Top stocks to buy for long term: Pankaj Pandey of ICICI Securities picks L&T, M&M, and more

Top stocks to buy for long term: Massive foreign capital outflows, concerns over a major global trade war, weak earnings, and faltering macroeconomic indicators have combined to keep the Indian stock market under pressure for the past five months.

After hitting a record high of 26,277.35 on September 27 last year, benchmark index Nifty 50 has been in the red since October each month. As of February 24 close, the index is down over 14 per cent from its record high.

Experts expect the market to remain volatile in the short term due to concerns over US President Donald Trump’s tariff policies, the counter measures of the country’s trade allies and its impact on global economic growth.

Experts say it is time to bet on quality stocks for the long term. After the recent corrections, several quality stocks across sectors are available at attractive valuations. These stocks have solid growth potential, and experts expect them to see healthy gains in the medium to long term.

Pankaj Pandey, the head of research at ICICI Securities, has picked the five stocks below to buy for the long term. Take a look:

Larsen and Toubro (L&T) | Target price: ₹4,400

L&T has a current order backlog of ₹5,64,223 crore, up 20 per cent year-on-year (YoY). Revenues and PAT (profit after tax) are expected to grow at a CAGR of 14.5 per cent and 15.1 per cent, respectively, over FY25-FY27E.

The company’s management is confident that it will surpass the order inflow and revenue guidance of 10 per cent and 15 per cent, respectively.

“We believe given the backlog growth and pick up in execution, there remains a strong probability of a beat in the revenue growth guidance. With a continued focus on improvement of overall return ratios and aspiration of 18 per cent RoE (return on equity) by 2026E, it looks realistic. L&T remains the best way to play the India capital expenditure (capex) story,” said Pandey.

Mahindra & Mahindra (M&M) | Target price: ₹3,850

M&M has sustained its revenue market leadership in the SUV category, bolstered by successful launches like Thar Roxx, XUV 3XO, XUV 700, and Scorpio-N. These vehicles have quickly resonated with customers, driven by cutting-edge technology and a value offering.

It has received encouraging responses to the recently launched electric vehicles, namely BE 6 and XEV 9e, amidst its overall goal of increasing its BEV volumes to 20-30 per cent of its SUV sales by 2027.

On the farm equipment front, healthy water reservoir levels and increased government spending in rural space are expected to benefit the domestic tractor industry, with M&M a key beneficiary given its industry leadership with nearly 44 per cent market share.

“Given its consistent positive surprise on new product launches, ability to grow ahead of the market and persistent focus on capital efficiency (RoE of more than 18 per cent), it is well poised for growth,” said Pandey.

Indian Hotels Company | Target price: ₹984

The Indian Hotels Company redefined its growth strategy from aspiration to acceleration, focusing on doubling its room inventory and revenues with consistent improvement in margins by 2030. 

It targets revenues to touch ₹15,000 crore by 2030, with like-for-like revenues growing at 8 per cent CAGR, new businesses growing at over 30 per cent CAGR and management fees clocking a 15-18 per cent CAGR (touching ₹1,000 crore from current levels of ₹400-450 crore. 

“EBITDA margins may improve consistently driven by operating leverage and efficiency and favourable revenue mix (to be at nearly 36 per cent in FY27 from 32 per cent in FY24. Large cash flows generated will be utilised for prudent capital allocation and steady dividend payout in the coming years,” Pandey said.

Narayana Hrudayalaya | Target price: ₹1,600

Narayana Hrudayalaya’s revenues for the quarter grew nearly 14 per cent YoY to ₹1,366.7 crore, driven by nearly 13 per cent YoY growth in India, which was mainly attributable to strong growth in the southern peripheral, northern peripheral, and Kolkata regions. Cayman Hospitals witnessed 15 per cent YoY growth as the second hospital in Cayman commenced its operations. 

The company is targeting aggressive capex (nearly ₹3,000 crore over the next two to three years) in cities such as Bengaluru and Kolkata, where it has a strong presence and brand loyalty. 

“We believe the company is far better poised (despite negative FCF in FY25-26E) to fathom the impact on the balance sheet as the margins and the return ratios are in good shape,” said Pandey.

JK Cement | Target price: ₹5,700

After recovering sales volumes in Q3FY25, JK Cement’s volumes may improve further over Q4FY25 and FY26E-27E, led by a pickup in demand, a capacity addition plan, and improved capacity utilisation of recently commissioned plants (nearly 4 mtpa added in the last 1.5 years).

“The longer-term outlook remains strong, led by a strong focus on capacity expansion (30 mtpa by FY26E and 50 mtpa by FY30E from 24 mtpa at present) and consistent efforts on improving operational efficiencies ( ₹150-200/ton of further cost savings expected in the next three years),” said Pandey.

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Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.