The Indian stock market has delivered a modest performance in 2025, navigating challenges such as significant foreign capital outflows, subdued corporate earnings, and global geopolitical tensions including concerns over US tariffs. In this environment, the Nifty 50 has managed a gain of over 9% year-to-date, while the broader Nifty 500 index has underperformed with a rise of just 5%.
Market Outlook and Recovery Catalysts
Despite the current headwinds, market experts maintain a positive stance for the coming year. This optimism stems from expectations of a revival in earnings growth, supported by favourable domestic growth-inflation dynamics and the potential for a landmark India-US trade deal. Against this backdrop, Rahul Ghose, Founder and CEO of Octanom Tech and Hedged.in, has identified five stocks that he believes are compelling buys for long-term investors.
1. Tata Consultancy Services (TCS)
Rahul Ghose highlights TCS as a standout franchise in the Indian equity universe. The company's strength lies in its long history of high return ratios, robust free cash flow generation, and dependable dividend payouts. Its diversified business across sectors like BFSI, retail, manufacturing, and communications, coupled with its role in large digital transformation projects, provides strong revenue visibility.
After a period of slow growth and valuation compression in the global IT sector, TCS now trades at a premium justified by its balance sheet strength and execution consistency. Ghose expects a recovery in global tech spending, driven by cost-optimisation, cloud migration, and AI initiatives, where TCS is well-positioned to gain without hurting margins.
At a current indicative price of ₹3,280, Ghose sets a three-year target range of ₹5,200 to ₹5,400. He views TCS as a high-quality compounder where investors pay a fair price for durable earnings and capital efficiency.
2. Bharat Forge
Bharat Forge has successfully transformed from a cyclical auto components player into a balanced, multi-segment engineering firm. While automotive remains key, the company now has significant exposure to high-growth areas like defence, railways, industrials, and exports. Management's focus on higher-margin, less cyclical segments like defence and aerospace is a strategic positive.
Ghose notes that at the current price band of ₹1,400–1,450, the market is mainly pricing in a domestic commercial vehicle recovery. However, he believes the longer-term potential from defence indigenisation and industrial capex is not fully valued. A diversified order book should drive margin expansion.
His three-year price objective for the stock is ₹2,100–2,200, based on mid-teens revenue growth and improved operating margins.
3. Lupin
The pharmaceutical major Lupin is showing clear signs of a turnaround after facing US pricing pressure and regulatory issues. Its balance sheet is healthier, and the company benefits from a strong domestic branded formulations business and a sizable US generics portfolio. A renewed pipeline in complex generics and respiratory products, which offer better margins, is a key growth driver.
Even after a sector rerating, Lupin trades below its historical valuation peaks, reflecting lingering investor caution. Ghose believes if the company sustains momentum in high-margin launches and maintains compliance, return ratios can improve significantly.
From an indicative price of ₹2,125, he sees a three-year target of ₹2,900–3,100 as achievable, factoring in mid-teens earnings growth and a gradual valuation re-rating.
4. ICICI Prudential Life Insurance
This insurer is a direct play on the long-term financialisation of Indian household savings. Despite strong parentage and a solid position in protection, ULIPs, and traditional products, the stock has historically traded at a discount to sector leaders. Recently, management's shift towards quality growth—emphasising protection products and better persistency—has started improving Value of New Business (VNB) margins.
Ghose sees scope for a meaningful upside of 35–40% over three years (approximately to ₹870), if VNB growth sustains and the valuation gap with top peers narrows through consistent execution. He views it as an opportunity to invest in an under-penetrated sector at cautious valuations.
5. Phoenix Mills (Phoenix Limited)
Recently rebranded as Phoenix Limited, the company is a leading owner and operator of premium retail malls and mixed-use developments in India's major cities. Its assets are aligned with trends like rising urban incomes and the formalisation of retail. A strong portfolio and visible pipeline should lead to steady rental growth and operating leverage.
Ghose believes Phoenix offers the potential for 50–70% upside over three years, driven by new asset additions, rental escalations, and improved leverage metrics. It provides an asset-backed way to invest in India's urban consumption story.
Final Takeaway for Investors
The expert's stock picks represent a mix of sectors—IT, manufacturing, pharmaceuticals, financial services, and real estate—offering diversified exposure to India's long-term growth themes. While the market faces near-term uncertainties, these companies are selected for their fundamental strength, market positioning, and potential for sustainable growth. As always, investors are advised to conduct their own research or consult certified experts before making any investment decisions, as market conditions are dynamic and individual circumstances vary.
