Religare Broking has picked a total of five stocks for Samvat 2081. The brokerage house has selected SBI, ITC, Titan Company, Berger Paints India, and Jyothy Labs. The brokerage firm has given the rationale behind these stocks.
State Bank of India
State Bank of India (SBI), India’s largest public sector bank, holds a strong 22-23% market share in credit. With consistent loan growth across retail, corporate, and SME sectors, it benefits from a stable deposit base and funding advantage. SBI’s strong internal accruals, leadership in term deposits, and efficient credit management position it well for future growth, especially with an expected revival in corporate capex.
Well-positioned in terms of LDR, LCR, SA and regulatory deposits: In the current environment of constrained credit growth due to high loan-to-deposit ratios (LDR), SBI is well-positioned with a low domestic LDR of 69%. While its deposit growth is softer than the system average, the low LDR makes this less of a concern. SBI holds a high share of stable retail deposits and has minimal run-offs, giving it the flexibility to use bulk deposits if needed. Despite offering lower savings account rates than private peers, SBI maintains a high SA share and leads in term deposit pricing, though it needs to improve its current account share and fee income. Could gain market share as peers struggle: Unlike other PSU banks, SBI has maintained a steady credit market share of 22-23%, with consistent loan growth across SME, retail, and corporate segments. It stands to benefit from a corporate capex revival. Although overall loan growth is slowing, SBI is well-positioned to gain market share due to its improved credit delivery, funding advantage, and challenges at its nearest competitor. With strong internal accruals and reasonable CET 1, raising fresh capital would further enhance its growth prospects. Technology investments drive cost efficiency: Over the years investment in technology has been instrumental in bringing its cost-to-income ratio below 50%.
SBI is well-positioned with a low loan-to-deposit ratio, allowing flexibility despite softer deposit growth. Its stable retail deposits and consistent 22-23% credit market share enable it to gain market share as competitors struggle. Additionally, technology investments have improved cost efficiency, reducing the cost-to-income ratio below 50% and enhancing long-term profitability. Based on these factors, we expect NII/ PPOP/PAT to grow at a CAGR of 14.2%/7.6%/7% over FY24-26E. We have a “Buy” rating on the bank with a target price of Rs 941.
ITC
ITC is a diversified conglomerate with a presence in multiple portfolios of businesses, including cigarettes, FMCG, hotels, agri-business, and paperboards and packaging. The company holds a dominant position in the Indian cigarette market, contributing significantly to its revenue. ITC has also expanded into various FMCG sectors, offering products like packaged foods, personal care items, and stationery.
Strong commitment to ITC Next strategy: ITC is vigorously implementing its ITC Next strategy to shape future growth and profitability. The extensive strategy reset unleashes new drivers of structural competitiveness by strengthening the multiple drivers of growth, innovation and R&D, building agile, resilient and efficient Supply Chains, mainstreaming digital adoption, and sustainability, and ensuring cost optimisation. The ITC Next strategy focuses on exploring opportunities to craft disruptive business models anchored at the intersection of the megatrends of digital and sustainability while leveraging the Company’s institutional strengths. Strategic growth and diversification: ITC actively pursues growth by fortifying its core businesses, exploring value-added adjacencies, and scaling up new growth vectors. This multi-pronged approach is evident in recent launches spanning diverse categories, including snacks, staples, dairy, and personal care. Furthermore, the company leverages strategic investments to enhance its distribution infrastructure and penetrate new markets. ITC’s commitment to diversification mitigates risk by reducing reliance on any single sector, offering investors exposure to a range of growth opportunities.
Strong brand portfolio and market presence: ITC possesses a portfolio of over 25 world-class Indian brands, built through an organic growth strategy and reaching over 250 million households in India. The company’s strong brand equity, particularly in the FMCG sector, coupled with its extensive distribution network, provides a competitive advantage in capturing market share.
With a strong portfolio of brands and an extensive market presence, ITC mitigates risks through diversification while leveraging brand equity to capture market share, ensuring sustained revenue and reinforcing its leadership position. On the financial front, we have estimated its revenue/EBITDA/PAT to grow at 12.7%/13.5%/13.8% CAGR over FY24-26E. Thus, maintaining our “Buy” rating and a target price of Rs 594.
