HDFC Bank, Adani Ports to IndiGo— Goldman Sachs says these 10 stocks can offer up to 45% returns in 12 months

While the Indian economy undergoes a cyclical slowdown and the stock market has corrected 10 per cent from its peak, global financial major Goldman Sachs has highlighted 10 stocks with strong sectoral tailwinds that have the potential to deliver robust returns over the next 12 months. These stocks, with an upside potential of up to 45 per cent, offer a 23 per cent upside on average due to either positive catalysts or healthy earnings per share (EPS) growth momentum.

"We highlight ten stocks (that offer 23 per cent upside on average), namely HDFC Bank, AU Small Finance, M&M, MakeMy Trip, IndiGo, Adani Ports, Power Grid, Apollo Hospitals, Titan and Godrej Consumer Products. These names have strong tailwinds within their respective sectors and have the potential to deliver strong returns over the next 12 months due to either positive catalysts or healthy EPS growth momentum," said Goldman Sachs.

"According to Goldman Sachs estimates, these companies are expected to deliver average earnings growth of 25 per cent and ROEs (return on equities) of 24 per cent on average over 25-27E," said the financial firm.

Goldman Sachs believes India's slowdown in growth is cyclical rather than structural, and the worst is likely behind in terms of economic growth and earnings trajectory.

"Our macro team believes the growth slowdown is cyclical rather than structural and largely reflects policy tightness — the lagged effects of credit regulation in late 2023, cautious monetary policy and (until recently) tight liquidity amidst forex outflows, and most importantly fiscal tightening," said the financial firm.

Goldman Sachs is of the view that recent policy easing measures, such as income tax relief in the Union Budget and policy rate cuts by the RBI, may help revive real GDP growth later in the year, with its economists expecting 6.4 per cent growth in the second half of calendar year 2025.

"Our strategy team also believes that the worst is likely behind us in terms of economic growth and earnings trajectory, and prices have corrected meaningfully; they see higher market volatility in the near term given still elevated domestic positioning in small and mid-caps and ongoing global uncertainty from tariffs. Consequently, they remain 'marketweight' in India within an emerging market context, and they recommend focusing on quality growth and earnings visibility," Goldman Sachs said.

Top stock picks

HDFC Bank | Target price: ₹2,090

Goldman Sachs believes that HDFC Bank is best positioned to benefit from RBI's liquidity measures. It expects a pick-up in loan growth as loan-to-deposit ratio consolidation is behind. Goldman sees a healthy earnings growth at 15 per cent CAGR over FY25-27E.

AU Small Finance | Target price: ₹796

Goldman Sachs highlighted that a healthy return outlook, better growth outlook versus the industry, healthy asset quality in the core portfolio, and a strong focus on growing its deposit franchise are some of the key positives about the stock.

Titan | Target price: ₹3,900

"We do not see any further downside to margins for Titan, as the company has taken the necessary actions like lowering premium on gold prices compared to competitors and also re-engineering studded jewellery designs," said Goldman Sachs.

"We expect Titan’s EBIT growth to largely track revenue growth over FY25-27E, which would mark an acceleration. We expect Titan’s standalone EBIT margin to grow at 18 per cent CAGR over FY25-27E, compared to 6.2 per cent CAGR over FY23-25," the brokerage firm added.

Godrej Consumer Products (GCPL) | Target price: ₹1,370

Goldman Sachs said it expects GCPL to have one of the strongest volume and EBITDA growth within its India consumer coverage over FY25-27 driven by 1) turnaround in HI from the new, improved formulation, 2) sustained high growth in air care/fabric care, and 3) recovery in EBITDA margins as price hikes in soaps play out.

Adani Ports | Target price: ₹1,400

"The stock is currently trading at 12.6 times FY27E EV/EBITDA — which is close to -1std dev of its long-term median. With FY26 growth outlook for the company looking better than FY25, coupled with reasonable valuations, we think risk-reward is attractive," said Goldman Sachs.

IndiGo | Target price: ₹5,050

Goldman believes IndiGo is one of the best-positioned airlines globally and poised to grow EBITDAR at a 17 per cent CAGR between FY24 and FY27.

MakeMyTrip | Target price: $124

"We see limited reasons for multiples to correct in the near-term given strong growth outlook and a prevailing benign competitive environment; we view MMYT as a steady earnings compounding story, with limited earnings downside risks," said Goldman Sachs.

Mahindra & Mahindra | Target price: ₹3,800

Goldman pointed out that M&M automotive segment’s current implied P/E multiple at 19.4 times on Q5 - Q8 basis is at a similar level versus Maruti Suzuki for nearly 330bps faster volume growth visibility over the next 12-month period (FY26E).

"For superior volume growth visibility and cleaner exposure to the faster-growing SUV segment, we believe that M&M should trade at a premium multiple to peers in the Indian Automotive industry," said Goldman Sachs.

Apollo Hospitals | Target price: ₹8,025

"We continue to like Apollo Hospitals in the current environment as the company remains leveraged to stable and inelastic domestic demand. We believe a nearly 10 per cent correction on a year-to-date basis (versus just 3-5 per cent FY26/27 consensus EBITDA estimate cuts in the past six months) offers an attractive entry point," said Goldman Sachs.

Goldman underscored that the key positives about the stock are the continued ramp-up of occupancy, operating leverage benefits of 50-100bps at the existing hospitals, break-even at Apollo 24x7, and diagnostics offering a good value.

Power Grid | Target price: ₹375

"We continue to see Power Grid as the largest beneficiary of this trend given its strong balance sheet, low cost of debt, and superior execution capabilities, positioning it to capture a substantial share of upcoming transmission projects," said Goldman Sachs.

"We believe its strong annual free cash generation from the legacy cost plus asset base is adequate to fund nearly 30 per cent of India’s grid capex requirement in FY25-32E, without over-leveraging or reducing its current dividend payout," said the financial firm.

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Disclaimer: This story is for educational purposes only. It is based on a Goldman Sachs report available on public platforms. The views and recommendations above are those of the broking company, not Mint. We advise investors to check with certified experts before making any investment decisions.