As the Indian stock market gears up for the week starting May 5, 2025, investors are buzzing with excitement over the latest recommendations from Motilal Oswal Financial Services Ltd. The brokerage has identified Varun Beverages Ltd (VBL) and JSW Infrastructure as its top stock picks, highlighting their impressive growth trajectories and solid performance in a competitive environment.
Varun Beverages, a key franchisee of PepsiCo, has showcased remarkable resilience and growth potential, as evidenced by its recent financial results. In the first quarter of CY24, VBL reported a staggering 29% year-on-year revenue growth, driven by a robust 30% increase in volume. This growth is particularly impressive considering that 15.5% of it was organic. Despite facing challenges with margins, which remained flat at 22.7% due to the consolidation of lower-margin operations in South Africa, the domestic demand for VBL's products has remained healthy, with double-digit growth noted.
The management at VBL remains optimistic about the future, projecting long-term double-digit volume growth. This confidence is bolstered by strategic initiatives such as the expansion of distribution channels through visi-coolers and a successful shift towards healthier beverage options, with products like Nimbooz experiencing a 100% year-on-year sales increase. Motilal Oswal has maintained a "BUY" rating for VBL, projecting a significant 18% revenue growth, 16% EBITDA growth, and 26% PAT growth over the next two years.
Meanwhile, shares of Varun Beverages saw a sharp rally in early trading on May 5, climbing 1.90% to INR 534.40 on the National Stock Exchange (NSE). Investors are eagerly anticipating an interim dividend of 25% or INR 0.50 per equity share, which will be declared on May 7, 2025, marking a significant point for shareholders.
On the other hand, JSW Infrastructure has also shown robust performance, concluding FY25 with a cargo volume increase of 117 million tons, which represents a 9% year-on-year growth. The company’s revenue rose by 19% to ₹44.8 billion, while its adjusted profit after tax (APAT) grew by approximately 22%. This growth reflects consistent progress towards its ambitious goal of achieving a 400 million tons per annum (MTPA) port capacity by FY30. The logistics segment of JSW Infrastructure is particularly promising, targeting ₹80 billion in revenue by FY30, bolstered by the recent acquisition of Navkar.
Motilal Oswal anticipates that JSW Infrastructure will solidify its market dominance, leading to a 13% volume compound annual growth rate (CAGR) from FY25 to FY27. The brokerage forecasts impressive revenue, EBITDA, and PAT growth rates of 22%, 23%, and 18%, respectively, during the same period. This positions JSW Infrastructure as a compelling option for investors looking to capitalize on India’s burgeoning infrastructure sector.
As the broader Indian stock market continues to evolve in 2025, it faces a mixture of opportunities and challenges driven by corporate earnings, regulatory changes, and global economic trends. Investors are keenly focused on key updates from leading companies, including the upcoming Q4 earnings report from BSE Limited, which is set to be released on May 6, 2025. The BSE, as Asia’s oldest stock exchange, plays a crucial role in India’s capital markets, facilitating equity trading, derivatives, and mutual fund distribution.
Market expectations for BSE’s Q4 performance are mixed, with analysts anticipating moderate growth in comparison to the previous quarter. Despite a remarkable year-on-year growth of 95% in revenue and over 100% increase in profits in the last quarter, the quarter-on-quarter figures indicated a notable decline, raising concerns about the company’s ability to maintain its momentum.
Investors are advised to monitor trading volume trends leading up to the earnings release, as well as management commentary regarding future growth initiatives. The high price-to-earnings (P/E) ratio of BSE, currently around 90, signifies lofty investor expectations. Any failure to deliver exceptional results could lead to a correction in the stock price.
In contrast to BSE’s mixed outlook, Varun Beverages continues to stand out in the fast-moving consumer goods (FMCG) sector, particularly in beverages. VBL’s strategic focus on both domestic and international expansion, combined with a robust product portfolio, positions it well for sustained growth. The company’s ability to adapt to consumer preferences, including a shift towards healthier beverage options, is a significant advantage in a competitive landscape.
Additionally, Bajaj Finance Limited, a prominent non-banking financial company (NBFC), recently announced a 4:1 bonus issue and a 1:2 stock split, igniting renewed interest from investors. These moves aim to enhance shareholder value and improve liquidity, making the stock more accessible to retail investors. The Reserve Bank of India’s recent 25-basis-point rate cut has further implications for Bajaj Finance, as it lowers borrowing costs and stimulates economic growth.
Despite concerns over margins, Bajaj Finance’s asset under management (AUM) growth remains strong, reflecting its ability to capture market share in a competitive NBFC landscape. Investors should keep an eye on the impact of rate cuts on loan disbursals and profitability, as well as the regulatory environment affecting lending practices.
Overall, the Indian stock market in 2025 presents a wealth of opportunities for astute investors. The upcoming earnings reports, coupled with the strong growth trajectories of companies like Varun Beverages and Bajaj Finance, underscore their potential in a dynamic financial landscape. By staying informed and diversifying portfolios, investors can navigate market volatility and unlock significant returns.
