Stocks to Buy for Long-term: TCS, Axis Bank, ITC Shares Among Top Picks by Kotak Equities amid Falling Stock Market
Strengthening Your Portfolio Amid Market Volatility
As the Indian stock market continues to face headwinds, it’s natural to wonder which stocks to buy for the long term. In the face of increasing trade war risks, FPI outflows, and weak corporate earnings, it’s essential to adopt a judicious approach to selecting quality stocks. In this article, we’ll explore the top picks by Kotak Equities for long-term investors, with a focus on TCS, Axis Bank, ITC, Indian Hotels Co., and Neogen Chemicals.
A Challenging Market Environment
The Indian market has been underperforming global indices, with the Nifty 50 index closing in the red for a fifth consecutive month in February 2025. This period is the first in about three decades. The challenges facing the market are multifaceted, with trade war risks, FPI outflows, and weak corporate earnings contributing to the subdued performance.
A Reasonably Solid Economic Outlook Ahead
Despite the challenges, India remains the world’s fastest-growing major economy. Kotak Institutional Equities is optimistic about the FY26 economic outlook, predicting strong GDP growth, controlled inflation, and an improved fiscal outlook.
Selecting Quality Stocks on Corrections
In its latest report, Kotak Equities advised investors to take a judicious approach to add select quality stocks on corrections for the long term. According to the brokerage firm, most sectors and stocks are still trading at premium valuations, with the degree of overvaluation rising in inverse correlation to market capitalization, quality, and risk.
Top Picks for Long-term Investors
Kotak Equities has recommended five stocks for long-term investors to buy and add to their portfolio in March 2025. These top picks are:
- TCS (Add): With a target price of ₹4,550 apiece, valuing the stock at 27x FY27E EPS.
- Axis Bank (Buy): With a target price of ₹1,500 apiece, valuing the stock at 20.9x FY27E EPS.
- ITC (Add): With a target price of ₹500 apiece, valuing the stock at 20.9x P/E FY27E EPS.
- Indian Hotels Co. (Add): With a target price of ₹860 per share, valuing the stock at 24.5x FY27E EPS.
- Neogen Chemicals (Add): With a target price of ₹2,090 apiece, valuing the stock at 30.5x FY27E EPS.
In-Depth Analysis of Each Stock
Let’s take a closer look at each of these top picks:
TCS (Add)
TCS’ strong deal wins are a promising sign of a good beginning. The deal TCV at $1,020 crore impressed us, while BSNL ramp-down in FY26E is expected to impact revenue growth and aid margins. Strong execution and a well-honed full-service model enable TCS to be a strong contender in discretionary and cost take-out programs.
Axis Bank (Buy)
Axis Bank reported 4% YoY earnings growth on the back of 15% operating profit growth. The worry on higher slippages from unsecured loans appears to have been addressed this quarter. Kotak Equities maintains a ‘Buy’ call on Axis Bank shares with a target price of ₹1,500 apiece, valuing the stock at 20.9x FY27E EPS.
ITC (Add)
ITC reported 8.6%, 1.6%, and 2.1% YoY growth in revenues, EBITDA, and PAT in Q3FY25. Kotak Equities incorporates ITC Hotels’ demerger and margin pressure, cutting FY25-27E EPS estimates. The brokerage firm expects earnings to grow by 7.0% in FY26 and 9.0% in FY27.
Indian Hotels Co. (Add)
Kotak Equities expects Indian Hotels Co.’s earnings per share to grow by 33.5% in FY26E and by 25.8% in FY27E. It maintains an ‘Add’ rating and raises SoTP-based target price to ₹860 per share from ₹800 per share earlier.
Neogen Chemicals (Add)
Kotak Equities views the medium-term story for Neogen Chemicals as promising, with numerous battery capacity plans. The brokerage firm has an ‘Add’ call and Neogen Chemicals share price target of ₹2,090 apiece.
In Conclusion
As the market continues to fluctuate, it’s crucial to stay focused on long-term growth prospects. By selecting quality stocks on corrections, you can strengthen your portfolio and navigate the challenges ahead. The top picks by Kotak Equities, featuring TCS, Axis Bank, ITC, Indian Hotels Co., and Neogen Chemicals, offer a range of opportunities for long-term investors to grow their wealth. Always remember to consult with certified experts before making any investment decisions.
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