High Conviction Ideas

APRIL 01, 2025

HIGH CONVICTION IDEAS

KEY FINANCIALS OF HIGH CONVICTION IDEAS
Price* Mkt cap. EPS (Rs) PER (X) Price/BV (X) RoE (%)
Company Rating (Rs) (Rs Cr) 2026E 2027E 2026E 2027E 2026E 2027E 2026E 2027E
BUY IDEAS
Adani Ports and SEZ BUY 1,183 255,534 59.9 66.4 19.8 17.8 3.5 3.0 19.1 18.1
Amber Enterprises ADD 7,211 24,390 135.6 171.5 53.2 42.1 8.6 7.1 17.7 18.6
Cummins India BUY 3,052 84,597 79.8 93.5 38.2 32.6 10.8 9.5 29.9 30.8
ICICI Bank BUY 1,348 952,733 67.2 74.1 20.1 18.2 3.1 2.7 16.1 15.6
Indian Hotels ADD 788 112,102 16.7 21.0 47.1 37.4 8.4 7.1 19.4 20.6
Mahindra & Mahindra BUY 2,666 331,500 119.0 131.1 22.4 20.3 4.2 3.5 20.1 18.8
Piramal Pharma BUY 225 29,796 1.9 4.1 121.0 55.2 3.6 3.4 3.0 6.4
SBI Cards and Payment Services BUY 881 83,824 28.9 39.3 30.5 22.4 5.2 4.3 18.3 20.9
Shriram Finance BUY 656 123,353 52.1 65.0 12.6 10.1 1.9 1.7 16.0 17.3
Union Bank BUY 126 96,321 20.4 20.7 6.2 6.1 0.8 0.8 12.8 11.8
Source: Kotak Securities – PCG and KIE. * Price as on 28th March 2025.

KEY POINTS TO NOTE

 The updated basket of top 10 high-conviction stock ideas, which we can recommend to our clients.
 Subject to clients’ requirements, investing in all can help in diversifying the risk.
 We have shared the high-conviction BUY ideas from the KIE and PCG universe.
 We will closely monitor these stocks for any positive or negative developments and communicate
accordingly. At the end of the month, we will rebalance the basket of these stocks. Additionally, if we identify
any opportunities or specific gains, we will replace the same with new ones during the month.
 Please note that this information is strictly for internal circulation only and this document should not be
shared/circulated outside the organization.

RATIONALE
Adani Ports & Special Economic Zone Ltd.
 ADSEZ is the largest commercial port operator with 25% share of India’s port cargo movement. The company
has evolved from a single port dealing in a single commodity to an integrated logistics platform
 ADSEZ appeared confident of five-year double-digit volume CAGR independent of uptick in market growth and
in the absence of new port acquisitions.
 ADSEZ’s investments in logistics have started feeding in port volumes while also driving entry into new
markets (trucking, warehousing, rail transportation).
 Implied share gains would be driven by a combination of growing market access and penetration (end-to-end
offering, logistics superapp, sharing of cost efficiencies).

Kotak Securities Limited has two independent equity research groups: Institutional Equities and Private Client Group. This report has been prepared by the Private Client Group.
APRIL 01, 2025

Amber Enterprises India Ltd.

 Amber Group is a market leader in the HVAC (Heating, Ventilation, and Air Conditioning) industry, serving
customers since 1990.
 The company’s “Consumer Durables” vertical comprises of RAC (room air conditioner) finished goods, RAC
components and Non-RAC components and the “Electronics Division” consists of EMS and PCB vertical
delivers solutions to various segments.
 Despite a high base, the RAC industry in India is poised to deliver robust volume-led growth in Q4FY25E.

 Amber is entering the growing automatic washing machine segment.

 In the medium term, Amber is keen to take advantage of the component PLI and plans to foray into PCBs for
mobile and IT hardware devices through a JV with Korea Circuits, which could further aid revenue growth.
 We expect strong revenue and earnings CAGR over FY24-27E.

Cummins India Ltd.

 Cummins India Ltd (CIL), part of the US$2,360 crore Cummins Inc, is a leader in engine space for power
generation.
 It is involved in designing, manufacturing, distributing, and service engines and related technologies for
industrials & commercial establishments and exports markets.
 It is likely to be a key beneficiary from opportunity in Indian data center market, will drive its domestic business
growth.
 Higher localization, growth in high-margin segments (data centers, distribution) & cost-reduction programs
are key growth levers for the company.
 In the recent time, CIL witnessed sharp market share gains in Low Horse Power and Medium Horse Power
engine (grew 23% yoy in 9MFY25 as against negligible growth for key peer in Kirloskar Oil Engines).
 CIL has track record of generating strong Free cash flows and return on equity of over 20%. ~60% of CIL’s
business has potential to grow at 2x-3x GDP over the next few years.

ICICI Bank Ltd.

