IndusInd Bank, Mazagon Dock offer 15-16% return potential, says Chola Securities

IndusInd Bank is Dharmesh Kant’s top stock pick for the next year, with Mazagon Dock emerging as another high-conviction idea. The Head of Research at Chola Securities expects both stocks to offer minimum returns of 15-16% over the investment horizon, supported by improving fundamentals and sector-specific catalysts.

Kant said much of the negative sentiment around IndusInd Bank has already been reflected in the stock price. He expects profitability to improve steadily over the coming quarters and believes the lender’s valuation leaves room for gains over the next year.

“If I have to pick one stock… that stock would be IndusInd Bank moving forward for the next one year,” Kant said.

He said the bank’s recovery is already underway, supported by improvements in the quality of assets and liabilities. Chola Securities expects return ratios to improve by 10-15 basis points sequentially and believes the impact of proposed insurance regulations has largely been priced into the stock.

“The impact of the insurance business because of the IRDA rulings… is already discounted in the price,” he said, adding that implementation of the proposals could be staggered, easing concerns for the sector.

Kant expects IndusInd Bank’s advances to grow by 10-12% initially, helping narrow the valuation gap as the stock trades at less than one times price-to-book value.

Apart from IndusInd Bank, Kant highlighted Mazagon Dock Shipbuilders as another high-conviction idea. He said the company could benefit if the government clears the P-75I submarine programme, which he estimates could create an order opportunity of nearly ₹50,000 crore.

“If that comes through… it will be a ₹50,000 crore kind of an order book opportunity,” he said.

Kant remained cautious on PB Fintech over the long-term despite seeing scope for short-term trading opportunities. He said fintech distributors could face pressure as banks and non-banking financial companies (NBFCs) develop their own insurance distribution channels, reducing dependence on third-party platforms.

He expects product owners and companies with direct distribution models to benefit more if the proposed insurance regulations are implemented over the next few years.

Kant also maintained a positive view on InterGlobe Aviation (IndiGo), citing lower crude oil prices and operating leverage. He expects Brent crude to remain in the $85-$90 per barrel range by year-end and sees the airline benefiting from stable fuel costs and higher ancillary revenue.

Based on FY27 estimates, Chola Securities sees InterGlobe Aviation reaching ₹6,200-6,300.

Kant said Reliance Industries still has room to gain despite its recent rally following quarterly earnings. He expects another 5-7% upside as Reliance Retail’s valuation gets reflected in the company’s market capitalisation.

“₹1,400 can be the likely target price by the time we end FY27,” he said, adding that investors should use any decline in the stock to accumulate.

For the full interview, watch the accompanying video

IndusInd Bank is my top stock pick for the next year, says Chola Securities’ Dharmesh Kant

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