Bharat Forge, TVS motors among 10 Hot Stocks that can double in 3 years

DAM Capital, an investment firm, has identified 10 stocks in the Indian equity market that they believe have the potential to double in value over the next 3 years. These stocks were selected based on their EBITDA and are as follows:

Transmission and Distribution (T&D) Business: This sector is expected to gain momentum due to a strong domestic tender pipeline and international interest from the Middle East and SAARC. Reduced competition in railways and sustained growth in civil projects are also expected to boost earnings with a projected 39 percent compounded annual growth rate (CAGR) over FY23-25E.

Trent Ltd: Trent is India's leading retailer with brands like Westside, Zudio, Star, and a joint venture with Zara. Analysts anticipate Westside's store count to expand to approximately 310 stores by FY26, with a 12 percent CAGR over FY24-26E. For Zudio, they expect around 900 stores by FY26, with a 32 percent CAGR.

Escorts: The synergy from Kubota, in terms of operations, markets, cost management, and product development, is expected to propel Escorts to new heights in the next decade. Analysts also believe that Kubota's synergy will increase market shares by 150-200 basis points (bps) over the next 4-5 years.

Bharat Forge: Analysts anticipate healthy export revenues due to a robust order book of Rs 3,000 crore and a focus on non-auto sectors. Government initiatives for indigenization and the launch of defense products present substantial opportunities for the company over the next decade.

Astral Pipes: The company's strong valuations, ground-level execution capabilities, and corporate governance make it an attractive choice for long-term portfolios. Analysts expect free cash flow (FCF) generation of Rs 1,400 crore over FY24-25E.

TVS Motor: A healthy double-digit growth in exports is expected to be a key driver for the company's growth in the next decade, leading to potential earnings upgrades and a higher valuation.

IDFC First Bank: This private sector bank is witnessing improvements in cost metrics, with a return on equity (RoE) of 12 percent in Q1FY24. Analysts project further improvement to 13.5 percent by FY25E, driven by strong CAGR growth in retail loans, a solid liability franchise, and favorable asset quality trends.

Havells India: Macro trends and innovation are expected to drive growth in fans, appliances, and lighting, while the real estate up-cycle and increased capex and exports are key growth drivers for cables and switchgears. With a strong balance sheet and approximately Rs 2,700 crore in cash reserves as of Q1FY24, Havells is well-positioned to handle input cost volatility and supply chain disruptions.

Uno Minda: The company's focus on electric vehicle (EV)-specific products and a revenue target of Rs 1,500 crore from EVs over the next 2-3 years are expected to significantly boost overall growth. Analysts foresee strong industry outperformance and higher earnings CAGR leading to an expansion in valuation over the next 3-5 years.

M&M Financial Services: Current Market Price (CMP): Rs 301 per share. Analysts expect an uptick in return ratios from approximately 2 percent in FY24E to around 2.3 percent in FY25E and further to about 2.5 percent in FY26E. They anticipate that this improvement will prevent any potential price-to-earnings (PE) derating in their base case scenario. The return on equity (RoE) is projected to converge to approximately 18-20 percent by FY26-FY27.

Disclaimer: These stocks have been identified by DAM Capital as potential candidates for doubling in value over a 3-year period, based on their analysis and market conditions. Please note that investing in stocks carries risks, and it's essential to conduct thorough research and consult with a financial advisor before making investment decisions.