JM Financial’s Top Stock Picks: Key Opportunities for Long-Term Investors

In the rapidly evolving landscape of finance and technology, JM Financial has spotlighted three standout stocks that offer promising long-term prospects. From the realms of digital connectivity to hyperlocal delivery services, these selections reflect the brokerage’s confidence in robust growth narratives. Let’s delve into why Tata Communications, Swiggy, and 360 ONE WAM are capturing attention in the investment community.

Tata Communications: A Strong Buy at Rs 2,000

JM Financial has reaffirmed its Buy recommendation for Tata Communications, setting an ambitious price target of Rs 2,000 per share. The firm evaluates the company at 11 times EV/EBITDA for FY27, slightly above its five-year average of 10.4 times. This optimistic outlook is driven by an expected 24% compound annual growth rate (CAGR) in EBITDA from FY25 to FY28.

• Q4 Performance: The company reported consolidated revenues of Rs 5,990 crore, surpassing expectations, largely due to solid core connectivity results.
• EBITDA Trends: Despite a slight miss in EBITDA due to one-off costs, JM Financial believes this is a temporary setback. The management anticipates EBITDA margins will rise from the current 20% to between 23-25% by FY27.

In the firm’s analysis, they stated, “We uphold our BUY rating on TCOM, anticipating robust growth in the digital sector driven by cloud, AI, and IoT megatrends.” However, they caution that global economic slowdowns could impact tech spending and delay profitability in the digital space. Yet, long-term investors may find substantial value as synergies from acquisitions begin to materialize.

Swiggy: Long-Term Investment Potential at Rs 500

Swiggy also earns a Buy rating from JM Financial, with a target price of Rs 500 based on a sum-of-the-parts (SOTP) valuation approach.

• Market Conditions: The stock may face fluctuations due to the impending expiration of lock-in periods on May 12, which could provide savvy investors with a timely opportunity to enter the market. Approximately 83% of the shares remain locked, suggesting that even a 15% release could flood the market with shares worth around Rs 12,000 crore.

JM Financial highlighted, “We assess the food delivery segment at 45 times FY27E Adj. EBITDA, while Instamart is valued at 1 times GOV FY27E.”

For those with confidence in India’s burgeoning hyperlocal delivery market, JM Financial suggests leveraging these liquidity events to significantly increase holdings in Swiggy.

360 ONE WAM: Target Increased to Rs 1,180

The outlook for 360 ONE WAM remains optimistic as JM Financial raises its target price from Rs 1,050 to Rs 1,180, maintaining a Buy stance. The company’s stock is now valued at a blended 30 times FY27 projected EPS of Rs 39.

• Operational Highlights: The latest quarter showcased steady performance, with operating profit before tax (PBT) increasing by 16.5% year-on-year and 11% quarter-on-quarter, reaching Rs 320 crore.
• Cost Management: The firm has effectively controlled costs and enhanced operational efficiencies.

A notable point for JM Financial is the consolidation of ET Money’s Rs 33,100 crore in assets under management, boosting total AUM to Rs 5.8 lakh crore. The anticipated acquisitions, including B&K Securities and UBS, are expected to bolster 360 ONE’s international reach, particularly among global Indian clients.

The firm noted, “Although we anticipate a slight 0.7% reduction in FY27 EPS due to dilution from the UBS transaction, we believe this will fortify the platform in the medium term.”

Conclusion

These three stocks reflect JM Financial’s strategic insights into sectors poised for growth. With robust fundamentals and long-term narratives, Tata Communications, Swiggy, and 360 ONE WAM present compelling opportunities for investors looking to navigate the dynamic market landscape.