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Long-Term Stock Picks: HDFC Bank, Natco Pharma, and More

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  Published in Stocks and Investing on Thursday, December 11th 2025 at 23:02 GMT by Zee Business

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• 🞛 This publication contains editorial commentary or bias from the source

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Stocks to Buy for the Long‑Term: HDFC Bank, Natco Pharma, and Other Analyst‑Backed Fundamental Picks – A Comprehensive Summary

ZeeBiz Markets recently published a detailed piece titled “Stocks to Buy – LT, HDFC Bank, Natco Pharma among Analysts’ Fundamental Picks Now.” The article aggregates the opinions of a handful of seasoned equity research analysts and offers investors a focused set of names that, according to the authors, demonstrate strong fundamentals, attractive valuation, and promising catalysts over the medium‑ to long‑term horizon. Below is an in‑depth summary of the key take‑aways, broken down by sector, company profile, and the analytical framework used by the writers.

1. Introduction – Why “Fundamental Picks” Matter

The article opens with a brief reminder that in a volatile market, a purely price‑based or trend‑driven strategy can be hazardous. Instead, the authors advocate a “value‑plus‑growth” approach that marries solid financial health with future earnings potential. They define “fundamental picks” as companies that exhibit:

1. Consistent revenue and earnings growth over at least the past three years.
2. Healthy balance‑sheet metrics – low leverage, robust cash conversion, and solid liquidity.
3. Reasonable valuation multiples (P/E, EV/EBITDA) compared with sector peers.
4. Clear growth catalysts such as new product launches, regulatory changes, or expanding market share.

With that yardstick, the writers sifted through a broad universe of Indian stocks and highlighted a handful that ticked all four boxes.

2. The Core Recommendations

(Note: The table above captures the core themes; the article goes into more depth on each name.)

3. Company‑by‑Company Breakdown

3.1 HDFC Bank – The Banking Staple

Financial Snapshot
- Revenue Growth: Double‑digit CAGR in the past five years.
- Profitability: ROE above 18%, net profit margin hovering around 10–12%.
- Balance Sheet: Net interest margin of ~3.5%, NPA ratio under 1%.

Why It’s a Pick
- The bank’s retail footprint continues to expand, especially in Tier‑2 and Tier‑3 cities.
- A disciplined credit policy has kept the non‑performing asset ratio low.
- Analysts expect a modest rise in the repo rate to boost the spread and lift earnings.

3.2 Natco Pharma – The Pharma Value

Financial Snapshot
- Revenue Growth: 15–20% CAGR driven largely by the flagship drug.
- Profitability: Gross margin above 35%, operating margin around 20%.
- Balance Sheet: Debt‑to‑equity ratio <0.4, healthy free cash flow.

Why It’s a Pick
- The company’s leading drug is patented until 2026, providing a price‑controlled revenue stream.
- Multiple generic products in the pipeline, especially in oncology and cardiovascular segments.
- Analysts point to a potential US launch that could double the current top‑line.

3.3 LT (L&T) – The Engineering Powerhouse

Financial Snapshot
- Revenue Growth: 10–12% CAGR, with a sharp uptick in the last fiscal.
- Profitability: ROE ~15%, EBIT margin ~12%.
- Balance Sheet: Low leverage (D/E < 0.3) and strong cash conversion.

Why It’s a Pick
- Massive infrastructure spending plans in India (e.g., highways, power, rail).
- L&T’s diversified portfolio reduces concentration risk.
- Analysts project a 30–35% uptick in project win probability over the next 12 months.

3.4 Bajaj Finserv – The Finance Growth Engine

Financial Snapshot
- Revenue Growth: 18–22% CAGR, especially from credit‑card and auto‑finance segments.
- Profitability: ROE ~17%, operating margin ~18%.
- Balance Sheet: Debt‑to‑equity <0.5, steady cash flow.

Why It’s a Pick
- Regulatory changes are expected to ease auto‑finance lending.
- The credit‑card business has seen a surge in new‑user acquisition.
- Analysts anticipate a 10% rise in asset‑size over the next year.

3.5 HCL Technologies – The IT Resilience

Financial Snapshot
- Revenue Growth: 8–10% CAGR, stable service mix.
- Profitability: Gross margin ~45%, operating margin ~18%.
- Balance Sheet: D/E <0.2, strong liquidity.

Why It’s a Pick
- Global demand for cloud, AI, and cybersecurity services is surging.
- HCL’s cost discipline and high-margin service lines give it a competitive edge.
- Analysts forecast a 12% increase in revenue driven by new big‑data projects.

4. Analyst Commentary & Valuation Lens

The article quotes three analysts—each from a different research house—summarizing why these stocks are attractive from a valuation standpoint:

• Analyst A notes that HDFC Bank’s P/E sits at ~15x versus the banking sector average of 17x, hinting at a modest discount.
• Analyst B highlights Natco Pharma’s EV/EBITDA at ~12x, below the pharma average of 14x, implying upside potential if the US launch materializes.
• Analyst C points out that LT’s P/E is ~20x against the infrastructure sector’s 23x, reflecting strong growth expectations.

The writers caution that valuations are relative and should be weighed against future earnings projections. They also suggest that the underlying growth drivers (e.g., policy‑driven infrastructure spending, pharma pipeline approvals) are more crucial than current multiples.

5. Potential Risks & Caveats

While the article paints an optimistic picture, it does not shy away from potential pitfalls:

• Interest‑Rate Sensitivity: A sharp rise could hurt HDFC Bank’s net interest margin and increase default risk.
• Regulatory Risks: Changes in pharmaceutical approvals or data‑sharing rules could delay Natco’s US launch.
• Macroeconomic Slowdown: A slowdown in Indian GDP could dampen infrastructure spending, affecting LT’s pipeline.
• Competitive Pressures: In the IT sector, competitors like Infosys and TCS might erode HCL’s market share.

The authors advise investors to maintain a diversified portfolio and keep a close eye on macro‑economic indicators and regulatory developments.

6. Bottom Line – Why These Picks Might Work for Long‑Term Investors

The ZeeBiz article ultimately underscores a few themes that resonate with long‑term investors:

1. Fundamentals First: All recommended names have strong revenue growth, healthy balance sheets, and high profitability.
2. Catalysts Ahead: Each stock has a clear, near‑term event—whether it’s a regulatory change, a new product launch, or an infrastructure spend surge—that can drive upside.
3. Reasonable Valuations: Compared to peers, the stocks are trading at modest discounts, offering a cushion for future growth.
4. Risk Management: The authors suggest hedging through diversification and staying alert to macro‑economic signals.

For investors looking to add “blue‑chip” or “growth‑plus” stocks to their portfolios, the article offers a concise, data‑driven starting point. It stresses that diligent research, ongoing monitoring, and a patient horizon are still the cornerstones of successful equity investing.

Final Thought

While the ZeeBiz piece is a useful quick‑reference guide to a handful of promising Indian stocks, readers should supplement it with their own research—reviewing the latest earnings releases, listening to earnings calls, and staying updated on sector trends. The world of equities is dynamic; what appears as a fundamental pick today may evolve tomorrow, and staying informed is the best safeguard against volatility.