Top 7 Stocks to buy in month of january 2025 for better Return
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Dominant position to sustain in the healthcare sector
Apollo Hospitals Enterprises Ltd. is the market leader in the private healthcare segment in India. It operates the largest chain of healthcare facilities, with 51 hospitals (45 owned and six managed), a total capacity of 9,500 beds, and 22 daycare/cradle centres with 634 beds as of FY24. The operational facilities are spread across the country, with a significant presence in Tamil Nadu (26%), Andhra Pradesh and Telangana (16%) and the eastern region (23%). The company should sustain its leadership position over the medium term, backed by its wide geographical footprint and diverse specialty mix. The company is optimistic about its growth trajectory, aided by strong operational performance, strategic expansions, strong performance of its developed hospitals and scale-up in the new hospitals.
Strong business model across the healthcare value chain
Apollo Hospitals has established itself as a prominent player in India’s healthcare sector and is one of the largest hospitals and pharmacy chains by FY24 revenue. The hospital segment is poised for significant growth by adding new beds, better occupancy, and improving average revenue per operating bed (ARPOB), which should drive revenue growth for its hospitals. We expect ARPOB to grow by 5-6% yearly, leading to a better revenue mix and price hikes. The company’s plan to operationalize four new hospitals, adding 1,500 beds in key markets, is progressing as planned. They anticipate operationalizing new facilities in Gurgaon, Kolkata, Hyderabad, and Pune within the
next five quarters, ensuring long-term revenue growth, and the EBITDA margin of the hospital segment is likely to reach 25% by FY26.
INTERGLOBE AVIATION LTD.
Customer-centric initiatives to improve business performance
IndiGo has introduced tailor-made business class services, launching on the Delhi-Mumbai route and expanding to 12 metro routes with over 40 configured aircraft by 2025, catering to both seasoned and first-time premium travelers. The BluChip loyalty program, launched in October 2024, provides lifetime-valid rewards and seamless redemption on every flight, attracting lakhs of customers and enhancing customer retention. Complementing these efforts, IndiGo has revamped its website and app with modernized architecture and an interactive design to simplify booking and travel management. These initiatives highlight IndiGo’s commitment to offering differentiated services, improving customer experience, and leveraging loyalty for sustained growth.
Expansion in international markets to add further tailwinds
The company has increased its international market capacity share to 28% and plans to expand further by adding two new destinations – Jaffna and Mauritius. Additionally, Penang and Langkawi are set to be launched in the coming months, with a target of adding three more international destinations by the end of FY25. This will bring the total international destinations to 40, driving the share of international ASKs to 30%. The company expects continued growth, driven by easing visa restrictions in key international markets, positioning itself for sustained demand and expansion in global markets.
KALYAN JEWELLERS INDIA LTD.
Strong growth prospects amid custom duty cuts and market expansion
The jewellery sector is expected to grow at a CAGR of 15-16% over the next 3-4 years, driven by expanding store networks in non-metro markets, rising disposable incomes, and increasing demand despite higher gold prices. The reduction in custom duty on gold jewellery has further boosted growth, encouraging customers to advance their purchases. Kalyan Jewellers is well-positioned to capitalize on this growth, having already seen a 37.4% YoY revenue increase in Q2FY25. The company’s expansion is strong, with 15 stores added in Q2FY25 and plans to open 80+ stores in FY26. Its FOCO model allows for efficient scaling, while its growing footprint across regions and international markets ensures it is poised to capture a significant share of the growing jewellery market.
Debt reduction and improved margins position for sustainable long-term growth
Kalyan Jewellers is making significant progress in strengthening its financial position. Despite a 3.4% decline in PAT in Q2FY25 due to a one-time loss of Rs. 120 crores linked to the customs duty reduction, the company is focused on debt reduction and cost optimization. It has already achieved nearly half of its debt reduction annual target of Rs. 300 crores in FY25 and has cut non-GML working capital loans by Rs. 143 crores. Kalyan is also increasing its gold metal loan (GML) share, which is expected to improve its gross margins. These measures, along with its ongoing expansion and store conversion plans, position Kalyan for better profitability and sustainable long-term growth, making it an attractive investment.
MUTHOOT FINANCE LTD.
Capitalizing on industry momentum, gold loan portfolio poised for success
The gold loan industry in India is poised for significant growth, driven by the cultural importance of gold, rising prices, and increasing demand for organized credit, with only 35% of household loans managed by organized lenders. The strong positive correlation between gold prices and loan growth highlights the sector’s resilience, while factors such as geopolitical tensions, central bank gold purchases, and inflation further support demand. Among all NBFCs, Muthoot Finance is the largest player in gold lending, leveraging its extensive branch network and innovative services like online loans and home visits to enhance accessibility. Gold loans, secured by tangible collateral, offer inherent safety, and Muthoot strengthens this with a conservative Loan-to-Value (LTV) ratio of 63% in FY24 and 66% in Q2 FY25, ensuring robust risk management and growth.
