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Focus Investment Ideas

State Bank of India

• State Bank of India combines scale with a granular retail-led franchise, supported by a 23% deposit market share, strong digital penetration through YONO, and improving corporate credit traction. Conservative underwriting, low borrower concentration, healthy capital buffers, and disciplined liability management underpin earnings resilience.

• FY26 reflected broad-based balance-sheet expansion, with loan growth of 17% led by retail, SME, and renewed corporate demand across renewables, data centres, metals, and infrastructure. Asset quality strengthened through low slippages and recoveries, while margin pressure stemmed primarily from rate transmission during the fiscal year.

• We expect credit growth to remain supported by a strong pipeline and favourable creditdeposit positioning, with the loan book projected to deliver a 13.6% CAGR over FY26-28. We project stable asset quality, controlled credit costs, and an 8% earnings CAGR.

Tata Steel

Key Rationales

• Tata Steel’s medium-term earnings profile is increasingly anchored around India-led capacity expansion, downstream mix improvement, and ongoing cost reduction initiatives rather than purely cyclical steel spreads. The Kalinganagar ramp-up, Ludhiana scrap-based EAF commissioning, and focus on higher downstream penetration should support realizations and profitability.

• 4QFY26 performance was broadly in line operationally, supported by stronger domestic deliveries and a sharp recovery in realizations following safeguard-led steel price improvement. Europe returned to marginal EBITDA profitability during the quarter, though transition-related disruptions in the Netherlands continued to weigh on utilization and earnings normalization.

• Management has guided for 2mt incremental volumes in FY27, driven primarily by India operations and ongoing ramp-up initiatives. We expect consolidated EBITDA and adjusted PAT to deliver ~17% and ~33% CAGR, respectively, over FY26–FY28, supported by downstream expansion, ongoing cost restructuring, and improving European profitability. "

Cummins India

Key Rationales

• Cummins (KKC) delivered a strong FY26 performance, with powergen revenue growing 24% and distribution revenue rising 22%. Data centers emerged as a key growth driver, contributing 30- 35% of powergen revenue, highlighting the company's strong positioning in a rapidly expanding market.

• Growth is expected to be supported by increasing data center investments, demand from manufacturing and commercial sectors, strong traction for the QSK60 platform, and higher contribution from aftermarket and service offerings within the distribution business. KKC is also investing in capacity upgrades and is currently operating at ~70% utilization, providing room to support future growth.

• Supported by a favorable mix of high-margin businesses, pricing flexibility, and strong demand momentum, we raise our FY27/FY28 estimates by 4%/7%. We expect KKC to deliver revenue, EBITDA, and PAT CAGR of 18%, 20%, and 21%, respectively, over FY26–28.

Groww

Key Rationales

• Groww continues to strengthen its position in the retail investing ecosystem through rising market share across equities, derivatives and margin funding. The company’s expanding product suite, including credit and asset management, supports long-term diversification beyond core broking revenues.

• The investment thesis remains anchored on Groww’s ability to monetize its large and growing user base through higher engagement and cross-selling opportunities. Increasing adoption of products such as MTF, lending and AMC offerings could drive stronger revenue mix diversification and improve earnings visibility over the medium term.

• Groww’s revenue/PAT to grow at a CAGR of ~20%/~26% over FY26-28, supported by rising monetization across broking, MTF, lending and AMC businesses. The brokerage estimates ROE expansion from ~29% in FY26 to ~33% by FY28, reflecting improving operating leverage.

Mankind Pharma

Key Rationales

• Mankind Pharma is well placed to outperform the domestic pharmaceutical market, driven by strong momentum in chronic therapies, continued market-share gains in key segments and scaling of the Bharat Serums & Vaccines portfolio, supporting sustained growth and profitability.

• Q4FY26 revenue grew 11.8% YoY to INR34.4bn, while EBITDA margin expanded 400bp YoY to 27.0%. Profitability exceeded expectations, aided by lower operating expenses, favorable product mix and robust domestic formulations growth.

• We expect Revenue, EBITDA and PAT CAGR of 16%, 19% and 20%, respectively, over FY26- 28. Growth should be supported by chronic portfolio expansion, BSV integration synergies, specialty business scaling and continued margin improvement.

