Growth gains value when it becomes more scarce and the discount rate decreases. - Bill Miller
Concerns over value remain, and the Indian benchmarks are down 6% from their all-time highs. However, opportunities might still arise in a costly market. Brokerages like Motilal Oswal and JM Financial shed light on some possible gains in this environment of high valuations, however they do so in unique ways.In 'Creating Wealth Through Bruised Blue Chips,' Motilal Oswal focuses on the potential of blue-chip stocks that have suffered severe losses from their peak. When their stock prices fall sharply, these companies—which are renowned for their profitability and resilience—offer exceptional purchasing opportunities, so long as their fundamentals are unharmed.
There are still some possibilities, even though the pool of wounded blue chips is limited by the Indian market's currently high valuations. Motilal's watchlist includes companies like Adani Enterprises, SBI Cards, Tata Elxsi, Avenue Supermarts, and Asian Paints, which are currently selling between 30 and 80 percent below their five-year highs.
In its 2025 bottom-up stock selection approach report, JM Financial selected 12 stocks that are worth monitoring. Maruti Suzuki, Axis Bank, Havells, and BHEL were among the companies in the lineup, which was evaluated using the criterion of "growth at a relatively reasonable price" (GARRP). What does "relatively" mean? Because the brokerage thinks that in order to give investors a safer entry point, the overall market would need to decline by 20–25%.
Both JM Financial's GARRP strategy and Motilal Oswal's search for wounded blue chips emphasize the importance of time. The takeaway for investors is that there are possibilities in even the most expensive markets, but only if they are prepared to delve deeply and bide their time until the proper opportunity presents itself.
According to Motilal, the secret is to spot damaged stocks, figure out why they dropped, keep an eye out for signs of a comeback, and purchase when prices are appealing.
PNC Infratech (+11.8%) (Rs 346.25)
After the NHAI-promoted highway project was finished ahead of schedule and a bonus of Rs 4.4 crore was earned, shares soared.
Bull Case: In just the first half of FY25, the company's order book has already exceeded its FY24 order value, demonstrating how strong it is. Its development trajectory may also be aided by a pick-up in government capital expenditures in the second half of FY25.
Bear Case: Because of a bribery case brought by the CBI against four of the company's workers, the Ministry of Roads, Transport, and Highways barred the company from taking part in any future tenders for a year.The disqualification's ambiguity hangs large, deterring investors and limiting opportunities for growth.
Supermarts on Avenue (Rs 3,718; -2.6%)
Goldman Sachs lowered its target price for DMart from Rs 4,000 to Rs 3,425 per share.repeating its call to sell.
Bear Case: DMart has been raising its price reductions in an effort to keep its competitive edge. Profits and margins have been impacted by DMart's price reductions for a basket of grocery produce, which went from a range of 15% over MRP in July of this year to 25% over MRP in December. According to GS, DMart lacks a competitive edge in urban fresh food categories and is unable to serve sizable portions of the Indian grocery industry.
Bull Case: CLSA, a stockbroker located in Hong Kong, is optimistic about DMart since the company is appropriately shifting to private labels, positioning it to handle competition in the future.Brands that are owned and sold exclusively by the retail store owner are known as private labels. Hence, CLSA was able to keep its 'outperform' rating on DMart.
Awfis Space Solutions (+19.4%, Rs 784.50)
After 85.3 lakh shares were exchanged, shares increased in value.
Bull Case: The management is optimistic about the demand for flexible office space in India and anticipates that the percentage of flexible offices in the leasing market would increase from 10% to 20% by FY28. Large corporations' increased desire for fully managed spaces and decentralization will fuel demand. In Tier II cities, the management plans to increase its footprint. Its current presence consists of 14 centers spread throughout nine locations, but in the past 12 months, it has expanded to 20 centers.
Bear Case: The business anticipates supply shortages in a few important areas, which will keep pricing and occupancy levels high for the foreseeable future.
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