Robust financial performance highlighting positive growth prospects
Muthoot Finance delivered a strong Q2FY25 performance, driven by a 28% YoY growth in its gold loan portfolio, steady NIMs at 11.5%, and lower-than-expected operating expenses. Despite higher than-expected provisions, the company posted an in-line PAT of Rs. 12.5 billion. The 4% QoQ increase in LTV ratio to 66% and strong customer additions (4% QoQ) propelled growth in gold AUM, even as average gold prices remained stable. Muthoot’s diversified portfolio, with robust growth in home loans and vehicle finance, positions it for continued growth despite some asset quality pressure in microfinance. With a 25% YoY growth target for gold loans in FY25 and strong demand driven by risk aversion in unsecured lending, Muthoot is well-positioned for a 21% CAGR in AUM and a 22% CAGR in earnings over FY24-FY26.
PB FINTECH LTD
Premium growth remains strong; Contribution margin a key monitorable
PB Fintech is currently on a strong growth trajectory. The company reported a remarkable 60% YoY increase in new business premiums, with a stable renewal rate of 65% QoQ. Notably, the growth in new health and life premiums was up by 69% YoY. Both the Point of Sale Person (POSP) and core online businesses demonstrated significant new business premium growth of 60% YoY in 2QFY25. Management has further reiterated its long-term premium growth guidance of 30%. On the contribution side, the contribution margin remains moderate at 27%, compared to 28% in 1QFY25 and 30% in 2QFY24. This is largely due to the accelerated growth in the health business. Unlike the term insurance sector, which has front-ended commissions, the health business features a flat commission structure, resulting in negative contribution margins during the first year. Further, the new initiatives achieved breakeven at the contribution level in 2QFY25. With increasing premiums and a moderate contribution margin, PB Fintech is well-positioned for continued growth.
Investment up to $100 million in new initiatives (PB Health) to drive growth
PB Fintech, the parent company of Policybazaar, received board approval to establish PB Health Services, a wholly owned subsidiary focused on healthcare services. PB will enter the healthcare sector with a potential one-time investment of up to $100 million (PB Health). This initiative aims to enhance the overall customer experience on claims turnaround, which is expected to foster greater trust and contribute to long-term growth in the insurance industry. The main reason is to focus on improving healthcare ecosystems (currently marred by high medical inflation), which will help PB in gaining higher health distribution business. PB Fintech projects that this move could drive up to 5% higher volume over the next 10 years. Hence, PB Fintech’s move to establish PB Health Services reflects its commitment to improving the healthcare ecosystem, strengthening customer trust, and unlocking growth opportunities in health insurance distribution over the long term.
SUN PHARMACEUTICAL INDUSTRIES LTD
Strong domestic growth and outperformance in the Indian pharma market
Sun Pharma has outpaced the Indian Pharma Market (IPM), with its India sales growing by 11% YoY in Q2FY25, driven by 14 new product launches and strong volume growth. The company maintained its No.1 position in prescriptions across 13 doctor specialties, achieving a 5% volume increase compared to the IPM’s 0.7%. Sun Pharma aims to match or exceed the IPM’s growth in FY25, supported by its focus on in-house manufacturing and cost optimization. With sustained momentum in its domestic business, new launches, and improved MR productivity, domestic sales are projected to grow at a 12% CAGR over FY24-FY27E, making it an attractive investment opportunity in India’s expanding the pharmaceutical sector.
Poised for strong growth in the US market driven by specialty products and industry
The pharmaceutical industry, particularly companies focusing on the US market, is expected to grow strongly due to ongoing drug shortages, new product launches, and a shift towards specialty products and niche molecules. Sun Pharma, with its strong presence in the US, stands to benefit from these trends. Its specialty segment has already shown impressive growth, contributing to the 20% YoY increase in US sales in Q2FY25. Products like Winlevi, Cequa, Levulan, and Ilumya are driving this momentum, with Levulan expected to see higher sales in Q3 due to seasonality. As US specialty sales continue to grow at a projected 10% CAGR from FY25 to FY27, Sun Pharma is well-positioned to capitalize on these opportunities and sustain its strong market performance.
UNITED SPIRITS LTD
Capitalising on premiumisation and structural tailwinds for robust growth
The premiumisation trend in the Indian alcobev industry is accelerating, driven by rising incomes, urbanisation, and a growing appetite for luxury brands. United Spirits (UNSP) is strategically capitalising on this shift, with its Prestige and Above (P&A) segment now contributing over 89% of revenue in Q2FY25, up from 51% in FY19. The company’s focus on premium brands, combined with strategic pricing, has bolstered value growth. The second half of the financial year is expected to further strengthen growth, driven by festive demand and structural tailwinds, including the reopening of business in Andhra Pradesh after a near 5-year gap, potentially helping the company achieve its double-digit growth target and positioning it for sustained success in the premium market.
Robust distribution network and entrenched market footprint provide a significant competitive advantage
UNSP is well-positioned to benefit from India’s growing alcobev market, leveraging its strong panIndia presence and established brand portfolio. The company benefits from state-wise regulations that create entry barriers for new players, fostering customer loyalty. With a distribution network spanning over 70,000 outlets and 36 manufacturing locations, including 11 company-owned facilities, UNSP’s key markets like Maharashtra and Karnataka contribute over a third of volumes. By exiting low-profit regions, UNSP focuses on high-margin markets. The company’s superior distribution and consumer reach, with nearly 1 in every 2 branded spirits bottles sold from its P&A portfolio, ensure long-term success.
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