- Kotak adds Kalpataru Projects to mid-cap model portfolio, removes 360ONE stock
- KPIL trades at 14.5x forward earnings with expected EPS growth of 30% in FY27
- Kotak cites narrative-driven mid-cap stocks and valuation concerns for changes
Kotak Institutional Equities has added Kalpataru Projects and Infrastructure (KPIL) to its mid-cap model portfolio while removing 360ONE, as the brokerage said it is "struggling to find new ideas" in the space after a sharp run-up in stock prices tied to its favoured investment themes.
KPIL trades at 14.5 times one-year forward earnings, which Kotak called attractive given both near-term and medium-term growth opportunities. The brokerage expects the company's earnings per share to grow 30% in FY2027 and 24% in FY2028, driven by a strong order book and rising exposure to the transmission and buildings and factories segments amid India's push on electrification and domestic manufacturing.
360ONE was dropped after its stock price rose 7.4% over the past month.
The brokerage noted that the narrative-driven nature of mid-cap stocks and frequent shifts in market narratives have made it question the relevance of valuations for investing in the space generally.
Check target price of midcap stock picks by Kotak.
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Road Ahead For Markets
Kotak expects the Indian market to see moderate upside and limited downside from current levels, contingent on a decisive end to the ongoing West Asia conflict over the next few weeks.
Kotak said India's macroeconomic position remains "manageable but volatile," shaped by three factors: continued uncertainty around the West Asia conflict and its impact on crude prices, deficient rainfall in the ongoing monsoon season, and government and RBI measures to cushion the external sector through higher capital flows.
On the earnings front, Kotak expects Nifty-50 net profit growth of 17.5% in FY2027 and 14% in FY2028, following a muted 8% in FY2026. It flagged the "somewhat weak quality" of this incremental growth, however, noting it is disproportionately driven by a sharp recovery in commodity-sector profits rather than broad-based momentum.
On valuations, the brokerage said the market looks reasonable on an aggregate, top-down basis — helped by a prolonged de-rating in banks and IT services — but far less comfortable bottom-up, with consumption stocks trading expensive and investment-linked stocks in sectors such as aerospace, defence and capital goods at "extremely rich" levels amid limited genuine investment opportunities.
Kotak pegged the Nifty at 22.7 times FY2026 earnings, easing to 19.7 times FY2027E and 17.2 times FY2028E as earnings catch up, with GDP growth estimated at 7.7% for FY2026, moderating to 6.6% in FY2027 before recovering to 7% in FY2028.
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