Stocks to Buy: CLSA expects Indian equities to deliver around 16% upside by December 2026, arguing that the market is emerging from a long adjustment phase and is now building a more stable profitability base for the coming years.
According to the brokerage, the past 14 months have been defined by a reset in expectations: GDP growth assumptions were revised lower, earnings-per-share projections moderated from elevated levels, and the currency weakened. Despite this reset, CLSA said the market has now reached a point where profitability appears more predictable, supported by an improving tolerance for foreign fund outflows and a transition away from peak equity supply.
The brokerage, however, highlighted an interesting trend in foreign investor behaviour. It said India is currently benefiting from being perceived as a safe haven in a global environment dominated by artificial intelligence–driven market sentiment, rather than solely on domestic fundamentals. CLSA’s exposure to Indian equities is lower today compared with the start of the year, but its regression models still indicate a potential 16% rally by end-2026.
The brokerage believes the heavy equity supply that marked 2025—amid record IPOs and secondary placements—has likely peaked, easing liquidity pressures going forward. It added that India’s valuation premium has moderated. The country’s forward price-to-earnings multiple now trades at a lower premium to emerging markets, while the price-to-book ratio is cheaper than Taiwan.
CLSA’s 13 High-Conviction Picks
In its latest research note, CLSA identified 13 stocks that could deliver up to 58% returns over the next 12 months. Describing these as its “high-conviction Tiger picks,” the brokerage said these companies represent the ideas its analysts are most confident about.
The list includes:
Eternal, NHPC, Apollo Tyres, Avenue Supermarts (DMart), Indus Towers, ONGC, Persistent Systems, DLF, Power Finance Corporation (PFC), REC, Tech Mahindra, UltraTech Cement, and Varun Beverages.
CLSA noted that while some of these stocks trade at elevated valuations, they are backed by equally strong growth trajectories.
On Eternal, CLSA said: “With a healthy dose of innovation, ambition and risk taking, Eternal is transforming consumption… We maintain our HC O-PF recommendation and lift target price from ₹450 to ₹483.” The brokerage expects Eternal’s EPS to rise 103% in FY26, 405% in FY27 and 95% in FY28, supported by rapid scale-up and category expansion.
NHPC: A Decadal Growth Story
For NHPC, CLSA reiterated its high-conviction stance, highlighting its dominant 15% share of India’s hydro capacity and 50% share in projects under construction. Analyst Bharat Parekh expects strong EPS expansion over FY25–27, supported by a surge in renewable energy execution. CLSA also forecasts 69% EPS growth and a 419-basis-point ROE improvement through FY27.
The brokerage said: “We believe the award of India’s largest hydro project in 3QFY26 and seven more projects over FY25–27 should crystallise NHPC’s estimated 2.6x decadal growth in REE.”
Other Stocks
Apollo Tyres: Target raised to ₹650 from ₹586, supported by a 61–63 basis point improvement in FY26–27 EBITDA margins due to softer raw material prices.
DMart: CLSA said DMart continues to embody “everyday low value,” while DMart Ready enhances its appeal to wealthier customers seeking better convenience without losing affordability.
DLF: Seen as a long-term beneficiary of India’s urbanisation cycle, offering exposure to rising demand for residential and mixed-use projects.
CLSA believes that a combination of stabilising valuations, easing supply pressures, and stock-specific earnings strength positions India for a constructive medium-term setup heading into 2026.
CLSA High Conviction Stock Picks
| Stock | Rating | Target (Rs) | Upside (%) |
|---|---|---|---|
| Apollo Tyre | HC O-PF | 586.00 | 13.7 |
| DLF | HC O-PF | 1,025.00 | 34.9 |
| DMart | HC O-PF | 6,300.00 | 57.1 |
| Eternal | HC O-PF | 450.00 | 0.4 |
| Indus Towers | HC O-PF | 520.00 | 29.7 |
| NHPC | HC O-PF | 117.00 | 40.6 |
| ONGC | HC O-PF | 320.00 | 27 |
| Persistent Systems | HC O-PF | 8,270.00 | 43.1 |
| Power Finance | HC O-PF | 495.00 | 22.7 |
| REC Ltd | HC O-PF | 500.00 | 22.1 |
| Tech Mahindra | HC O-PF | 1,695.00 | 32.7 |
| UltraTech Cement | HC O-PF | 14,500.00 | 22.4 |
| Varun Beverages | HC O-PF | 744.00 | 58.2 |
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
