its report noted, “We expect the company to deliver 15%+ APE growth in FY26/FY27e, with a margin improvement of 100bps by FY27e over FY25 levels.”
The brokerage values HDFC Life at 2.5x FY27e Embedded Value per Share (EVPS) of Rs 348 to arrive at the revised target.
Just Dial
Digital local search platform Just Dial has also earned a Buy call from JM Financial, with a target price of Rs 1,200, implying a potential gain of 27.5%, the highest among the four picks.
The Q1 performance was weak, collections grew just 0.6% YoY, and paid campaign additions came in at 4,000 versus the brokerage estimate of 7,300. Ad spend rose sharply, weighing on EBITDA growth, which came in at 7.4% YoY.
Despite the subdued metrics, the brokerage remains bullish due to the company’s attractive valuation. The stock trades at just 8x FY26 core earnings, excluding its large cash reserve that makes up 68% of its market cap.
“Ex-cash and other income, the stock is extremely cheap at 8x FY26 PER,” the brokerage noted.
The brokerage also flagged the potential of a 7.3% dividend or buyback yield, if the company follows through on its plan to distribute 100% of FY25 profits. With modest expectations on cost inflation and revenue recovery, EBITDA margin is projected to expand to 30% by FY28.
Valuation-wise, the brokerage has trimmed its PER multiple to 17x from 18x earlier, citing slower-than-expected growth but continues to see value.
ICICI Lombard General Insurance
Next on the list is ICICI Lombard. JM Financial has increased its target price to Rs 2,250 from Rs 2,150, indicating a 12.3% upside, and maintained a Buy rating.
For the quarter, the company reported profit after tax of Rs 7.5 billion, which was 25% above estimates. While gross direct premiums grew a modest 0.6%, net earned premiums rose 14% YoY. Combined Ratio (COR) came in at 102.9%, with like-to-like COR improving to 102.2% after normalising for accounting changes.
The brokerage remains cautious about the company’s growth outlook in certain commercial lines but sees 12%/15% net earned premium growth in FY26/FY27, supported by better performance in motor and retail health insurance.
“As we look to FY27e, we expect EPS estimates to be revised upwards as the company starts discussing IFRS numbers,” said brokerage in its report.
The stock is currently valued at 35x/30x FY26/FY27e earnings, with RoEs projected at 18%+. The firm has raised its valuation multiple from 32x to 34x based on FY27 EPS of Rs 67.
ICICI Prudential Life Insurance
JM Financial remains positive on ICICI Prudential Life, revising its target to Rs 760 from Rs 730, implying a 13.4% return potential.
In Q1FY26, VNB margin stood at 24.5%, up 170bps QoQ and 50bps YoY, even though total APE fell by 5%. The improvement in profitability was attributed to cost efficiency and a shift toward high-margin non-linked savings products.
The brokerage forecasts VNB growth of 18%/13% in FY26/FY27, outpacing APE growth, and sees further room for margin expansion. It also notes that the company trades at 1.6x FY27e EV, which is significantly cheaper than HDFC Life and SBI Life, despite improving metrics.
“With growth improving to industry levels and margins near 1Q levels, we see a sharp rerating in the stock,” the brokerage said in the note.
The revised valuation is based on 1.8x FY27 EVPS of Rs 430, up from 1.7x earlier. The brokerage continues to list ICICI Prudential as its preferred pick in the life insurance space.