 ICICI Bank is one of India’s largest private sector banks, offering a wide range of financial services, including
retail & corporate banking, wealth management, & digital banking.
 It has a well-balanced loan portfolio across retail, SME, & corporate segments, ensuring stable expansion and
reduced concentration risk.
 The bank’s asset quality has been improving, with a declining Gross and Net NPA ratio, reflecting strong risk
management and a healthier loan book even in a challenging macro environment.
 ICICI Bank has demonstrated superior underwriting skills by delivering better asset quality trends despite
tough conditions, reinforcing investor confidence in its risk management.
 Strong profitability is supported by healthy ROA, ROE, and NIM, along with a high CASA ratio that ensures a
stable and low-cost funding base.
 Valuation remains attractive for the sector, and given its strong fundamentals and superior asset quality
trends, the bank is expected to continue trading at a premium valuation.

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APRIL 01, 2025

Indian Hotels Co Ltd.

 IHCL is the largest play on India’s hospitality sector, with its wide presence across the mid-to-premium
segments and presence in business and leisure locations.
 In Q3FY25, IHCL reported better-than-expected consolidated revenue and EBITDA supported by healthy
improvement in average room rate (ARR) and occupancy.
 Management expects the healthy momentum to sustain in Q4FY25 and beyond.

 IHCL continues to commission new keys and has a strong pipeline of which is to be operationalized over the
next 4-5 years.
 Hospitality upcycle will continue, owing to favorable demand-supply dynamics in the industry and IHCL is a
key beneficiary with its dominant position.

Mahindra & Mahindra Ltd

 Mahindra & Mahindra Ltd. is the flagship company of the Mahindra Group.
 The company offer a wide range of products and solutions ranging from SUVs, pickups, commercial vehicles
and tractors, to electric vehicles, two-wheelers, gensets and construction equipment.
 Mahindra, with its core brands Mahindra and Swaraj, continues to lead India’s tractor industry. With market
share at 41.6% in F24, M&M continues to be the domestic market leader. M&M has plans to grow its farm
machinery business, through launch of 'Made in India' farm machinery products.
 In the auto sector, M&M posted total sales of 8,24,939 vehicles (7,46,833 four-wheelers & 78,106 three-
wheelers) in FY24, registering a growth of 18.1%. The UV (Utility Vehicle) market share for M&M stood at
18.2% in FY24. In the Light Commercial Vehicle (<7.5 Ton segment), M&M retained its leadership position with
46.3% market share.
 M&M continues to execute well by maintaining leadership position in all three segments (tractors, SUV, Light
Commercial Vehicle), improved return ratio as well as cashflow generation besides well-preparedness for EV
transition.

Piramal Pharma Ltd. (PPL)

 Piramal Pharma Limited (PPL) is part of the Piramal group of companies.

 The company operates in 3 major segments. 1) Contract development and manufacturing organisations
(CDMO), 2) Complex hospital generics (CHG) and 3) Consumer healthcare (OTC).
 PPL owns 17 development and manufacturing facilities across India, US and UK with capabilities in sterile,
API, formulations, drug discovery and manufacturing of nutrition products.
 The company holds 49% stake in AbbVie Therapeutics, JV with Allergan, and 33.33% in Yapan Bio which
operates in the biologics / bio-therapeutics and vaccine segment.
 Company has transformed into a formidable CDMO player with niche capabilities, backed by an onshore
setup. PPL’s leadership in key products within the high-entry-barrier CHG segment, aided by backward
integration, also lends comfort.

Kotak Securities – Private Client Group Please see the Disclosure/Disclaimer on the last page For Private Circulation 3
APRIL 01, 2025

SBI Cards & Payment Services Ltd.

 SBI Cards is a subsidiary of State Bank of India (SBI), one of the largest banks in India.

 It is the second-largest credit card issuer in India, with a customer base exceeding 2 crore active cards. As
the country’s largest pure-play credit card company, it holds an 18.7% market share in terms of cards in
circulation.
 It provides a diverse range of credit cards tailored to different customer needs, including shopping, travel, fuel,
lifestyle, and business segments. It has co-branded partnerships with leading brands such as IRCTC, BPCL,
Air India, & Ola.
 In Q3FY25, 11.75 lakh new accounts were acquired, reflecting 7% yoy growth. Retail spending remained strong
at Rs.80,792 crore, marking a 10% yoy increase. Additionally, asset quality is improving, with a shift towards
higher credit bureau scores.
 We remain optimistic about the payments industry, particularly the credit card segment, and view SBI Cards
as a key player with strong growth potential, making it an attractive stock.

Shriram Finance Ltd.

