Brokerage Flags 52% Upside: Nuvama Picks Top Stocks

Leading brokerage Nuvama Institutional Equities has identified four stocks with significant upside potential, initiating 'Buy' recommendations based on sector-specific trends, earnings visibility, and strategic balance sheet changes.

Nuvama's Top Picks

The firm has put several counters on its 'Buy' list, expecting gains of up to 52% from current trading levels.

Vedanta: Metal and Mining Leader

Vedanta is highlighted as Nuvama's top pick in the metals and mining sector. The brokerage maintained its 'Buy' rating and increased the target price to ₹806, signaling a potential 28% upside. Vedanta is nearing statutory clearances for a demerger into five separate listed entities, a move expected to unlock shareholder value across its aluminium, zinc, oil & gas, power, and steel businesses. The brokerage cited strong commodity prices, effective cost reduction, and volume growth as further drivers for its investment thesis. Nuvama has revised its EBITDA estimates upwards for FY27-28, projecting a 20% CAGR for EBITDA between FY25 and FY28, factoring in higher commodity prices and adjusted valuation multiples.

ICICI Prudential Life Insurance: Profitability Focus

Nuvama also reiterated a 'Buy' rating on ICICI Prudential Life Insurance, setting a target price of ₹790, which implies a 16% potential gain. While recent total annualised premium equivalent (APE) growth was modest, the insurer demonstrated improved profitability. An increase in protection share by 240 basis points year-on-year supported a Value of New Business (VNB) margin of 24.3%. The brokerage expects demand for protection products to be supported by GST exemptions. Any margin dilution from increased growth is anticipated to be offset by distributor commission renegotiations and operational efficiencies. Nuvama has marginally adjusted its VNB estimates and raised the target price, noting the stock trades at a lower price-to-embedded value multiple than historical averages.

ICICI Lombard General Insurance: Growth Momentum

ICICI Lombard General Insurance received a reiterated 'Buy' rating from Nuvama, with a target price of ₹2,350, indicating about a 23% upside potential. The company posted double-digit growth in gross direct premium income and gross written premium. Strong performance in retail health insurance, bolstered by GST exemptions, was a key factor. However, combined ratio levels remained elevated due to increased claims and cost pressures, standing at 103.5% excluding one-time wage code impacts. Nuvama believes ICICI Lombard's superior portfolio management and recovery in the motor segment position it favorably against peers.

Just Dial: Digital Platform Potential

In the internet and digital services space, Nuvama maintained its 'Buy' rating on Just Dial, assigning a target price of ₹1,100. This represents a substantial potential upside of nearly 52% from the current market price. The brokerage noted moderate revenue growth alongside improved short-term profitability, with an EBITDA margin reported at 31.2%, exceeding estimates.