JM Financial has recently issued a positive outlook on three specific stocks following their impressive quarterly earnings for the fourth quarter of FY25. This decision is shaped not only by their strong performance but also by promising guidance for FY26, which has influenced the revised price targets for these investments.
State Bank of India: A Solid Investment Choice
JM Financial has reaffirmed its ‘Buy’ rating for State Bank of India (SBI), with a revised target price set at Rs 960. In Q4FY25, SBI, recognized as the largest lender in the country, reported a net profit of Rs 18,600 crore, marking a 10% decline year-over-year. However, this profit was bolstered by unexpected treasury gains, aided by non-performing asset (NPA) transfers and robust recoveries from the written-off pool. The bank showcased a healthy loan growth rate of 12% year-on-year, contributing to a 3% increase in net interest income (NII). Notably, the asset quality remained stable, with gross and net slippage ratios holding steady at 43 bps and 26 bps, respectively. Despite these positive indicators, JM Financial cautions that margins could face challenges in the near future, as the repo-linked book is repricing quicker than deposits. According to JM Financial, “Profitability could remain strained in FY26 due to margin pressures, normalization of credit costs, and a rising cost-to-income ratio.”
Coforge: Strong Growth Prospects Ahead
The brokerage firm has also kept its ‘Buy’ recommendation for Coforge, raising the target price to Rs 10,000 from Rs 9,610. Following a strong quarterly performance, the management anticipates that EBIT margins could improve to 14% by the end of FY26, up from the current 13.2%. This growth trajectory is particularly encouraging, as it signals that profitability is not being compromised, especially in light of the lucrative Sabre deal. Additionally, revenue is projected to increase by 30% in constant currency terms for FY26. The company’s strong momentum is underscored by a record total contract value (TCV) of $2.1 billion, even when excluding the $1.56 billion Sabre contract, the TCV still shows a healthy $566 million with a book-to-bill ratio of 1.4x.
RR Kabel: A Reliable Performer
JM Financial has maintained a ‘Buy’ rating for RR Kabel, while slightly adjusting the target price to Rs 1,400 per share, down from Rs 1,450. The company enjoyed a 26% year-on-year revenue growth in Q4FY25, driven by strong demand in both domestic and export markets. The growth was broad-based, particularly within the wires and cables segment, which saw a 28% increase, alongside a 13% growth in the fast-moving electrical goods (FMEG) portfolio. RR Kabel’s strategy focuses on enhancing its cables business, boosting brand visibility, and investing in manufacturing capabilities. However, rising competitive pressures pose potential risks to the business’s continued growth.
Conclusion
The insights provided by JM Financial on these stocks paint a promising picture for investors. With solid earnings reports and strategic growth plans, these companies seem well-positioned for future success. As always, potential investors should consider market conditions and individual financial situations before making investment decisions.
