Top 10 rate sensitive stocks to buy post RBI meet with return potential of up to 40%

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26 Aug, 2025 12:21

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Indian market witnessed a knee-jerk reaction as the Reserve Bank of India (RBI) kept policy rates unchanged at 6 percent. Higher inflation forecast and revising down growth outlook for 2017-18 weighed on sentiment.

The Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 6 percent but highlighted its cautious view on rising inflation.

"Banks underperformed the overall markets, the RBI policy which came out at 2 30 pm had hawkish undertones which spooked the markets at the closing session," Nikhil Kamath, Co-Founder and Head of Trading, Zerodha told Moneycontrol.

"We maintain that the markets are overvalued at the current juncture and would not recommend entering fresh longs at this point," he said.

The decision of the MPC is consistent with the neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4 per cent within a band of +/- 2 percent while supporting growth.

“The central bank’s stance was largely along expected lines, reflected in a relatively muted response in the bond and equity markets. There is only a slight shift towards a cautious bias, with headline inflation seen above target in FY19 - at above 5% in 1H FY19 and 4.5-4.6% in 2H,” said Radhika Rao, India Economist, DBS Bank.

“They remain optimistic on growth, expecting FY19 to head back towards 7%. The guidance remains data-dependent, with a shift to tighten rates requiring further evidence of a built-up in inflationary pressures,” she said.

Rao further added that policymakers are also likely to keep an eye on the financial stability risks, arising especially from global policy normalisation risks.

A rate cut or a rate hike, investors are advised to stick to quality rate sensitive stocks which can outperform benchmark indices, suggest experts.

We have collated a list of 10 rate sensitive stocks which could give up to 40% return in the next one year:

ICICI Bank: Outperform| Target Rs405| Return 23%

Credit Suisse maintains an outperform rating on ICICI Bank post Q3 results and raised its 12-month target price to Rs405 from Rs347 earlier.

Slippage from unknown stress moderated in the December quarter and the operating performance also remained tepid, said the report.

But, the private sector lender is in a strong capital position, and the valuations too look attractive. Credit Suisse expect the net interest income or NII growth to track asset growth.

ICICI Bank remains the best-capitalised corporate lender among the banking pack. Credit Suisse expect gains from stake-sale of ICICI Securities to cushion profitability.

TVS Motor Company Ltd: BUY| Target Rs720| Return 11%

Jefferies maintains a buy rating on TVS Motor Company with a target price of Rs720. The December quarter earnings were a slight beat in the core earnings.

The revenue, gross margin drove beat in the EBITDA. Double-digit margin guidance by 4Q is likely to be missed. The net profit came in lower due to a fall in other income on account of acquisitions.

HDFC: Outperform| Target Rs2250| Return 26%

Credit Suisse maintains an outperform rating on HDFC with a target price of Rs2250 post December quarter results. The mortgage lender reported another steady quarter and the net interest margins (NIMs) should start to improve by March quarter.

HDFC reported strong loan growth, and stable spreads in Q3. Consolidated profitability remains strong with the return on equity (RoE) at 21 percent. The non-performing assets (NPAs) were flat and the management is not seeing any stress in affordable housing segment, said the report.

Chola Finance: Outperform| Target Rs1365| Return 6%

Macquarie maintains an outperform rating on Chola Finance with a target price of Rs1365 post Q3 results. The company reported exceptional numbers for the quarter ended December.

The vehicle finance led to strong AUM growth; however, the home equity business is still consolidating. The asset quality witnessed a sharp improvement which is crucial for the company.

Eicher Motors: BUY| Target Rs39300| Return 42%

CLSA reiterates a buy on Eicher Motors with a target price of Rs39,300 considering the fact that the stock is trading at attractive valuations when compared to its peers owning to superior growth.

Eicher Motors believed that concerns on growth outlook are overstated, and the growth rate is moderating on a rising base. On the FY19 PEG basis, it is now trading cheaper than most peers.
Eicher offers a better long-term growth outlook than most largecap peers.

SBI Life Insurance Company: BUY| Target Rs840| Return 21%

HDFC Securities maintains a buy rating on SBI Life with a target price of Rs840. The domestic brokerage firm continue to like SBI Life due to strong distribution footprint of its parent
Posted strong quarter on both on growth and margin.

Prestige Estates: BUY| Target Rs345| Return 20%

HSBC maintains a buy rating on Prestige Estates with a target price of Rs345. The expansion of the commercial portfolio and the mid-income focussed resident projects is likely to bring growth.

The global investment bank retains a buy and raised its target price to Rs345 from Rs310 earlier. The restructuring will be the catalyst for the company, said the note.

Shriram Transport Finance: BUY| Target Rs1660| Return 22%

Jefferies maintains a buy rating on Shriram Transport Finance and raised its target price to Rs1660 from Rs1212 earlier. Despite the rally, the valuation remain stable at 2.2x FY19E BV which appears reasonable.

There is a better visibility of recovery in earnings and returns, said the note. The loan growth should improve given improving CV outlook

Maruti Suzuki India Ltd: BUY| Target Rs11,245| Return 25%

Nomura maintains a buy rating on Maruti Suzuki post Q3 results but raised its 12-month target price to Rs11,245 from Rs9843 earlier.

The December quarter result was driven by cost control and lower promotion expenses. There is a high growth visibility, along with premiumisation. Apart from the above two factors, royalty reduction is likely to drive profitability.

Nomura expect Revenue/EPS to grow at a CAGR of 17%/19% over FY18-20. The brokerage firm expect free cash flow generation to continue to rise sharply. Maruti Suzuki remains a top pick for Nomura.

Hero MotoCorp Ltd: BUY| Target Rs4200| Return 19%

Sharekhan maintains a buy rating on Hero MotoCorp with a target price of Rs4200. The two-wheeler maker reported numbers which were broadly in-line. The topline for the quarter came at Rs. 7,306 crore increased by 15% y-o-y.

Given the inline results on the operating front, we have broadly retained our earnings estimates for FY2018 and FY2019. Sharekhan maintains a buy rating on the stock with an unchanged price target (PT) of R4,200.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.