Axis Bank, IndiGo Among HSBC's Top Stock Picks For 2025

Axis Bank Ltd. and InterGlobe Aviation Ltd. emerged among HSBC Global Research's top stock pics for 2025. These are based on bottom-up analysis, which are also consistent with HSBC's top-down strategy, it said.

Analysts at the global brokerage also highlighted the risk-reward in the equities in emerging markets is better than widely perceived after initially taking a cautious stance after US President-elect Trump's re-election.

"There is no sugar coating that tariffs and a strong dollar are downside risks," analysts said in a note on Dec. 2. More room for counteracting policies by emerging markets, downside risks already being priced in and favourable growth dynamics over developed markets provide a case for better risk-reward.

Some emerging market economies could benefit from a shift of trade flows, if US tariffs are predominantly targeted towards specific markets, such as China, HSBC said.

While the US election outcome will likely reinforce the era of US equity exceptionalism, there is still justification for a small overweight in EM, which presents a "significantly better" outlook than Europe, Australia, and the Far East countries.

HSBC favours the Indian market for being insulated from US politics and the potential from a strong domestic story. Axis Bank and IndiGo are the top pics for 2025 in the Indian market, with an upside of 19% and 12%, respectively.

HSBC On Axis Bank 

• The brokerage has a 'buy' rating on the stock with a target price of Rs 1,350 per share, an upside of 19% from the previous close.

• Indian banks are the largest sector in the listed universe.

• Some large banks are well-placed to outperform in 2025, as they offer appealing valuations and better operating metrics.

• Set to benefit from growing capex and infrastructure in India.

• The bank has taken necessary steps to protect profitability and strengthen its balance sheet.

• Asset quality has improved, and loan slippage has moderated.

• There is scope for Axis Bank to reduce costs.

• A narrowing of its return of assets gap with peers is the key to reducing its valuation discount.

HSBC On IndiGo

• The brokerage has a 'buy' with a target price of Rs 4,940 per share, an upside of 12%.

• The company is set to benefit the most from strong competitive positioning.

• Strong penetration in the corporate traffic segment, which represents the highest yielding traffic.

• The company is best placed to earn the highest profit margins in the industry.

• Has a strong balance sheet with one of the highest liquidity/sales ratios globally.

• Discount to its long-term valuation is unjustified.

• Expects investor sentiment to turn positive on the stock.