Churning portfolio ahead of Diwali? Ambit lists top 10 'winning' stocks

The market is entering a stock-picker’s phase, as rising concentration in large-caps historically signals slower broad-market growth over the next 12-18 months, analysts at Ambit Capital said. 

 

Mid- and small-caps could face sharper corrections, while countercyclical policies may offer only short-term relief. Market breadth has already narrowed as the NSE500 fell ~6 per cent over the past year, with the median stock down ~10 per cent.

 

Since September 2024, large-caps (-4.6 per cent) have outperformed mid-caps (-5.7 per cent) and small-caps (-9.3 per cent), yet only 17 per cent, 24 per cent, and 23 per cent of stocks in these segments, respectively, delivered more than 10 per cent returns, underscoring the need for selective stock-picking.

 

“Market is set for moderation over next 12-18 months as rising concentration has historically preceded slower growth over the following eight quarters – a pattern confirmed by Indian data. Past cycles suggest another 18 months of stagnation in large-caps (-2 per cent CAGR) and correction in mid-caps (-10 per cent) and small-caps (-15 per cent),” said Bharat Arora, and Neeraj Makhijani, research analysts at Ambit Capital research.

 

Against this backdrop, the brokerage highlighted 10 high-conviction, bottom-up ideas, largely large-caps, favouring quality, low-volatility stocks.

HDFC Bank

 

Ambit analysts see HDFC Bank benefiting from accelerating credit growth, normalisation in cost of funds, and focus on high-yield segments like MSME, gold, and unsecured retail loans. The bank’s strategic moderation in loan growth has improved its loan-to-deposit ratio (~95 per cent), positioning it for steady margin and profitability growth. Analysts forecast return on assets (RoA) rising from 1.79 per cent in FY25 to 1.91 per cent by FY28.

Bharti Airtel

 

Telecom major Bharti Airtel is on a monetisation path after years of sub-par returns, analysts noted. Policy support for tariff hikes and the rollout of high-value products like Airtel Black underpin Ambit’s confidence. Therefore, analysts expect a 15 per cent tariff hike in December 2025 and see Airtel maintaining superior return on capital employed (RoCE) versus peers, driving earnings per share (EPS) growth of ~30 per cent FY25-27E.

 

Mahindra & Mahindra (M&M)

 

According to analysts, M&M’s focus on its SUV core brand and leadership in LCVs supports market share gains. Farm machinery and non-tractor businesses add optionality, with core earnings expected to grow at ~13 per cent CAGR FY25-28E. Analysts highlighted the company’s ability to outperform industry volume growth (~9.4 per cent versus 5 per cent expected industry CAGR).

 

Sun Pharma

 

Specialty products now drive nearly 19 per cent of Sun Pharma’s revenue, reducing dependence on US generics. With a robust pipeline, including Leqselvi and Unloxcyt, Ambit analysts expect Specialty to contribute ~$500mn annually in 3-4 years. They anticipate 19 per cent EPS compound annual growth rate (CAGR) over FY26-28E, supported by margins and a strong branded-generics presence.

 

InterGlobe Aviation (IndiGo)

 

IndiGo’s low-cost model and international expansion have strengthened its market position. International revenue has grown 10x over FY17-24, and domestic dominance allows profitable global scaling. Ambit analysts project ~14 per cent revenue and EPS CAGR over FY25-28E, with attractive valuations compared to global peers.

 

Tech Mahindra

 

Tech Mahindra is improving operational efficiencies under new leadership, reducing subcontracting and increasing offshore headcount, according to analysts. Combined with telecom stabilisation (34 per cent of revenue) and margin levers, Ambit sees potential for higher profitability and attractive valuations relative to peers.

 

Godrej Consumer Products (GCPL)

 

GCPL’s Household Insecticides segment and recent acquisition of Raymond’s Consumer Care portfolio are expected to drive 13-15 per cent revenue growth in the next decade. Innovation, distribution expansion, and margin improvements (~170bps FY25-28E) back Ambit’s positive view.

 

PB Fintech (Policybazaar)

 

With India’s insurance penetration set to rise, PB Fintech dominates online distribution (90 per cent+ market share). Analysts highlighted its scalable business model, renewal-driven profitability, and long-term Ebitda potential (~39 per cent). Despite a ~25 per cent correction from January 2025 highs, Ambit sees value in the stock.

 

Fortis Healthcare

 

Fortis focuses on brownfield expansion, increasing bed capacity while prioritising high-margin diagnostics. Analysts note capital allocation improvements and expect ~700bps Ebitda margin expansion over FY25-28, supporting potential re-rating.

 

Max Financial Services

 

Lastly, Ambit expects Max Life to outperform peers due to a lower unit-linked insurance products (ULIP) base, strong non-par product mix, and distribution scale-up via Axis Bank and agency channels. Value of new business (VNB) growth is projected at 20 per cent+ in FY26, with margins recovering through a shift toward higher-margin products.

 

Overall, analysts at Ambit stress that broad indices may stagnate, but selective, high-quality, large-cap stocks with strong fundamentals, operational efficiency, and strategic growth levers remain attractive.