Stock Market Volatility: Nomura Highlights Top Picks for Investors This Week

The stock market has experienced significant fluctuations this week, with some stocks maintaining stability while others faced increased pressure. In the midst of this volatility, global brokerage firm Nomura has issued "Buy" recommendations for several stocks, indicating favorable investment opportunities in a turbulent market.

Nomura’s Insight on Key Stocks

Nomura has identified four stocks that they believe show promise in the current economic climate. Below is an analysis of each recommendation, illustrating the potential upside for investors.

Axis Bank: Expected 21% Upside

Axis Bank stands out in Nomura’s report, with the brokerage projecting a 21% upside from its current levels. Despite suffering a 13% decline over the past six months, which outperformed the Bank Nifty’s decrease of only 3%, Nomura emphasizes a bullish outlook for the bank.

The decline is attributed to slower loan and deposit growth and a slight dip in asset quality relative to competitors. However, the brokerage has maintained a "Buy" rating with a target price set at ₹1,230, indicating confidence in the bank’s potential for recovery.

Nomura forecasts that improvement in liquidity could propel loan growth. As of now, Axis Bank is trading at 1.6 times its one-year forward book value, signaling a widening valuation gap compared to peers like ICICI Bank, HDFC Bank, and Kotak Mahindra Bank. The firm also anticipates robust profitability, predicting a Return on Assets (RoA) of 1.7% and a Return on Equity (RoE) of 14-15% for FY26-27. They project a gradual increase in loan and deposit growth, expecting figures to reach 11-12% by FY26-27. ### Shriram Finance and Bajaj Finance: Top Picks Among NBFCs

In the realm of non-banking financial companies (NBFCs), Nomura has revised its outlook and included Shriram Finance (SHFL) and Bajaj Finance (BAF) among its top picks.

Shriram Finance is showcased for its expected annual Asset Under Management (AUM) growth of 15-16% and an RoE ranging from 15 to 16%. The stock trades at an appealing valuation of just nine times the projected FY27 earnings per share.

Bajaj Finance maintains its position on Nomura’s "Buy" list with a robust projected earnings Compound Annual Growth Rate (CAGR) of 29% and strong RoA/RoE of 4.1%/21% for FY26-27. Additionally, SBI Cards is forecasted to deliver a striking EPS CAGR of 45%, with an RoA of 4.5% and RoE of 21% during the same timeframe.

Samvardhana Motherson: ‘Buy’ with Revised Target Price

Nomura has also reiterated its "Buy" recommendation for Samvardhana Motherson International but has adjusted its target price downward to ₹155 from ₹209, suggesting a 23% upside.

This adjustment comes amid concerns about global tariff uncertainties impacting demand. The revised valuation multiple has been set to 18 times earnings, reflecting the company’s historical trading range. Despite reporting a consolidated revenue of ₹27,700 crore for Q3FY25—an 8% year-on-year increase—last quarter’s performance fell short of both Nomura’s and market expectations by 3-5%.

The brokerage acknowledges the weaker volume growth outlook and tariff uncertainties as headwinds for growth. Nevertheless, they believe that acquisitions and progress in the consumer electronics segment could foster strong earnings growth and diversify the company’s revenue streams.

Fortis Healthcare: Maintaining a ‘Buy’ Rating

Finally, Nomura maintains a "Buy" rating on Fortis Healthcare, setting a target price of ₹708 per share. The brokerage highlights the company’s recent acquisition of Shrimann Hospital in Jalandhar, describing the acquisition cost as favorable compared to new project costs.

While the acquisition may have a dilutive effect on earnings in its first year, Nomura predicts it will contribute positively in the subsequent 2-3 years. Caution is advised, however, as the hospital’s performance will depend heavily on retaining key medical personnel, whose departure could detrimentally affect revenues and profitability.

Conclusion

In a week marked by stock market volatility, Nomura’s targeted recommendations present promising opportunities for investors. By focusing on potential recovery and growth in these selected stocks, investors and market participants may find valuable insights to navigate the current financial landscape.

For further information on stock market movements, including Nifty 50 and BSE Sensex levels, and to receive expert advice on investment strategies, readers are encouraged to explore updated analyses on platforms such as Financial Express. Download their app for timely alerts and insights into the fast-paced world of business and finance.