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The ongoing developments globally are likely to have a limited structural impact on India, wrote Venugopal Garre, managing director and India head of research at in a recent coauthored note.
The research and broking house had recently upgraded their outlook on midcaps and has now suggested 10 stocks from the smallcap and midcap (SMID) universe that are a ‘screaming buy’ from a long-term perspective despite the challenging geopolitical backdrop.
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“Our 10 picks aren’t those superheroes, with 21 per cent growth factored in for the first quarter of fiscal 2025-26 (Q1-FY26). These rather are your next-door citizens who have the potential to over-deliver. These same also have experienced around 2.5 per cent positive earnings revisions for FY26 in May where the overall midcap space declined slightly,” Garre wrote.
Riding the momentum
The stocks, Bernstein said, had already started showing momentum. Till Mid-April, these stocks were down 20 per cent on a weighted average basis, with nine of these 10 exhibiting negative growth. However, their weighted average price has been up 28 per cent since then.
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“With 7 of these 10 stocks still down year-to-date (YTD), we expect the surge to continue. Moreover, on running a reverse discounted cash flow (DCF) we find most of these lying in the 13-17 per cent implied growth range, translating to reasonable valuations in the mid-cap space,” the note said.
Here are the top 10 picks:
Coforge
HIGH deal momentum (+175 per cent YoY) is expected to drive robust growth in FY26. Annual Contract Value (ACV) for the next 12 months is up 48 per cent YoY, indicating a strong pipeline and sustained business expansion.
KPIT Technologies
Despite macroeconomic uncertainties, KPIT has executed well, positioning itself for a potential positive surprise in FY26—even without explicit double-digit growth guidance. Notably, new deal wins rose 19 per cent QoQ, including a significant $100 million contract with Mercedes.
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Persistent Systems
Management remains highly confident despite broader uncertainties, targeting a 20 per cent revenue CAGR from FY25-27 and 26 per cent from FY27-31. The company boasts a robust deal pipeline and a strong, diversified client portfolio.
Delhivery
The negative impact from e-commerce insourcing appears to be plateauing, which could unlock volume growth—particularly from Meesho this year. The Ecom Express acquisition is expected to boost parcel volumes by 15 per cent, even if Delhivery retains only 30 per cent of the e-commerce parcel market.
Bernstein top picks
Renew
There is strong confidence in the take-private deal (already proposed by key investors), especially after the recent fundraise. Renew trades at attractive valuations compared to peers in both renewable energy and solar manufacturing, and maintains a healthy project pipeline.
Paytm
Paytm is poised to achieve PAT profitability next quarter, supported by easing regulatory concerns, a rebound in merchant lending, and stabilization of payment volumes. Additional upside could materialize if BNPL services are revived or if restrictions on the Payments Bank are lifted.
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Max Financial
Growth and margin expansion are anticipated following the Axis-Max rebranding. Continued market share gains should help close the valuation gap with peers. Regulatory concerns over bank-channel sales are expected to subside, providing further growth visibility.
HDFC AMC
Steady household flows are reducing fund cyclicality, and FY26 market performance has outpaced expectations, resulting in mark-to-market gains. Leveraging the parent bank’s brand and distribution network, HDFC AMC is well-positioned for market share gains and potentially higher AuM growth than consensus estimates.
Jubilant FoodWorks
Jubilant has delivered strong growth despite a challenging environment, with aggressive store expansion and four consecutive quarters of positive like-for-like sales (LFL) where competitors have struggled. The company’s focus on value (menu, free delivery) and cost control (own app and delivery fleet) remains intact. Plans to open 1,000 new stores by 2028 are expected to enhance delivery capabilities and margins.
Devyani International
A potential merger with Sapphire Foods could unlock significant value, especially given Sapphire’s rerating and improved corporate cost structure. The recent quarterly results may mark a bottom, and with a recovering consumer environment and value-driven launches, average daily sales could rise by 10 per cent over the next two years.
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