Brokerage Reveals Top 18 'High-Conviction' Stocks: Can They Deliver Stunning 50-200% Returns in 3 Years?

JM Financial has unveiled a compelling list of 18 "high-conviction" stocks that it believes could deliver extraordinary returns of 50% to 200% within the next three years. This curated selection spans a wide array of sectors, including banking, automotive, infrastructure, logistics, retail, hotels, and real estate, offering investors diverse opportunities.

Key Investment Criteria

The cornerstone of JM Financial's selection framework is a rigorous assessment of earnings momentum projected over a three-year period. The brokerage has established specific annual compounding growth rate thresholds: large-cap stocks must demonstrate the ability to grow at a minimum of 14.5%, mid-cap stocks at 20.5%, and small-cap stocks at 26%. These growth benchmarks are instrumental in shaping the brokerage's optimistic return forecasts for the coming years.

Top Large-Cap Recommendations

Among its top large-cap picks is ICICI Bank, valued at $110 billion, which is projected to achieve a 14% CAGR in advances and a 13% CAGR in deposits through FY25-28, with profit growth expected around 12% annually. Maruti Suzuki, with a $55.8 billion market cap, is forecast to achieve a 14% revenue CAGR driven by volume growth and increasing average selling prices, boosted by demand for hybrids and a new battery plant. Adani Ports, valued at $36 billion, is expected to see EBITDA cross Rs 22,500 crore in FY26 and Rs 45,000 crore by FY29, with completed governance steps like the removal of share pledges potentially supporting a valuation uplift. Zomato (referred to as Eternal in the report) is a key pick, with its quick commerce arm Blinkit rapidly expanding its store count and targeting EBITDA break-even by 1QFY27. Shriram Finance is expected to grow its loan book at ~15% CAGR through FY28, targeting over 50% upside. Cholamandalam Investment is poised for over 18% AUM growth across its various lending segments, with a forecast of at least 50% returns by FY28.

Mid and Small-Cap Stars

In the mid- and small-cap space, Oil India is highlighted for expected crude and gas output growth of 30-40% as the Indradhanush pipeline becomes operational. Vishal Mega Mart is projected to achieve 20% revenue, 27% EBITDA, and 31% PAT CAGR through FY28, supported by a high proportion of private labels. Phoenix Mills has the potential to double its value within three years, based on its strong rental income growth, new mall developments, and strategic stake acquisitions. PNB Housing Finance is expected to improve its balance sheet and earnings, offering potential valuation uplift. Aegis Logistics and its associated entity AVTL are highlighted, with AVTL projected for a remarkable 60% EBITDA CAGR, potentially offering over 200% upside if planned capex materializes. Star Health is expected to see its stock double in three years, driven by normalizing claims ratios and stable premium growth. Nuvama Wealth Management is identified as a potential doubler, with expectations of a re-rating from 19x to 24-25x its FY27 EPS. Sagility, working with top US health insurers, is projected for 35% EPS CAGR. Chalet Hotels forecasts 19% revenue and 22% EBITDA CAGR. Ajax Engineering is well-positioned for compounding growth with a strong market share. Gokaldas Exports earnings could double if US tariff conditions ease or EU FTA progresses. SJS Enterprises is expected to show steady earnings growth driven by rising content per vehicle and new-age products.

Risks and Assumptions

JM Financial acknowledges that some of the projected returns are contingent on external factors. These include the operational timelines for Oil India's pipeline and refinery expansion, Star Health's claims ratio normalization, potential easing of US tariffs for Gokaldas Exports, timely execution of new mall projects for Phoenix Mills, and the crucial decision by Aegis and AVTL to proceed with their significant capital expenditure plans. The brokerage has clearly outlined these conditions underpinning its return estimates.

Impact

This report offers investors a roadmap of potential growth opportunities, guiding them towards stocks with strong earnings visibility and significant upside potential over the medium term. It encourages a focus on fundamental growth drivers rather than short-term market fluctuations. The broad sector coverage also provides diversification avenues. The identification of specific risks also adds a layer of prudence for investors.

Impact Rating: 8/10

Difficult Terms Explained

• High-conviction stocks: Stocks that an analyst or brokerage firm has very high confidence in, based on thorough research and strong conviction about their future performance.
• CAGR: Compound Annual Growth Rate. The average annual growth rate of an investment over a specified period longer than one year.
• Large caps, Mid caps, Small caps: Market capitalization categories for companies. Large caps are typically the largest companies, mid caps are medium-sized, and small caps are the smallest.
• RoA: Return on Assets. A profitability ratio that measures how effectively a company uses its assets to generate profit.
• RoE: Return on Equity. A profitability ratio that measures how effectively a company uses shareholders' equity to generate profit.
• EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of a company's operating performance.
• FY (Fiscal Year): A 12-month period that companies and governments use for accounting purposes. It does not necessarily align with the calendar year.
• AUM: Assets Under Management. The total market value of the investments that a person or entity manages on behalf of clients.
• PAT: Profit After Tax. The profit a company has left after deducting all expenses, including taxes.
• GRM: Gross Refining Margin. The difference between the selling price of refined petroleum products and the cost of crude oil.
• FTA: Free Trade Agreement. An agreement between countries to reduce or eliminate trade barriers.
• CPA: Cost Per Acquisition. The total cost spent to acquire one new customer.
• ARR: Average Room Rate. The average daily rate achieved for a serviced room.