Stocks to buy for long term: Pankaj Pandey of ICICI Securities picks Persistent, SBI, DLF and more

Mint

27-05-2025

Stocks to buy for the long term: The Indian stock market benchmark Nifty 50 looks set to extend its winning run to the third consecutive month. After a 6.30 per cent rise in March and a gain of 3.46 per cent in April, the Nifty 50 is up 2.74 per cent in May till the 26th.
Favourable macro, healthy retail buying and largely stable Q4 earnings have kept the market up despite persisting concerns over Trump's tariffs and their impact on the global economy.
The Indian stock market could remain on a strong footing in the medium term due to a bright growth outlook, expectations of a healthy monsoon, easing inflation and a strong influx of retail investors.
However, experts warn that the valuations look a bit on the higher side, which could trigger consolidation. They suggest buying quality stocks at the current juncture, which are available across segments.
Pankaj Pandey, the head of research at ICICI Securities, has picked five stocks to buy for the next one to two years. Take a look:
Persistent offers cloud, data, product, and design-led services to BFSI, healthcare and hi-tech verticals. It continues to demonstrate industry-leading growth, supported by a robust TCV (total contract value) of $2.1 billion in FY25.
'We expect dollar revenue and earnings to grow at a CAGR of 18.4 per cent and nearly 27.2 per cent over FY25–27E, backed by resilient deal wins (annual contract value of $1.5 billion), margin stability, diversified revenue mix across verticals and no deal cancellations despite a challenging macro backdrop,' said Pandey.
Despite higher investments in S&M (service management), margin expansion of 200–300 bps is targeted in the medium term, supported by operational efficiency.
The management has reaffirmed a revenue target of nearly $2 billion by FY27 and an ambitious FY31 revenue target of $5 billion, likely incorporating an inorganic growth component, implying a nearly 23.5 per cent CAGR over FY25-31.
SBI remains well-positioned to deliver steady growth, backed by a strong corporate pipeline and revival in momentum of personal loan disbursements, while secured retail and MSME segments remain healthy.
Easing liquidity, coupled with a CD (credit-deposit) ratio at 69.7 per cent and a prudent deposit repricing strategy, is expected to support credit expansion without straining funding costs.
The bank's diversified loan mix—anchored by a high share of fixed and MCLR-linked loans at nearly 70 per cent — provides a cushion against margin headwinds in the ongoing rate cut cycle.
'Despite some near-term NIM (net interest margin) pressure, earnings resilience is likely to hold, aided by treasury gains and stable operational efficiency,' said Pandey.
'Asset quality remains a key strength, supported by sustained control over slippages and steady recoveries and write-offs. Management's focus on revival in Xpress Credit is also poised to aid yields, further strengthening the overall outlook,' Pandey said.
For FY26, DLF is targeting ₹ 20,000-22,000 crore of presales. It has a strong medium-term launch pipeline of ₹ 95,196 crore ( ₹ 21,256 crore unsold launched inventory), which should aid in maintaining healthy pre-sales bookings over the next three to four years.
On the rental portfolio, it will be developing nearly 28 msf, of which nearly 6.2 msf is expected to be completed in FY26 with exit rental income of ₹ 6,700 crore.
It eyes annuity rental income of over ₹ 10,000 crore by FY30 (including 100 per cent of JVs share in DCCDL and Atrium place). It has earmarked ₹ 5,000 crore capex per annum for FY26 and FY27.
'We believe the scale-up in its annuity portfolio would provide a consistent revenue stream amidst cyclicality in residential business by nature,' said Pandey.
Marico is transforming its business model from low-margin hair oil and edible oil to premium foods and personal care business, which will provide a strong margin lever in the long run.
The company has delivered 6-7 per cent volume in the domestic business, high compared to large FMCG players, on the back of strong 20 per cent growth in the foods business and personal care business (nearly 22 per cent of India business).
'Gradual recovery in the sales volume of the core products (Parachute, Saffola edible oil and value-added products) and sustained strong growth of 20 per cent+ in premium businesses coupled with moderation in input cost inflation will help the company to clock 16 per cent earnings growth over FY23-25E, expected to be better compared to large companies,' said Pandey.
Gland Pharma is one of the largest generic injectable-focused B2B companies, with a global footprint across 60 countries.
Gland's in-house complex injectable pipeline includes 19 products with a US market opportunity of $6.5 billion (Filed 9 ANDAs and launched 6 products from this portfolio).
The French CDMO, Cenexi, grew despite a machinery breakdown in a Fontenay plant as the Belgium plant has returned to normal levels of production.
'We believe turnaround in this business is around the corner. This, along with In-licensing deals for GLP 1 contracts for the Gland base business, could provide significant traction in FY26/FY27,' said Pandey.
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Disclaimer: This story is for educational purposes only. The views and recommendations above 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: 27 May 2025, 08:56 AM IST