The Indian stock market is currently navigating a challenging landscape as it faces a downward trend entering 2025. Amid this turbulence, Kotak Institutional Equities has issued a ‘Sell’ recommendation on three specific stocks, indicating cautious sentiment in the investment community.

IndusInd Bank: A Serious Setback

IndusInd Bank, ranked as India’s fifth-largest lender, is experiencing severe difficulties that have taken a toll on its share price. Recently, the Reserve Bank of India (RBI) approved a one-year extension for the CEO instead of the anticipated three years. Compounding these issues, the bank disclosed inconsistencies within its derivatives portfolio, wiping out gains from the third quarter of FY25. As a result, the stock plummeted over 27% in just one day. Kotak commented, "Restoring lost trust will require more than a few quarters," leading them to downgrade the stock from ‘Buy’ to ‘Reduce.’ The target price has been slashed by 40%, dropping from Rs 1,400 to Rs 850.

JSW Energy: A Cautious Outlook

JSW Energy recently finalized the acquisition of a 74% stake in KSK Mahanadi, with an enterprise value of Rs 16,100 crore. While this move allows the company to elevate its capacity targets to 28 GW by FY2030, Kotak Institutional Equities believes it may restrict future borrowing capabilities. The brokerage maintained a ‘Sell’ rating on the stock, slightly adjusting the target price from Rs 370 to Rs 385. Despite a decrease in valuations, Kotak highlighted that 2.9X P/B and 23X P/E (FY2026E) ratios remain elevated, not fully accounting for risks associated with execution delays.

NMDC: Facing Multiple Challenges

Kotak Institutional Equities has expressed concerns regarding NMDC, forecasting that its earnings might peak in FY25 before entering a decline. The anticipated drop in iron ore prices, coupled with growing market surplus and increased supply pressure in India from merchant iron ore mines, poses significant challenges. Furthermore, potential taxation changes in Karnataka could adversely impact NMDC’s earnings. The brokerage firm maintains a ‘Sell’ rating on NMDC, setting a target price of Rs 55 due to the dilutive nature of the company’s future expansion plans.

Conclusion

These stock evaluations from Kotak Institutional Equities signal a cautious approach as the Indian equity markets navigate through turbulent waters. Investors should remain vigilant and consider these insights when making informed decisions.