JM Financial’s Top 4 Buy Recommendations for Strong Gains
Market Insights – May 22, 2025
JM Financial, a prominent brokerage firm, has identified four compelling stock picks across diverse sectors that show promising potential for investors seeking robust returns. The firm maintains a bullish stance on Innova Captab, Fortis Healthcare, Oil India, and Power Grid Corporation. Here is an in-depth look at these top recommendations and the rationale behind JM Financial’s optimism.
1. Innova Captab: Pharma Sector Growth Catalyst
JM Financial maintains a Buy rating on Innova Captab with a target price of Rs 1,152, implying a potential upside of 26.5% from current levels.
The company’s Q4FY25 results were a mixed bag: revenue grew 20% year-on-year (YoY), albeit 7% below analyst expectations. However, the firm impressed with its EBITDA margin of 15.2%, exceeding estimates by 102 basis points. Profit After Tax (PAT) stood at Rs 296 crore, marking a modest 3% YoY increase.
A key growth driver is the commercialisation of Innova Captab’s Jammu plant, which broadens its addressable market to include injectables and liquid formulations. JM Financial anticipates a strong growth trajectory for the business with a projected compound annual growth rate (CAGR) of 29% in revenue, 33% in EBITDA, and 34% in PAT from FY25 to FY28. —
2. Fortis Healthcare: Strong Healthcare Sector Performer
Fortis Healthcare remains a favored pick in the healthcare sector with JM Financial’s Buy rating and a target price of Rs 810, signaling a 20.5% potential gain.
The company reported solid Q4FY25 figures, with revenue, EBITDA, and adjusted PAT growing 12%, 14%, and 28% respectively, year-on-year. The hospital segment posted revenue growth of 14.2%, while the diagnostic business grew modestly by 3%.
JM Financial projects Fortis Healthcare to sustain over 15% topline growth and achieve margin expansion of 200 to 300 basis points over the next three years. The hospital chain is expected to generate free cash flows totaling Rs 39.8 billion during this period. Currently trading at 26.2 times forward EV/EBITDA, Fortis Healthcare’s valuation may see an upward re-rating, supported by improving fundamentals.
3. Oil India: A Resilient Dividend Play
Oil India continues to be a top recommendation, with JM Financial reiterating a Buy call and setting a target price of Rs 500, implying a 17.1% upside.
Despite standalone Q4FY25 EBITDA falling short at Rs 21.3 billion due to increased other expenses and contract costs, the company outperformed expectations with a 4% rise in crude sales volume. Additionally, the Numaligarh Refinery Limited (NRL) refinery posted a strong Gross Refining Margin (GRM) of $9.3 per barrel, boosting overall earnings.
The company’s consolidated EPS for FY25 was Rs 40.3 per share. JM Financial forecasts an approximate 13% CAGR in earnings over the next 3 to 5 years. Oil India is also noted for its attractive dividend yield in the 4-5% range. The stock currently trades at a reasonable 6.3x FY27E EPS. Adjustments to EBITDA estimates for FY26 and FY27 have been made, but the price target remains unchanged, supported by increased value in listed investments.
4. Power Grid Corporation: Power Sector Giant
Power Grid Corporation is the final pick on JM Financial’s list, with a Buy rating and a target price of Rs 341—representing a 19.3% potential upside.
Q4FY25 revenue remained steady at Rs 123 billion, in line with expectations. EBITDA was robust at Rs 102 billion, delivering an impressive margin of 83.3% despite higher employee and finance costs. Adjusted PAT was lower at Rs 41 billion, impacted by these elevated expenses.
JM Financial highlights that nine Transmission-Based Competition Bidding (TBCB) projects are over 90% complete and slated for commissioning in FY26, which is expected to boost capitalisation. Capital expenditure is projected to exceed Rs 250 billion in FY26, propelled by progress on High-Voltage Direct Current (HVDC) projects.
The brokerage underscores the inherent challenges and significant rewards associated with executing large transmission projects. It anticipates improved visibility in capitalisation and earnings growth going forward, making Power Grid Corporation an attractive long-term investment.
Conclusion
JM Financial’s top four Buy recommendations—Innova Captab, Fortis Healthcare, Oil India, and Power Grid Corporation—span sectors including pharmaceuticals, healthcare, oil, and power. Their targets indicate healthy upside potential backed by solid fundamentals, robust earnings growth, and strategic expansions.
Investors interested in diversifying their portfolios with quality picks should consider these recommendations while monitoring market developments.
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Written by Oliviya Kunjumon for Smart Money Mindset, published on May 22, 2025.