Stocks to Buy: Analyst recommends ICICI Bank, Gravita India; check target

Stocks to Buy: Shrikant Chouhan of Kotak Securities has recommended buying ICICI Bank and Gravita India; here's why

Don't want to miss the best from Business Standard?

Stocks to buy recommended by Shrikant Chouhan of Kotak Securities 

ICICI Bank – BUY

CMP - ₹1,390

 

FV - ₹1,800

 

Resistance – ₹1,445/1,550

 

Support –  ₹1,370/1,320

 

ICICI Bank is India’s second-largest private sector bank with a pan-India franchise, strong international presence and a diversified business mix across retail, corporate and business banking. As of Q2FY26, total advances stood at ₹14.1 trillion with domestic loans growing 10.6 per cent YoY, led by retail (52 per cent of loans) and a fast-scaling business banking franchise (25 per cent year-on-year (Y-o-Y) growth). Retail growth remains anchored in secured products like mortgages, while unsecured exposure (credit cards + personal loans) is well-controlled at 13 per cent of total loans, limiting downside risk.

 

Profitability metrics remain best-in-class. Net interest margin (NIM) was resilient at 4.3 per cent, return on asset (RoA) at 2.3 per cent and return on equity (RoE) at 16–17 per cent. Fee income grew 10 per cent Y-o-Y and core operating profit rose 6.5 per cent Y-o-Y in Q2FY26, reflecting steady operating momentum despite a subdued loan growth environment. Cost efficiency remains strong with a cost-to-income ratio near 39–40 per cent.

 

Asset quality continues to remain pristine. Gross non-performing asset (NPA) improved to 1.6 per cent and net NPA to 0.4 per cent, with provision coverage ratio (PCR) at 75 per cent. Credit costs stayed benign at 30–40 basis points (bps). Slippages moderated sequentially and are largely driven by retail, while corporate asset quality remains steady. Importantly, the bank carries a sizable contingency buffer of ₹1,310 crore (90 bps of advances), providing a strong cushion against any unforeseen stress.

 

From a macro standpoint, H2FY26 is likely to be stronger than H1 for the banking sector. Following a subdued H1 marked by cautious lending, loan growth is expected to see a gradual uptick as system liquidity improves and demand revives. Margins are likely to have bottomed in Q2FY26, and with rate cuts expected to flow through, the downside to NIM appears limited from here. Further, the worst of stress in unsecured and microfinance institution (MFI) segments appears behind us, supporting asset quality normalisation across the system. As a large, well-diversified lender, ICICI Bank is ideally placed to benefit from these sectoral tailwinds.

 

At current valuations trades at a premium, justified by its superior execution track record, consistent profitability and strong balance sheet. With stable asset quality, normalised credit costs and improving growth-margin dynamics into H2FY26, ICICI Bank remains a high-conviction structural compounder in the Indian banking space.  CATCH STOCK MARKET LIVE UPDATES TODAY

Gravita India – BUY

CMP - ₹1,789

 

FV - ₹2,150

 

Resistance – ₹1,850/1,950

 

Support – ₹1,730/1,660

 

GRAV reported a strong Q2FY26 performance, with PAT rising 33 per cent Y-o-Y, ahead of expectations on the back of improved operating margins (10.7 per cent). Volume growth in H1FY26 (8 per cent Y-o-Y) was temporarily impacted by capacity expansion delays and goods and services tax (GST)-related destocking. However, with 125 ktpa of lead recycling capacity set to be commissioned in H2FY26 (50 per cent on base), volumes are poised to accelerate, supporting a robust 33 per cent Y-o-Y growth outlook for FY2027E.

 

Capacity additions of 80/45 ktpa at Mundra/Phagi in H2FY26 will significantly strengthen the India and global lead footprint (171/237 kt as of H1FY26). GRAV has prudently rephased capex by prioritising brownfield expansion, reducing FY2026E capex to ₹21 crore and FY2026-28E capex to ₹122 crore. The recycling roadmap toward 0.7 mtpa by FY2028 remains intact, with a higher lead share in the mix. The Li-ion battery recycling pilot plant at Mundra is also scheduled to go live in Q3FY26.

 

While regulatory triggers—including GST reverse charge mechanism (RCM) extension on battery scrap and Multi Commodity Exchange (MCX) aluminium alloy contract have witnessed delays, the medium-term growth outlook remains solid. GRAV is well-positioned to benefit from expanding domestic lead recycling capacity, scaling rubber operations, and entering Li-ion recycling. Inorganic opportunities under evaluation can further diversify its portfolio across geographies and verticals.

 

With strong organic growth levers and capacity ramp-up, GRAV is on track to deliver 25 per cent/24 per cent revenue/earnings per share (EPS) compound annual growth rate (CAGR) over FY2025-28E. Following the recent correction, valuations offer an attractive risk-reward.

 

(Disclaimer: This article is by Shrikant Chouhan, head equity research, Kotak Securities. Views expressed are his own.)