Lenskart Solutions

Key Rationales

• Lenskart has built a differentiated omnichannel eyewear platform through vertically integrated manufacturing, supply-chain automation, technology-led customer acquisition, and a multi-brand portfolio across mass and premium categories. Expanding organized penetration, improving operating leverage, disciplined working-capital management, and low leverage support scalable profitability and earnings visibility.

• Lenskart delivered a strong 4QFY26 driven by operating leverage, premiumization-led ASP expansion, and sustained volume momentum. Consolidated revenue grew 41% YoY, while EBITDA doubled with ~380bp margin expansion.

• We expect growth momentum to remain supported by accelerated store additions, deeper Tier-2 penetration, AI-led operating transformation, and supply-chain localization initiatives. Margins are expected to improve through sourcing efficiencies and operating leverage, while revenue, EBITDA, and PAT are projected to deliver 25%/42%/44% CAGR over FY26-28E."

Waaree Energies

Key Rationales

• Waaree is aggressively building an integrated clean energy ecosystem under its “Waaree 2.0” strategy, with planned capacities of 28GW modules, 15GW cells, 10GW ingot-wafer, and 20GWh BESS by 2028–30. Management believes backward integration, technology transition, and supply chain control will be key differentiators amid global pricing volatility and industry overcapacity.

• India’s renewable energy opportunity remains structurally strong, with installed solar capacity expected to rise from ~150GW currently to ~400GW over the next 7 years, while battery storage demand is projected to expand from ~1GWh currently to over 200GWh.

• Management has outlined an ambitious roadmap to scale revenue nearly 4x to INR1 trillion by 2030, supported by strong visibility across utility, C&I, rooftop solar, KUSUM, BESS, and manufacturing integration businesses. Company also plans to maintain debt-to-equity below 1x while targeting ~20% EBITDA margins

Fortis Healthcare

Key Rationales

• Fortis has completed a multi-year turnaround under IHH Healthcare, from loss-making entity in FY18 to generating ?10.8b in PAT by FY26, transitioning into a professionally managed platform with stronger governance & cleaner balance sheet. Its capital-efficient brownfield expansion model supports scalable growth while limiting leverage & enhancing return ratios.

• Hospitals remain the key earnings driver, supported by rising occupancy, richer specialty mix and 3,200+ planned bed additions by FY30. Higher-acuity treatments are lifting realizations and margins, while newer facilities provide upside as capacity utilization improves steadily.

• Diagnostics recovery adds incremental upside as Agilus transition issues are largely behind and will benefits from better realizations, improved test mix and hospital referrals. We expect revenue/EBITDA/PAT CAGR of ~15%/17%/22% over FY26-28E.

Delhivery

Key Rationales

• Delhivery continues to strengthen its competitive positioning through network consolidation, asset optimization, and expansion into new logistics verticals like same-day fulfillment and intra-city delivery. The Ecom Express acquisition enhances scale, automation capabilities, and route efficiency, while management remains focused on sustaining profitability-led growth across transportation businesses.

• It reported 30% YoY revenue growth in 4QFY26, driven by strong traction in Express Parcel and PTL segments. EBITDA rose 80% YoY with margins expanding 210bp to 7.5%, supported by robust shipment growth, operating leverage, and better route optimization.

• Management expects 15-20% annual volume growth across core segments, with steady-state service EBITDA margins of 16-18% over the next two years. New offerings like Delhivery Direct, Rapid, and international parcel services provide incremental growth avenues. We expect FY26- 28 revenue/EBITDA CAGR of 13%/33%.

Shaily Engineering

Key Rationales

• Shaily Engineering Plastics has built nearly four decades of expertise in precision plastics manufacturing, serving global leaders across healthcare, consumer, personal care, appliances, automotive, and lighting industries. Its strong innovation capabilities and diversified customer base include IKEA, Unilever, Gillette, P&G, GE, and Garrett.

• SHEP’s healthcare business is witnessing strong momentum from rising GLP-1 and insulin pen demand after semaglutide patent expiries in key emerging markets. Backed by robust order visibility and sole-supplier engagements, the company plans a fivefold expansion in pen manufacturing capacity to over 150 million units by FY28.

• We expect the strong growth momentum to continue, supported by volume commitments from key Healthcare customers. We expect SHEP to clock 29%/38%/43% CAGR in revenue/EBITDA/PAT over FY26-28, with EBITDA margin sustaining at 32%+. We expect its RoE/RoCE to expand to ~28%/36% in FY28E.