Titan Company
Titan Company, a prominent player in India’s consumer goods sector, is renowned for its wide range of products across watches, jewellery, and eyewear. Established in 1984 as a joint venture between Tata Group and the Tamil Nadu Industrial Development Corporation (TIDCO), Titan’s portfolio includes popular brands like Tanishq (jewellery), Fastrack (youth accessories), and Titan Eye+ (eyewear). Its jewellery division, Tanishq, is the largest revenue contributor, benefiting from India’s increasing demand for branded and trusted gold and diamond jewellery. The company is known for its strong brand equity, innovation in product design, and expansive retail network. Titan’s focus on premiumization, digital channels, and global expansion has positioned it as a market leader in the lifestyle segment.
Titan enjoys a dominant position in the organized jewellery and watches markets in India, with an estimated market share of ~8%. The company’s market leadership in these segments is supported by its distinct brand, association of trust with Tata Group, continuous store additions, and its pan-India distribution networks. As of June 2024, Titan has a presence in over 280 towns with over 900 exclusive brand outlets with brands like Tanishq, Mia, and Zoya in the jewellery segment. In the watches segment, it has 1,137 exclusive brand outlets with more than 8,000 multi-brand outlets, with a presence across 330 towns with brands including Titan World, Fastrack, and Helios.
Strategic gold hedging policy: Titan has implemented a well-structured hedging policy to safeguard itself against fluctuations in gold prices, which are a key input for its jewellery production. The company sources gold primarily through three channels: gold metal loans from banks, customer exchanges, and spot market purchases. For gold acquired via metal loans, Titan locks in the quantity but determines the liability upon actual sale, creating a natural hedge. For spot purchases, the company uses future contracts on commodity exchanges to align with expected sales, effectively mitigating price risks. This comprehensive hedging strategy ensures Titan remains protected from adverse gold price movements, contributing to financial stability and operational efficiency.
Strong brand value: Titan enjoys a strong brand reputation, bolstered by its association with the Tata Group, which is renowned for its commitment to ethical business practices and high-quality standards. The company leverages a broad portfolio of established brands across multiple lifestyle segments. In the jewellery category, its key brands include Tanishq, Mia, CaratLane, and Zoya. Meanwhile, in the watches and wearables space, Titan’s portfolio features well-recognized names like Titan, Sonata, Fastrack, Raga, and Xylys. This diverse range of brands across jewellery and timepieces enhances Titan’s market presence and appeal to a wide audience, further solidifying its position as a leader in the lifestyle and fashion sector.
Titan has a large presence in the Jewellery industry through its brands like Tanishq, Mia, Zoya and Caratlane and has an overall market share of ~8% further, a downward revision of custom duty on gold imports is a positive in the long-term with short-term implications on profitability and gold on lease. The company is also an emerging lifestyle player with a presence across segments like Watches, Eye Care, and Emerging business. The company is focused on increasing its footprint by store expansion while making efforts to improve margins. Its new business continues to see consistent growth. On the financial front, we have estimated its revenue/EBITDA/PAT to grow at 21.5%/28.0%/28.9% CAGR over FY24-26E. Thus, maintaining our “Buy” rating and a target price of Rs 4,270.
Berger Paints India
Berger Paints Limited, incorporated in 1923, is one of the leading manufacturers and sellers of paints and varnishes in India with an established brand. It is present in the decorative paint segment (80% of the sales) and industrial segment. Berger has 29 manufacturing plants in India (including plants of subsidiaries in India), two in Nepal, one each in Poland and Russia, and around 184 stock stations. Its decorative segment includes brands such as ‘Weathercoat’, ‘Luxol’, ‘Silk’ and ‘Easy Clean’. The Berger group also has an international presence in eight countries, including Russia, Nepal, Bangladesh, and certain countries in Europe.
Investment Rationale Expanding distribution network: Berger Paints boasts a robust distribution network throughout India, comprising approximately 64,000 dealers and retailers. This extensive network has significantly enhanced the company’s presence in the decorative segment. Additionally, Berger has strategically established manufacturing facilities across various regions to effectively meet local demand. The company is also focused on expanding its sales through the introduction of company-owned and operated (COCO) stores nationwide. Looking ahead, Berger plans to further extend its network in areas where it currently has limited presence.
