Forget RVNL, Railtel or Tata Motors! Experts see 10% upside in THIS monopoly stock in short term
Stock to buy for short-term: Amid continued FIIs' buying for the seventh straight session, the Indian investors are looking for value picks that may generate alpha returns and beat the key benchmark returns by a considerable margin. Despite the escalation in cross-border tensions between India and Pakistan, stock market experts have suggested investors look at monopoly stocks as they face limited selling in weak markets and give sharp upside when there is a trend reversal.
According to stock market experts, the summer season is approaching, and IMD has already predicted a record-hot season this year. So, air conditioner stocks or white goods stocks are expected to remain in focus. However, experts suggested looking at the market from another angle. They suggested buying the vehicle air conditioner maker stock, and the company's name is Subros. Subros is a leading player in vehicle air conditioning, which covers 42% of the market space in passenger vehicles and 54% in the commercial vehicle segment. The company is also expanding its foothold in railways, buses, and the home air conditioner segment. They said that the rise of EVS is a big boost for Subros, and Tesla coming to India may open a significant avenue for revenue for Subros in the long term.
Speaking on the fundamentals of Subros shares, Seema Srivastava, Senior Research Analyst at SMC Global Securities, said, "Subros is a leading player in the vehicle air conditioning space, with a strong market share—42% in passenger cars and 54% in trucks as of Q3 FY25. The company focuses on cars and expands into other areas like railways, buses, home air conditioners, and refrigeration trucks. This helps reduce risk and opens up new growth opportunities."
The SMC Global Securities expert said that the truck segment looks especially promising. With the government investing in infrastructure and more demand for commercial vehicles (CVs), the company's management expects strong growth in FY26. It has already received new orders and started production on two new truck models. The company's profit margins improved in Q3 FY25 due to lower raw material costs, cost-saving steps, and better product mix. It also earned extra income from forex gains and government incentives.
"On the capex front, the company plans to invest ₹ 250–275 crore in FY26 to maintain and expand its capacity," Seema added.
Seema Srivastava highlighted the benefit that Subros may reap on the EV theme, "The rise of electric vehicles (EVS) is a big positive for Subros. As EVs become more common, the company is developing new technologies like compressors and engine cooling systems suited for them. This will increase the value of products it supplies per vehicle by 1.5 to 2 times. It also aims to earn 20% of its revenue from alternative fuel vehicles in the future, showing its focus on cleaner, future-ready solutions."
"The EV theme in the auto segment will pick up once Tesla starts operations in India. As there is a buzz in the market that Elon Musk's Tesla may start operations in India in FY26, Subroas shares can be a good bet for its existing shareholders, who continue to hold it for the long term," said Avinash Gorakshkar, Head of Research at Profitmart Securities.
Regarding Subros' share price outlook, Mahesh M Ojha, AVP of Research at Hensex Securities, said, "Subros' share price is in the ₹ 570 to ₹ 605 per share range. On breaching the ₹ 605 hurdle, Subros shares may touch ₹ 650 soon. So, Subros shareholders are advised to hold Subros shares for a fresh breakout above ₹ 605. In profit-booking at resistance levels, one should accumulate more in the ₹ 585 to ₹ 595 range for the short-term target of ₹ 650 apiece. Fresh investors can also initiate momentum buying if the stock sustains above ₹ 605 apiece. They can maintain a buy-on-dips strategy and strict stop loss below ₹ 570."
Subros can be a good short-term investment choice if you are looking for a railway PSU, air conditioner maker, or auto stock.
Disclaimer: This story is based on exchange filings by Reliance Industries and is for educational purposes only. The views and recommendations above, if any, are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
First Published: 26 Apr 2025, 08:26 AM IST
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