The domestic market remains in consolidation mode, with elevated oil prices keeping investors wary of a potential inflation flare-up, tighter monetary policy, weak earnings, and a slowdown in economic growth.
The stock market benchmark Nifty 50 is down about 0.60% for August so far, looking set to snap its two-month winning run even as Q1 results came in better than expected. This reflects that higher oil prices remain a key concern for markets, and as long as the US-Iran conflict is unresolved, a sustained rally is unlikely.
Q1FY27: Strong all-round show
Pankaj Pandey, the head of research at ICICI Securities, said at the Nifty 50 level, earnings came in ahead of street estimates, reflecting resilience despite a volatile macro backdrop.
“Topline growth came in at a multi-quarter high at 18% year-on-year (YoY), while adjusted profit after tax (PAT) growth stood at 15% YoY. Within the index, financials outperformed, reporting 19% YoY growth in adjusted PAT, compared to 12% YoY growth for non-financials,” said Pandey.
“At an aggregate level, all listed companies reported 16% YoY PAT growth in Q1FY27. Excluding oil marketing companies (OMCs), listed companies reported 25% YoY PAT growth in Q1FY27, while excluding Nifty 50 and OMCs, earnings growth was stronger at 35% YoY, highlighting the breadth of the earnings recovery,” Pandey said.
Pandey highlighted that Q1FY27 earnings mark the fourth consecutive quarter of double-digit earnings growth, with Q2FY26 at 12% YoY, Q3FY26 at 18% YoY, Q4FY26 at 15% YoY, and Q1FY27 at 25% YoY.
Indian stock market outlook
Pandey believes near-term earnings, i.e., Q2FY27, may see some moderation, primarily due to the lagged impact of elevated commodity prices. However, on a full-year basis, the impact appears manageable.
“Our forward estimates for Nifty EPS in FY27E and FY28E remain unchanged. We foresee no material risk to the double-digit earnings growth trajectory, with Nifty 50 earnings expected to grow nearly 16% CAGR over FY26–FY28E,” said Pandey.
“Overall, the earnings cycle remains healthy, with temporary margin pressures unlikely to derail the broader growth trajectory. We retain our 12-month rolling Nifty target as 28,000, i.e., 20 times P/E on FY28E, with the corresponding Sensex target placed at 93,000,” said Pandey.
Stock picks for the long term
Pankaj Pandey recommends buying the following five stocks for the next 1 year:
Shriram Properties | Previous close: ₹77.91 | Target price: ₹125 | Upside potential: 60%
Shriram Properties is among the top five residential real estate developers in South India.
As Pandey said, the company is targeting ₹3,300- ₹3,500 crore in pre-sales (40-49% YoY) for FY27, led by a strong launch pipeline of nearly ₹6,000 crore and sustenance sales of nearly ₹1,400- ₹1,500 crore.
It has unsold inventory of 2.9 msf (GDV of ₹1,970 crore) in ongoing projects and 17.7 msf (GDV of ₹11,560 crore) in upcoming projects, scheduled to be launched over the next 4-5 years.
“Overall, Shriram Properties’ unsold GDV potential stands at ₹13,530 crore, providing a strong pre-sales growth trajectory. We estimate its pre-sales to grow at 31% CAGR over FY26-FY28E to ₹4,030 crore,” said Pandey.
Vedanta Aluminium Metal | Previous close: ₹440.30 | Target price: ₹600 | Upside potential: 36%
Pandey highlighted that Vedanta Aluminium, part of the Vedanta Group, operates India’s largest primary aluminium metal capacity of nearly 2.9 MTPA, commanding nearly 40% market share.
He believes the company is well-positioned to benefit from robust domestic aluminium demand, supported by the recent commissioning of nearly 435 KTPA BALCO capacity and debottlenecking at its Jharsuguda plant, which will increase capacity to nearly 3 MTPA by FY28E.
“Vedanta Aluminium’s backward integration through the commissioning of Lanjigarh alumina refinery, along with captive bauxite and coal mines, should reduce input costs and improve operating efficiency. We maintain a positive view on the company, having an attractive valuation of nearly 4 times EV/EBITDA based on FY28E earnings,” said Pandey.
Sportking India | Previous close: ₹213.07 | Target price: ₹273 | Upside potential: 28%
SportKing India is a leading yarn manufacturer with two spinning units and one dyeing unit in Punjab.
Its diverse product portfolio spans cotton, acrylic, blended and polyester yarn.
Pandey highlighted that robust yarn demand in both domestic and export markets, coupled with lower cotton procurement costs, has expanded cotton yarn spreads nearly 41% YoY in Q1FY27, driven by a 21% YoY rise in yarn realisations, resulting in nearly 700 basis points YoY EBITDA margin expansion.
“With yarn prices sustaining at higher levels, performance should remain strong over the next one to two quarters. With firm operating spreads in the base business and greenfield expansion on the anvil, we have a positive view on SportKing India,” said Pandey.
NRB Bearing | Previous close: ₹486.10 | Target price: ₹610 | Upside potential: 25%
NRB Bearing is India’s leading producer of needle and cylindrical roller bearings. It is strengthening its growth profile through rising industrial exposure and diversification into aerospace and defence.
Pandey underscored that the industrial business grew 34% YoY in Q1FY27, increasing its revenue contribution to 14%, while the ₹1,100 crore lifetime nominated business (order book) provides healthy medium-term visibility.
Pandey believes increasing presence across industrial, aerospace, defence and mobility applications should support a favourable business mix, aiding margin expansion with management targeting 18–20% EBITDA margins on a blended basis.
“We expect revenue and PAT to grow at 13% and 13.3% CAGR, respectively, over FY26-FY28E. We have a positive view on the stock,” said Pandey.
Lumax Auto Technologies | Previous close: ₹1,988.80 | Target price: ₹2,450 | Upside potential: 23%
Pandey underscored that Lumax Auto Technologies is a leading auto ancillary player, with its key products including integrated plastic modules (constituting a bulk 56% of its revenues), gear shifters, mechatronics, and alternative fuel systems, among others.
The passenger vehicle (PV) domain accounted for the largest share, nearly 53% of sales at Lumax Auto Technologies, which has significant growth potential due to India’s low car penetration.
Lumax Auto Technologies counts Mahindra and Bajaj Auto as its top OEM (original equipment manufacturer) clients, contributing nearly 46% of its sales.
“With the company’s strong positioning in PV ancillary space, history of industry outperformance, shift towards higher value content, healthy orderbook and marquee clientele, we have a positive view on Lumax Auto Technologies,” said Pandey.
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Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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