If you are looking for good bargain buys in 2025, CLSA has interesting large cap picks. Skimming for large caps that have corrected over 20%, CLSA has added Tata Motors, NTPC, Nestle and Britannia to their India focus portfolio. Meanwhile the brokerage house has also cut the Overweight stance on banks and removed HDFC Bank.
CLSA is forecasting muted returns for the Nifty in 2025. According to them, “valuations for India still remain extended.” Comparing the Nifty 12-month forward PE to its historical valuations, CLSA outlined the risks involved. The report highlighted the uncertain and risky global macro environment along with a near-term economic growth slowdown in India in the face of elevated absolute and relative valuations. In fact, the NSO’s first advance estimates of FY25 GDP growth estimate, pegs it at a 4-year low of 6.4%. The revised growth numbers suggest moderate economic expansion, high inflation, strained consumption and external factors that may influence overall performance in the coming months.
CLSA Overweight Commodities, staples
CLSA in the report outlined the economic concerns and highlighted what spurred the choice of stocks and the sectors that they represent and explained that, “underperformance of actual capex spending versus expectations and rising tailwinds for affordable consumption make us favour this sector and raise staples to a big overweight.” They remain “Overweight commodities and insurance. IT, discretionary, industrials and healthcare are our big Underweights.” With the recet additions, even Staples join the list of ‘Overweights’ on the CLSA list.
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The recent correction in the market has been quite steep and with more than half of the NSE 200 stocks trading more than 20% below their 52-week highs., CLSA has identified 30 companies with positive recommendations.
Why is CLSA betting on Tata Motors, NTPC, Nestle and Britannia?
Here is an analysis of CLSA’s top bets at the moment –
Tata Motors: According to CLSA, “after over 35% decline, we believe Tata Motors is adequately building in risks of a slowdown in commercial vehicles as well as the Jaguar Land Rover (JLR) portfolio.”
NTPC: CLSA is looking at the correction in the stock as an opportunity to foray into the “power theme as well as gains from some capacity additions in H1FY25.
Nestle and Britannia: CLSA has added these two stocks in their portfolio after the recent decline in stock value “to benefit from low stock expectations despite changing government actions in favour of affordable consumption.”
These additions “raise the defensiveness of our portfolio in the face of a turbulent global macro after Trump takes office,” stated the CLSA report.
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