TVS Motor, PNB Housing, Radico Khaitan, JSPL, among 14 stocks with potential to double in three years: DAM Capital

TVS Motor Company, PNB Housing Finance, M&M Financial Services and Radico Khaitan are among 14 stocks that have the potential to give multibagger returns and double in three years, according to DAM Capital.

The brokerage firm has shortlisted stocks that it believes have upside and meet the profit after tax (PAT) CAGR required to double in three years. DAM Capital said its analysts used their judgement to select high-conviction ideas across market capitalisation after adjusting for any re/ de-rating.

The list of DAM Capital’s ‘Doubler Stocks’ – stocks that it expects to double in three years- include Glenmark Pharmaceuticals, Sharda Cropchem, Strides Arcolab, Entero Healthcare Solutions, Greenlam Industries, Radico Khaitan, Cholamandalam Investment and Finance Company, Ramkrishna Forgings, PCBL, Jindal Steel & Power, Home First Finance Company, M&M Financial Services, TVS Motor Ltd and PNB Housing, PCBL and Jindal Steel & Power are some other stocks seen doubling over the next three years.

Cholamandalam Investment and Finance Company

DAM Capital expects Cholamandalam Investment’s AUM to grow in the range of ~25-28% while maintaining healthy RoEs of ~20-22% over FY25-FY27E. It expects ~35%+ earnings CAGR over FY25-FY27E.

Entero Healthcare Solutions

Entero Healthcare Solutions is estimated to achieve 2x its revenue between FY24E and FY27E,

driven by a strong deal pipeline with EBITDA/PAT set to reach 4x/6x backed by procurement efficiencies, entry into higher margin adjacencies and operating leverage. Ex-Cash ROCEs are expected to inch up to ~15% with long-term ROCEs of 25%+ as M&A pace drops, said the brokerage firm.

Glenmark Pharmaceuticals

DAM Capital believes Glenmark Pharma has decisively corrected its leverage issues with the ₹5,650 crore Glenmark Life Sciences stake divestment. It expects the company to begin generating meaningful FCF from FY26E, with limited capex spends and improved OCF generation.

“Additionally, recently, Glenmark’s R&D subsidiary, IGI, has shared very promising initial data for its investigational oncology drug ISB 2001. In our view, this creates significant possibility of out-licensing of ISB 2001 over the next few quarters – could be a value unlocking event for the stock if this comes through,” DAM Capital said.

Greenlam Industries

Greenlam Industries’ new capacity ramp-up and subsequent debt reduction should drive ~3x EPS CAGR over FY25E-27E, although near-term margins/RoCE are expected to remain under pressure. Quicker ramp-up of Ply/PB units should drive a re-rating (or at least help hold on to premium multiples), said the brokerage.

Home First Finance Company

Home First Finance Company has reported a consistent improvement in efficiency ratios, such as AUM per employee and AUM per branch, over the last few years. Augmenting leverage RoAs is expected to moderate to 3.3%, while RoEs to inch-up to 19% by FY27E. The company has created a niche for itself in the affordable space through its differentiated operating model, DAM Capital said.

The brokerage firm expects higher steel spreads in FY26 and FY27, while the near term (2HFY25) might see a gradual improvement. China steel spreads are currently at a cyclical trough, and it anticipates medium-term recovery. Government measures, such as stimulus packages and fiscal spending, could accelerate this improvement.

Mahindra & Mahindra Financial

DAM Capital expects the company’s business assets to grow at ~20% for the next three years. Brighter outlook of its OEM, which constitutes ~43% of the vehicle financed by M&M Financial Services, adds comfort to its growth estimates.

M&M Financial’s asset quality has seen a considerable improvement, from peak overall stress of ~35% at the end of Q1 FY22 to ~10.3% in Q2FY25. As we enter a normalised macro, it will result in lower LGDs (loss given default) requiring lower provisions (even with same level of stress) and hence the credit cost. Taking into consideration the above, we expect the earnings to grow ~27% over FY25-27E with an uptick in RoAs to ~2%, DAM Capital said.

PCBL

The brokerage firm anticipates PCBL to generate ₹9,500-10,000 crore over the next five years, with cash flows increasing annually due to higher capacity and sales volumes. This cash will support growth initiatives and debt reduction, it said.

PNB Housing Finance

PNB Housing Finance is expected to clock ~17-18% growth CAGR with RoAs of ~2.3-2.5% over FY25-FY27E. The brokerage firm believes that the PNB Housing Finance stock is currently trading at an attractive valuation of ~1x. With visible improvement in the company’s performance, it expects the multiple to re-rate to ~1.5x-1.6x on sustained execution.

Radico Khaitan

DAM Capital expects 368 bps improvement in EBITDA margin over FY24-27E for Radico Khaitan, driven by stabilising raw material inflation, improving contribution of P&A segment and higher operating efficiencies. PAT is expected to grow at ~34% CAGR over FY24-27E. Improving operating cash flows, stable working capital and no significant capex requirements will aid the company turn net cash positive by FY27E.

Ramkrishna Forgings

The brokerage house believes that the new product launches, expansion into new product segments with castings, and a healthy pipeline in both existing CV markets and potential markets such as EV and passenger vehicles (PV), coupled with market share gains, would drive a double-digit volume growth over the next 2-3 years for Ramkrishna Forgings.

Sharda Cropchem

This asset light business model based on cost competitive Chinese sourcing, combined with significant investments in global registrations and distribution, has created a long growth runway and should reflect in a strong profitability growth over FY24- 27E (~EBITDA CAGR of 68%), DAM Capital said.

Strides Pharma Sciences

DAM Capital estimates Strides Pharma Science’ base business (ex-soft gel) to deliver revenue/ EBITDA CAGR of 13%/ 24% between FY24 and FY27E, and ROE/ adj. ROCE to increase to 18%/ 21% from 11/ 13% with potential for further upgrades driven by new launches. The steady scale-up in OCF, combined with limited organic capex requirements, will lead to meaningful free cash flow generation (expect FCF of ₹1,540 crore exSoft Gel between FY25E and FY27E).

Over this period, it expects the company’s net debt position to improve from ~ ₹2,200 crore in FY24 to ₹1,050 crore in FY27E, after accounting for the ₹2,800 crore pushdown to OneSource as part of the Soft Gel business.

TVS Motor Company

TVS Motor Company’s strong product portfolio and enhanced brand equity are expected to drive market share gains which, combined with the trend of premiumisation, would lead to robust outperformance in the domestic markets. Given the higher contribution from the 125cc+ segment, increased exports and improved average selling price (ASP), we believe that EBITDA margins would expand by >100 bps from current levels over the next two years, which would be a key trigger for a re-rating of the stock, DAM Capital said.

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.