Kotak Institutional Equities has made some changes in its Model portfolios. The weightage of two stocks, Zomato and Apollo Hospitals, have been increased. They have added 100 bps to Apollo Hospitals and it now stands at 300 bps. They have also added 40 bps to Zomato and the total weightage now stands at 260 bps. The brokerage has now removed United Spirits from the portfolio. It carried 140 bps weight earlier.
Why Kotak increased weight on these 2 stocks
Giving a rationale for the changes in the Kotak Institutional Equities’ large cap portfolio, the brokerage highlighted that they “Prefer stocks with compounding in earnings/book and lower risks of derating in multiples.”
1. Apollo Hospitals
The total KIE (Kotak Institutional Equities) weight on Apollo Hospitals is 3% or 300 bps. The stock has fallen 12% so far in 2025 despite hitting highs in January. The stock had hit a 52-week high of 7545.35/share on January 7, 2025. According to the KIE, the “stock trades at 24.6x FY26e EBITDA, which is significantly lower than its peer group.”
It had delivered strong Q3 numbers with no significant changes in the earnings estimates. The management expects improvement in the room occupancy of hospitals, 200 bps improvement in operating margin in the near term and high growth in pharma sector to be broadly positive for stock.
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The total KIE (Kotak Institutional Equities) weight on Zomato is 2.6% or 260 bps. The stock is down 15% so far in 2025. It had hit a 52-week high of 304.70/share on December 9, 2024. The stock has delivered 48% returns to its investors over the last 1 year.
Zomato had reported a 57% drop in its Q3FY25 net profit while the Q3 revenue from operations clocked 64% growth. The company has guided for 2,000 store additions by December 2025.
Why has Kotak Institutional Equities removed United Spirits from portfolio
That said, KIE (Kotak Institutional Equities) has removed United Spirits from its portfolio. According to them, the stock is “trading at 62x FY26e EPS (about 55x FY26E EPS adjusting for the value of IPL franchise).” They highlighted that the stock has done well over the past 12 months (up 21%). “Its valuations may look similar to other consumer staples/discretionary stocks but the business faces potential downside medium-term structural risks from (1) growing health concerns around alcohol consumption and (2) possibly negative impact of GLP-1 drugs on alcohol consumption.
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