Time to buy? Sunny Agrawal finds best picks across banking, pharma, capital markets & infrastructure

Indian equities have turned attractively valued after months of turbulence, and investors with an 18-month horizon should start deploying money now — particularly in mid and small-cap stocks. That is the view of Sunny Agrawal, Head of Fundamental Equity Research at SBI Cap Securities, speaking to ET Now.

"If somebody has got an investment horizon of 12 to 18 months, midcap and smallcap is the place to be," Agrawal said, pointing to companies with clear earnings visibility of mid-teen or higher double-digit growth through FY27 and FY28. The Nifty 50, he noted, is trading at 17-18 times one-year forward earnings, below its 10-year average relative to MSCI Emerging Markets.

Banking looks steady

Agrawal's top large-cap call is private sector banking. He expects net interest margins to stabilise from the fourth quarter onwards, with the broader industry likely delivering 13-14% credit growth. HDFC Bank, ICICI Bank and Axis Bank all feature on his list, with an expected return of 12-14% over two years. "Valuations have turned very comfortable," he said.

Capital markets and wealth management

Asset management companies remain a firm favourite. SIP inflows have held up even during weak market sentiment, providing a stable earnings base. As sentiment recovers, Agrawal expects broking and exchange-linked businesses to bounce back. He specifically named Angel One and Groww as direct beneficiaries of a volume recovery, alongside wealth managers 360 One and Nuvama, both of which generate roughly half their revenues through recurring fee streams.

Auto ancillaries over auto

Within consumption, Agrawal prefers auto ancillaries over automakers. He pointed to companies including Lumax, Minda Corp and Gabriel, which have built technology-agnostic product portfolios and pursued acquisitions, setting up for 15-16% earnings CAGR over the next two to three years.

Pharma: CDMO and the GLP-1 wave

In pharmaceuticals, Agrawal sees the longest runway in contract development and manufacturing. Among recently listed names he is recommending Anthem Biosciences, Sai Life Sciences and Sudeep Pharma to clients. Among established names, Lupin stands out for consistent delivery.

On the high-profile GLP-1 weight-loss drug theme, his preferred play is indirect. Rather than backing a single drug maker, he recommends Shaily Engineering and Plastics, a pen and device supplier exposed to the global GLP-1 market broadly, rather than tied to any one pharma company or brand.

Electronics manufacturing

Within EMS, Agrawal picks Syrma SGS, citing improving margins, a strong order book, and new capital expenditure expected to come online in FY27 and FY28.

Metals and mining

With ferrous and non-ferrous metal prices in an upswing, Agrawal sees opportunity in smaller, focused miners. He highlighted GPIL, which has recently received permission to operate an iron ore mine that should improve margins, and MOIL in the manganese space.

Infrastructure: Power is the theme

For infrastructure, power ancillaries are where Agrawal sees the clearest opportunity. He named GE Vernova T&D for transmission, TD Power Systems for turbines, and Polycab for cables and wires. L&T remains a well-balanced, broad-based infrastructure play, while MNC industrials like Cummins, ABB and Siemens, despite elevated valuations, are backed by the long-term manufacturing scale-up story in India.

The overarching message: volatility will continue for two to three months as geopolitical tensions play out, but quality stocks bought now should deliver solid compounded double-digit returns by FY27.