Stocks to buy for long-term: TCS, Axis Bank, ITC shares among top picks by Kotak Equities amid falling stock market

Indian stock market continued to underperform global indices with Nifty 50 closing in red for a fifth consecutive month in February 2025, the first in about the last three decades. Increasing trade war risks over the global economy, FPIs outflows and weak corporate earnings led to the subdued performance in Indian equities.

However, India still remains the world’s fastest-growing major economy. Kotak Institutional Equities sees a reasonably solid economic outlook for FY26 with strong GDP growth, under controlled inflation and an improved fiscal outlook.

“Despite the recent correction, Nifty 50 is trading above the historical average forward PE. In our view, investors need to adopt a judicious approach to add select quality stocks on corrections for long term perspective,” Kotak Equities said.

It believes that 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. The Nifty 50 Index is trading at PE of 18.8x and 16.4x on FY26E and FY27E EPS (Earnings Per Share) of ₹1,079 and ₹1,349 per share, respectively, it said.

The brokerage firm has recommended five stocks to buy and add to the portfolio in the month of March 2025. These stock picks are Tata Consultancy Services (TCS), Axis Bank, ITC, Indian Hotels Co., and Neogen Chemicals.

TCS | Add | Target Price: ₹4,550

TCS’ strong deal wins is a good beginning. Deal TCV at $1,020 crore, impressed us. BSNL ramp-down in FY26E 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 & cost take-out programs, Kotak Equities said.

The brokerage firm has an ‘Add’ rating for TCS shares with a target price of ₹4,550 apiece, valuing the stock at 27x FY27E EPS.

Axis Bank | Buy | Target Price: ₹1,500

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, the brokerage firm noted. It maintains a ‘Buy’ call on Axis Bank shares with a target price of ₹1,500 apiece.

ITC | Add | Target Price: ₹500

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 and cuts FY25-27E EPS. It expects earnings to grow by 7.0% in FY26 and grow by 9.0% in FY27.

ITC share price is currently trading at a valuation of 20.9x P/E FY27E EPS. The brokerage firm values ITC using Sum of the Parts (SoTP) methodology. It has an ‘Add’ rating and ITC share price target of ₹500 apiece.

Indian Hotels | Add | Target Price: ₹860

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 | Target Price: ₹2,090

Kotak Equities the medium-term story for the company remains promising amid numerous battery capacity plans. It has an ‘Add’ call and Neogen Chemicals share price target of ₹2,090 apiece.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.