IndusInd Bank, Hero MotoCorp Among Five 'Overcorrected' Stocks Looking Attractive, Says Emkay

The correction territory in which Indian equities seeped into this month still has some attractive pockets of opportunity, if one goes by the 'fallen angel' stock list of Emkay Global.

The benchmark Nifty 50 has corrected 8% in October, but 64% of Emkay's coverage universe has fallen more than 15% from 52-week highs, the brokerage said.

It has picked five stocks whose negative momentum may not have turned around immediately, but are attractive from a one-year perspective.

IndusInd Bank

Emkay said the hit for microfinance lending is temporary and what the market has overlooked is IndusInd Bank Ltd.'s decision to sacrifice growth rather than compromise on credit standards.

The Mumbai-based private lender's net profit in the second quarter took a hit due to higher provisions. Outstanding slippages on the microfinance book stood at Rs 2,259 crore, higher than Rs 1,988 crore in the June quarter.

Auto loan book could see better traction in the second half of the current fiscal, while temporary non-performing loans do not indicate asset quality crisis. Moreover, as the Reserve Bank of India eases liquidity, deposit growth will improve, Emkay said.

IndusInd Bank stock is available at 1.2 times its price-to-book value on a one-year forward basis and prices in a worst-case scenario on asset quality and growth. "As both normalise, there is scope for significant rerating."

Hero MotoCorp

The two-wheeler cycle is not done yet and structural issues, like high penetration, notwithstanding, the sector is coming out of a five-year downcycle, according to Emkay. It does not see the upswing dying out in two-three years.

"The share of budget 2W is rising after a long hiatus, and that benefits HMCL more than others. Channel checks suggest strong festive demand, so the weak 2Q numbers look like an aberration."

Hero MotoCorp's share price is now at a "very reasonable" 18 times one-year forward multiple, and with a promising second half looming, the stock is at a good entry point, Emkay said.

Saregama

Although Saregama Ltd.'s stock declined after it lost out the bid to acquire Karan Johar's Dharma Productions, Emkay called it "a good thing" saying the acquisition could have hurt the company's balance sheet and return ratio.

Further, the long-term prospects for the music licencing business is robust and low penetration of paid users has significant upside. "There are lumpy costs for acquiring music rights, so quarter-to-quarter may not be the best way to look at this business," Emkay said.

Saregama's share price has corrected 26% from its peak and is now 30 times one-year forward multiple. The stock is supported by consistent and rising return on investment of over 20% and steady operating cash/Ebitda of 60%, the brokerage said.

Mahindra & Mahindra Financial Services

Chief Executive Officer Raul Rebello is strengthening the business with improved credit delivery and controls, Emkay said. The brokerage sees a credible path to 2.5% return on asset, even if it takes some time to get there.

"Diversification of the portfolio is another long-term positive that will strengthen the business and reduce ROA volatility," the firm said.

The recent clean-up of the book provoked a sell-off that has brought the stock to an attractive 1.5 times PBV. Emkay now sees a strong rerating opportunity, even if it takes one-two years.

Escorts Kubota

Despite correction in Escorts Kubota Ltd.'s share price, following the divestment of its railway equipment division to Sona BLW, it may present a buying opportunity, Emkay said. This is because of positive agricultural outlook from an above-average monsoon, leading to a pickup in rural demand and favourable industry base, that could support a tractor upcycle the brokerage said. This may start from second half, it said.

Additionally, Escorts' strategic initiatives in product expansion, channel development, and increased capacity to tap into opportunities in both domestic and export markets, combined with its expanding sourcing from India, are expected to bolster mid- to long-term growth.

Escorts Kubota's share price has corrected 18% from its peak and trades at 24 times core September 2026 price-to-earnings, compared to 27 times for larger rival M&M.