 Shriram Finance is one of India’s leading NBFCs, specializing in vehicle finance, MSME loans, and retail
lending, catering primarily to underserved segments.
 The company has a well-diversified loan book, with a strong presence in commercial vehicle financing,
ensuring stable growth despite economic fluctuations.
 Asset quality trends have remained resilient, with controlled credit costs and strong risk management
practices, reflecting its robust underwriting capabilities.
 Expected rate cuts will reduce the cost of funds, benefiting margins and profitability, while improving liquidity
in the system will further support business expansion.
 Strong profitability, healthy capital adequacy, and consistent earnings growth reinforce confidence in Shriram
Finance’s ability to sustain its premium positioning in the sector.
 Valuations remain attractive, making it an appealing investment within the NBFC sector, especially given its
strong business fundamentals.

Union Bank of India.

 Union Bank has a well-diversified loan book across retail, agriculture, MSME, and corporate segments, driving
steady loan growth of 12% YoY, positioning it for sustained expansion.
 The bank’s valuations remain attractive at 0.7x FY26E ABV, offering a strong investment case as asset quality
trends continue to improve and earnings visibility strengthens.x
 Asset quality has shown significant improvement, with GNPA reducing to 3.85% and NNPA at 0.82% in
Q3FY25, supported by strong underwriting practices and better recoveries, reinforcing long-term stability.
 Despite short-term margin pressures, the bank is focusing on optimizing its funding mix and maintaining
operational efficiency, with a stable cost-to-income ratio of 46%, ensuring profitability.
 Improving liquidity conditions in the financial system will support credit demand and business growth,
allowing Union Bank to capitalize on long-term opportunities in the sector.

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APRIL 01, 2025

RATING SCALE (PRIVATE CLIENT GROUP)

Definitions of ratings
BUY – We expect the stock to deliver more than 15% returns over the next 12 months
ADD – We expect the stock to deliver 5% - 15% returns over the next 12 months
REDUCE – We expect the stock to deliver -5% - +5% returns over the next 12 months
SELL – We expect the stock to deliver < -5% returns over the next 12 months
NR – Not Rated. Kotak Securities is not assigning any rating or price target to the stock.
The report has been prepared for information purposes only.
SUBSCRIBE – We advise investor to subscribe to the IPO.
RS – Rating Suspended. Kotak Securities has suspended the investment rating and price target
for this stock, either because there is not a sufficient fundamental basis for determining, or
there are legal, regulatory or policy constraints around publishing, an investment rating or
target. The previous investment rating and price target, if any, are no longer in effect for this
stock and should not be relied upon.
NA – Not Available or Not Applicable. The information is not available for display or is not
applicable
NM – Not Meaningful. The information is not meaningful and is therefore excluded.
NOTE – Our target prices are with a 12-month perspective. Returns stated in the rating scale are our
internal benchmark.
FUNDAMENTAL RESEARCH TEAM (PRIVATE CLIENT GROUP)
Shrikant Chouhan Arun Agarwal Amit Agarwal, CFA
Head of Research Auto & Auto Ancillary, Building Material, Transportation, Paints, FMCG
shrikant.chouhan@kotak.com Cement, Consumer Durable agarwal.amit@kotak.com
+91 22 6218 5408 arun.agarwal@kotak.com +91 22 6218 6439
+91 22 6218 6443

Rini Mehta Sumit Pokharna K. Kathirvelu

Research Analyst Oil and Gas, Information Tech Support Executive
rini.mehta@kotak.com sumit.pokharna@kotak.com k.kathirvelu@kotak.com
+91 22 6218 6433 +91 22 6218 6438 +91 22 6218 6427

Pankaj Kumar Amarjeet Maurya Shasvat Shah Veer Trivedi

Construction, Capital Goods & Midcaps Internet Software & Services Research Associate BFSI
pankajr.kumar@kotak.com amarjeet.maurya@kotak.com shasvat.shah@kotak.com veer.trivedi@kotak.com
+91 22 6218 6434 +91 22 6218 6427 +91 22 6218 6440 +91 22 6218 6432

TECHNICAL RESEARCH TEAM (PRIVATE CLIENT GROUP)

Shrikant Chouhan Amol Athawale Sayed Haider
shrikant.chouhan@kotak.com amol.athawale@kotak.com sayed.haider@kotak.com
+91 22 6218 5408 +91 20 6620 3350 +91 22 62185458

DERIVATIVES RESEARCH TEAM (PRIVATE CLIENT GROUP)

Sahaj Agrawal Prashanth Lalu Prasenjit Biswas, CMT, CFTe Karan Kulkarni
sahaj.agrawal@kotak.com prashanth.lalu@kotak.com prasenjit.biswas@kotak.com karan.kulkarni@kotak.com
+91 79 66041701 +91 80 61563691 +91 33 66337301/ 66388300 +91 20 66203350

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APRIL 01, 2025

Disclosure/Disclaimer
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Adani Ports and Special Economic Zone, Cummins India, ICICI Bank, Indian Hotels, Mahindra & Mahindra, SBI Cards and Payment Services, Shriram Finance, Union
Bank of India - Yes
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APRIL 01, 2025

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