10 stocks with strong fundamentals and reasonable valuations to buy

Stocks to buy

Bajaj Auto: Buy at ₹10,501 | Target Price: ₹12,483 | Potential Upside: 18.9%

We remain optimistic about Bajaj Auto’s growth trajectory in the medium to long term, supported by several key factors: 1) a growing focus on exports to drive sales; 2) increasing demand for the 125cc 2W “Freedom”; 3) strong demand for the 2W EV “Chetak”; and 4) an aggressive marketing push for CNG-based 2-wheelers and electric variants. 5) With the rising contribution of premium products like Triumph, solid growth in the EV portfolio (2W+3W), and improving profitability from “Chetak,” we recommend BUY rating on the stock. We value the stock using an SOTP-based methodology, arriving at a target price of Rs. 12,483 (30x Sep-FY27E core EPS + KTM stake + cash).

Bharat Dynamics: Buy at ₹10,501 | Target Price: ₹12,483 | Upside Potential: 34.7%

We have a positive outlook on BDL, as it is catering the strategic needs of the MoD Indian defence forces, supported by:- 1. Sole supplier of offensive, as well as defensive systems domestically, 2. Upcoming big ticket project are in the pipeline it is expected to materialize from FY25 onwards. 3. increasing exports opportunity, talks are under way with 4-5 friendly countries, 4. Diversified product portfolio across armed forces, 5. The company’s humongous order book, which stood at ~ ₹195bn as on 1st April 2024 stands 8.2x of FY24 revenue will support the growth story of the company. We value the company at a PE of 60x on FY26E EPS and arrive at a target price of INR 1,501 on the stock.

ACC Ltd: Buy at ₹2,301 | Target Price: ₹2,795 | Upside Potential: 21.5%

India’s cement demand is expected to maintain a growth rate of 7-8%, largely propelled by investments in infrastructure and extensive residential housing projects. The company is targeting to double its capacity to 140mnt by FY28E, a significant increase from its current capacity of 89 mnt. The company’s strategy revolves around cost optimization, with a concerted effort to reduce costs to fuel its growth trajectory. As per our FY26E estimates we expect Revenue/EBITDA to grow at a CAGR of 5.7%/13.1% respectively over FY24-FY26E. We maintain our rating to BUY and arrive at a target price of INR2,795 implying a EV/EBITDA multiple of 13.0x on FY26E EBITDA.

Somany Ceramics: Buy at ₹698 | Target Price: ₹965 | Upside Potential: 38%

We expect SOMC to registered a healthy Revenue/EBIDTA/PAT growth of 11/13/23% CAGR over FY24-27E and RoCE expansion from ~14.2% in FY24 to ~17.4% in FY27E. We ascribe a multiple of 22x on FY26E EPS to arrive at a TP of Rs.965 with a rating of “OUTPERFORM”.

TCS: Buy at ₹4,078 | Target Price: ₹4,664 | Upside Potential: 14.3%

Company is investing significantly to create a large footprint in emerging growth markets. A near all-time high TCV and client interest in GenAI shall provide growth. We have introduced FY27E and expect Revenue/EBIT/PAT to grow at a CAGR of 10.3%/12.3%/12.2% respectively over FY24-FY27E. We maintain our rating to BUY with a revised target price of INR4,664 implying a PE of 30x on SepFY27E EPS of INR167.

HCL Technologies: Buy at ₹1,843 | Target Price: ₹2,105 | Upside Potential: 14.2%

The company remains committed to achieving business growth in a sustainable and responsible manner. Their deal pipeline is robust, featuring opportunities in Data & AI, Digital Engineering, SAP migration, and efficiency-driven programs. We have introduced FY27E and expect Revenue/EBIT/PAT to grow at a CAGR of 10.5%/13.5%/13.7% respectively over FY24-FY27E. We upgrade our rating to BUY with a revised target price of INR2,105 implying a PE of 27x on Sep-FY27E EPS of INR78.

EFC (I) Ltd: Buy at ₹488 | Target Price: ₹855 | Upside Potential: 75%

EFC’s plan to scale up all 3 business verticals – Managed office space, Design and Build and Furniture manufacturing will establish itself as an integrated player with diverse revenue streams and also able to capitalize on the cross synergies from these 3 verticals. The furniture manufacturing division starts contributing meaningfully from Q2FY25 as the large capacities go live and will be scaled up in FY26. With the market already for EFC as 60-70% capacity utilization will be met from internal furniture requirement only and then will start pursuing the B2B model. We assign a multiple of 20x on FY26E EPS, and arrive at the TP of INR 855 with an OUTPERFORM rating.

Granules India: Buy at ₹590 | Target Price: ₹723 | Upside Potential: 22.5%

Granules is expected to benefit from its strategic shift towards the FD segment, stabilizing Paracetamol API sales in Europe, backward integration efforts, the operationalization of its new FD facility, and new product launches, particularly in North America. We project the company’s Revenue/EBITDA/PAT to grow at a CAGR of 15%/22%/27% from FY24-27E. We value the company at a PE of 21x on FY27E EPS and arrive at a target price of INR 723 on the stock.

Global Health: Buy at ₹1,047 | Target Price: ₹1,246 | Upside Potential: 19%

We forecast that Medanta’s revenue and EBITDA will grow at a CAGR of 21.6% and 23.0%, respectively, for FY24-26E. The company is in a capex phase, planning to invest INR 1,000-1,200 crore over the next two years, which may impact margins, when the Noida facility begins operations. Based on these factors, we value the stock at 27x EV/EBITDA for FY26E, resulting in a target price of INR 1,246 per share and a BUY rating.

Ugro Capital: Buy at ₹247 | Target Price: ₹345 | Upside Potential: 39%

UGRO Capital is well-positioned to capture the growing demand for MSME credit, with its scalable and techdriven business model driving sustainable growth. The company’s diversified revenue streams, combined with its strong focus on capital efficiency through co-lending partnerships, provide a solid foundation for long-term profitability. We project UGRO to achieve an Earnings Per Share (EPS) CAGR of 42% from FY24-26E. Based on these factors, we assign a Price-to-Book (P/ABV) multiple of 1.83x on FY26E Adjusted BVPS and arrive at a target price of INR 345, with an OUTPERFORM rating.