JM Financial, a domestic brokerage firm, has picked three stocks to bet on. These include Maruti Suzuki, Bajaj Finance, and Angel One. The brokerage house expects one of the stocks to give as much as 18% returns over the next 12 months.
Here’s a detailed analysis of the reasons why JM Financial picked these stocks.
JM Financial on Maruti Suzuki: Victoris triggers upgrade in target price
JM Financial maintained its Buy rating on Maruti Suzuki, while raising the target price to Rs 18,050, from Rs 14,250, which is at a one-year forward price to earnings (P/E) of 27 times. This is an upside of 18.2% from current levels.
The change in target price was based on the launch of a new car model called Victoris SUV by Maruti Suzuki. The company launched the car at an introductory price of Rs 10.50 lakh (ex-showroom), placing it in competition with segment leaders like the Hyundai Creta and Kia Seltos. By retailing it through the Arena network, Maruti aims to expand its reach across tier-2 and tier-3 cities, while avoiding overlap with the Nexa-sold Grand Vitara. “Additionally, with the commencement of Maruti Suzuki’s battery plant, we expect a series of new hybrid launches. The integration of in-house battery production is also likely to support higher margins, ”said JM Financial.
JM Financial on Bajaj Finance: Pivoting to secured lending
JM Financial raised the target price of Bajaj Finance slightly to Rs 1,060 from Rs 1,000, while maintaining its ‘Buy’ rating on the stock. This implies an upside potential of up to 10%. Bajaj Finance gained market share of 420 basis points (bps) in unsecured loans and 120 bps YoY in consumer durable and personal loans each, aided by strong growth in EMI cards after lifting of the RBI embargo and rising share of salaried and cross-sell personal loans. Diversification into multiple segments remains a key strength, with non-Bajaj Finance auto, SME and its sub-segments like industrial equipment, commercial vehicle, tractors, and new car financing delivering strong traction. This underscores Bajaj Finance’s pivot towards secured lending.
However, the brokerage said that it expects pressure on yields due to movement in secured segments to be offset by a decline in the cost of funds. Further, pressure on fee income should be largely offset by operating leverage. Credit cost in FY26/27 should moderate from FY25 levels but still remain higher than long-term trends.
JM Financial on Angel One: Initiates coverage on phenomenal growth
JM Financial initiated coverage on Angel One with a ‘Buy’ rating. The target price on the stock for the next twelve months is Rs 2,700, implying up to 17.6% upside. The phenomenal growth in revenue, net profit, and client base marks the reason behind coverage on the discount broker firm.
The firm is among the largest retail brokers in India, boasting over 32 million clients, with more than 9 million being active on the NSE. Angel One began as a regular offline broker in 1996 but transitioned to online discount broking in FY20. Since then, the company experienced substantial growth across various metrics, with its client base increasing at a CAGR of 68%, net revenue growing at a CAGR of 80%, and PAT rising at a CAGR of 90% from FY20 to FY24.
“Despite regulatory changes with concerns around retail losses in the derivatives segment, the industry has become fairer with up-streaming of client funds, true-to-label charges, and a limited number of expiry days. Angel One navigated these to maintain FY25 net profit at FY24 levels, even as it invested in adjacent business lines,” said JM Financial.