Top Stocks to Watch: Bajaj Finance, Nykaa, and Varun Beverages

As market volatility persists, major global brokerages have identified several key stocks with significant growth potential based on recent management interactions and strategic shifts. From fintech resilience to expansion in the beverage and beauty sectors, these companies are positioning themselves for long-term value creation.

Bajaj Finance: Strong Growth and Asset Quality

JP Morgan has issued an 'overweight' rating on Bajaj Finance, setting a target price of Rs 1,080. Following a recent management meet, analysts highlighted three critical pillars of strength for the NBFC. First, despite global macroeconomic headwinds like rising oil prices and supply chain disruptions, the company’s ground-level growth momentum remains robust.

Second, asset quality continues to show stability. Bounce rates and collection efficiencies remain benign across all loan segments, showing no adverse impact from geopolitical tensions in West Asia. Finally, regarding Net Interest Margins (NIMs), management is confident in its guidance of a 10–12 basis points decline by FY27, even amidst tight liquidity. Analysts project a 26% earnings Compound Annual Growth Rate (CAGR) over FY26–FY28, driven by AI-led operating cost leverage and declining credit costs.

Varun Beverages: Strategic Expansion via Asahi Partnership

CLSA has assigned a 'high conviction outperform' rating to Varun Beverages (VBL), with a target price of Rs 654. This optimism follows a strategic partnership with Japan’s Asahi Group Holdings to introduce the CALPIS brand to India. CALPIS is a century-old, fermented milk-based beverage.

Under this alliance, Asahi will handle product development and technical support, while VBL leverages its massive manufacturing and cold-chain distribution network to manage marketing and brand operations in India. This move allows VBL to enter the premium fermented dairy-based ready-to-drink (RTD) segment, effectively diversifying its portfolio beyond carbonated drinks.

Nykaa: Aggressive FY30 Revenue Guidance

Nomura has issued a 'buy' rating on Nykaa with a target price of Rs 317, following insights from the company's investor day. Nykaa has laid out an ambitious roadmap for FY30, aiming to grow its revenue by 2.5x to 3x.

Furthermore, the company expects to expand its EBITDA margins to the early-to-mid teens by the end of the decade. Nykaa is strategically positioned to capture a larger share of premium lifestyle spending as consumer preferences shift toward discovery-led, new-age brands, utilizing its content ecosystem and owned brands to maintain a competitive edge.

Jubilant Foodworks: Recovering Margins and Store Refurbishment

Citigroup maintains a 'buy' rating on Jubilant Foodworks with a target price of Rs 650. Analysts noted that while the Jan-March quarter saw some deceleration, it was due to high base effects and lower free-delivery thresholds rather than a fundamental drop in demand.

Management is focusing on a 200bps standalone margin expansion between FY24 and FY28, offsetting cost inflation through pricing and product mix actions. To bolster the dine-in experience, the company is currently refurbishing 400–500 Domino’s Dine-In/Take-Away (DITA) heavy stores. Additionally, the Popeyes brand is showing improved economics as it moves toward a disciplined scale-up.

Key Takeaways

  • Bajaj Finance is projected to achieve a 26% earnings CAGR (FY26-FY28) supported by strong asset quality and AI-driven cost efficiencies.
  • Varun Beverages is diversifying its portfolio into the premium fermented dairy segment through a strategic partnership with Japan's Asahi Group.
  • Nykaa has set aggressive long-term targets, aiming for a 2.5x to 3x revenue increase and mid-teen EBITDA margins by FY30.