Diverse product and brand portfolio: Berger’s revenue is primarily driven by the decorative paint segment (~80% contribution to revenue mix), though it also operates in other areas such as general industrial and automotive paints, powder coatings, and protective coatings. The company’s research and development (R&D) initiatives enable it to consistently introduce innovative products that cater to changing customer needs and help expand its diverse product portfolio. Berger offers a variety of products, including water-based, solvent-based, as well as interior and exterior paints. Some of its well-known brands are ‘Weathercoat,’ ‘Luxol,’ ‘Silk,’ and ‘Easy Clean.’
Continuous addition of capacity: Berger has consistently expanded its capacity (current capacity- ~1.5 Mn KL), both through organic growth and acquisitions, to address the rising demand driven by increased per capita paint consumption. The company is currently developing a greenfield project in Panagarh, West Bengal, with an estimated cost of approximately 500 crore, fully financed through internal accruals. This facility is expected to be operational by March 2026. Following this, Berger plans to establish a manufacturing unit in Odisha with a projected capex of around 1,460 crore and an annual capacity of 410,000 KLPA, fully financed through internal accruals and existing liquidity.
Berger Paints has demonstrated resilient performance, consistently surpassing industry growth rates and achieving the highest market share among listed competitors. Further, management remains positive on the growth prospects which would be driven by double-digit volume growth for the decorative segment, steady demand, innovations and expansion in the distribution along with catch-up in rural areas will help in aiding growth. On the financial front, we estimate its revenue/EBITDA to grow at 13%/15.9%/ 16.3% CAGR over FY24-26E and maintain a Buy rating with a target price of Rs 655.
Jyothy Labs
Jyothy Labs Ltd is one of India’s leading FMCG companies, established in 1983 with the single brand ‘Ujala’. Over time, it has evolved into a multi-brand company across different categories, expanding into the manufacturing and marketing of products. The company has diversified into categories such as fabric care, dishwashing, household insecticides, and personal care. Some of its leading brands include Ujala, Exo, Henko, Pril, Margo, Maxo, Mr. White, MoreLight, Neem, and Maya, all of which are well-known and established in their respective categories.
Established brand portfolio and market leadership: Jyothy Labs holds a commanding market presence in select brands, led by Ujala’s dominant market share in the fabric whitener segment.. They have demonstrated strong performance in Dishwashing with Exo and Pril, while Maxo exhibits significant growth in Household Insecticides, especially in coils. This diversified portfolio and market leadership position provides a solid foundation for future growth, though continuous innovation and marketing efforts are essential for sustaining momentum.
Strong financial position and growth trajectory: In FY24, Jyothy Labs experienced notable revenue growth, primarily due to higher volumes and slight price adjustments. Over the past four years, the company has maintained consistent revenue growth, supported by volume increases and commodity price trends. A major contributor to this growth was the significant decline in raw material costs, which greatly improved profitability margins. Jyothy Labs showed substantial margin gains in its Fabric Care and Dishwashing segments, reflecting efficient management and stronger profitability. The company also maintains a solid financial position, staying net debt-free with only minimal lease obligations.
Extensive distribution network and market reach: Jyothy Labs has established a robust distribution network, making its products accessible in over 2.8 million retail outlets through a vast network of over 9,900+ channel partners. They directly reach 1.2 million outlets, strategically focusing on expansion into new geographies. The company’s adoption of innovative sales models, like van and moped sales for rural areas, coupled with the digitization of rural distribution, further strengthens its market penetration.
We believe Jyothy Labs has come a long way by innovating products across categories, investing in advertisements & promotional activities and gaining market share. Going ahead, the management aims for volume-led growth and at the same time maintain margins. Additionally, they want to invest behind brand building initiatives, manufacturing and strengthening distribution reach in rural areas as well as grow digitally. We are optimistic about the growth prospect of the company and estimate its Revenue/EBITDA to grow at 15.7%/17.3% CAGR over FY24-26E. Hence, We have a “Buy” rating on the stock to arrive at a target price of Rs 624.
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