Today, we recommend two stocks, one from the financial services sector and another from the capital goods sector, as recommended by the Trade Brains Portal, to buy for an upside potential of more than 43%. The financial services sector plays a vital role in driving India’s economic growth by efficiently channeling domestic savings into productive investments.
Simultaneously, the capital goods sector serves as a powerful growth engine, supported by increased government spending on infrastructure and a strong focus on manufacturing, making it a promising area for investment. We also analyzed the market’s performance on Thursday to understand what may lie ahead for the stock indices in the coming days.
1. Indian Railway Finance Corporation (IRFC)
- Current price: Rs 121.63
- Target price: Rs 175
- Upside: 43.4%
- Time frame: 16 – 24 Months
To view the report for the stock mentioned above or explore other stock recommendations, click here
Why It’s Recommended
Indian Railway Finance Corporation (IRFC), a Navratna Public Sector Enterprise under the Ministry of Railways, was established in 1986. Its core function is to raise funds from financial markets to support the acquisition or development of railway assets, which are then leased to Indian Railways. Beyond this, IRFC also provides financial assistance to other rail-related entities like Rail Vikas Nigam Limited (RVNL), RailTel, Konkan Railway Corporation Limited (KRCL), and Pipavav Railway Corporation Limited (PRCL). As of March 31, 2025, IRFC managed assets worth Rs 4.6 lakh crore.
In Q1 FY26, IRFC’s lease income grew by 9.2%, rising from Rs 4,946.6 crore in FY24 to Rs 5,403.75 crore. The net interest income also improved slightly, increasing from Rs 1,589.43 crore to Rs 1,762.83 crore. The net interest margin increased from 1.37% to 1.53% YoY. During the quarter, IRFC disbursed loans of Rs 2,492 crore; the total loan sanctioned to date stood at Rs 23,714 crore, including Rs 700 crore to NTPC and Rs 5,000 crore to its subsidiary, NTPC Renewable Energy Ltd.
The company also signed a rupee term loan agreement of Rs 5,000 crore with NTPC REL and emerged as the leading bidder for a Rs 3,167 crore funding project for the Banhardih Coal Block in Jharkhand’s Latehar district. Going forward, the company is expecting the annual sanctions to reach around Rs 60,000 crore, and disbursements are targeted to reach around Rs 30,000 crore.
In FY25, IRFC was granted Navratna status by the Department of Public Enterprises and is now aiming for Maharatna status. The board approved the financing of 20 BOBR rakes for NTPC, valued at Rs 700 crore, under Indian Railways’ General Purpose Wagon Investment Scheme (GPWIS). Additionally, in January 2025, a lease agreement for 8 BOBR rakes worth over Rs 250 crore was signed with NTPC. IRFC also signed a Memorandum of Understanding with REMCL to jointly explore financing opportunities for Indian Railways’ renewable energy projects, including in nuclear, thermal, and green energy sectors.
Risk Factors
IRFC’s entire loan portfolio is tied to the Ministry of Railways (MoR) and its associated entities. As of March 31, 2025, 62% of its portfolio comprised lease receivables from the MoR, 37% consisted of advances for leased railway assets, and only 1% was loans to companies like NTPC and RVNL. Because its business growth heavily depends on MoR’s investment in Indian Railways, IRFC is exposed to risks from shifts in government funding or policy. Moreover, since it relies on borrowing from the market, the company is also vulnerable to interest rate changes.
2. Thermax Ltd
- Current price: Rs 3,339
- Target price: Rs 4,225
- Upside: 26.5%
- Time frame: 12-14 Months
To view the report for the stock mentioned above or explore other stock recommendations, click here
Why It’s Recommended
Founded in 1966, Thermax Ltd. is a leading Indian engineering company that delivers integrated energy and environmental solutions. It specializes in areas like heating, cooling, power generation, water treatment, air pollution control, and specialty chemicals, all aimed at promoting cleaner energy, air, and water. The company has a strong global presence, with 34 international and 22 domestic offices, 16 manufacturing plants (12 in India and 4 overseas), and over 45 subsidiaries operating across 90+ countries.
Its workforce totals 7,854 employees, with operations spanning Asia, Southeast Asia, the Middle East, Africa, Europe, and the Americas. Thermax’s total order book has grown at a 15% compound annual growth rate (CAGR) over the past five years and stood at Rs 10,693 crore as of FY25, up 6% year-over-year from Rs 10,111 crore in FY24.
In FY25, the company posted an operational revenue of Rs 10,389 crore, marking an 11% increase from Rs 9,323 crore in FY24. Over the last five years, its revenue has grown at a CAGR of 17%. The profit after tax reached Rs 627 crore, showing a steady 25% CAGR over the same period. Segment-wise, sales in FY25 rose by 15% in the Chemical segment, 12% in Industrial Products, 6% in Industrial Infrastructure, and 36% in Green Solutions.
In Q1 FY26, the company reported operating revenues of Rs 2,150 crore. The profit after tax rose from Rs 109.42 crore in the previous quarter to Rs 151.45 crore. The order book grew to Rs 11,376 crore, up 6.4% QoQ from Rs 10,693 crore in Q4 FY25. The company plans for big growth in chemicals, set for an almost Rs 250 crore order book in Q2. The company also plans to enter new segments such as coatings, sealants, and construction chemicals and invest heavily in R&D.
Looking ahead to FY26, the company expects its EBITDA margins to enter double digits. It recently formed a strategic partnership with UK-based Vebro Polymers to meet India’s growing demand for industrial and commercial flooring. Thermax also teamed up with Latin American company Oswaldo Cruz Quimica to manufacture and distribute high-performance resins and polymers. In terms of project execution, the company expects to complete most of a Rs 467 crore Flue Gas Desulphurization (FGD) project, Rs 350 crore by FY26 and the remaining Rs 100 crore by FY27, and a Rs 315 crore Bio-CNG order by the third quarter of FY26.
Risk Factors
Thermax is exposed to the cyclical nature of the capital goods and engineering sectors, especially during periods of reduced infrastructure investment. Its global operations make it sensitive to fluctuations in commodity prices. Additionally, the company faces intense competition in specific segments such as packaged water treatment systems and low-capacity boilers.
Market Recap 04th September, 2025
On Thursday, the Nifty 50 started the day with a strong gap-up, opening at 24,980.75, rising 265.7 points above its previous close of 24,715.05. However, despite hitting its intraday high at the opening level, the index gave up most of its gains and ended the session almost flat at 24,734.30, posting a marginal rise of 19.25 points or 0.08%. From a technical perspective, Nifty closed below its 50-day EMA and near the 20-day EMA, while still staying above the 100-day and 200-day EMAs on the daily chart.
The BSE Sensex showed a similar pattern, opening significantly higher at 80,295.99, an 888.96-point jump, but eventually closing at 80,718. Momentum indicators showed signs of caution, with the Nifty 50’s RSI at 49.09 and the Sensex’s RSI at 47.46, both staying well below the overbought mark of 70. The Bank Nifty Index also started on a positive note but ended flat, gaining just 7.90 points (0.01%) to settle at 54,075.45. The markets initially surged on optimism about GST reforms, but gains were trimmed by the close due to ongoing foreign institutional investor (FII) outflows and increasing concerns over U.S. tariffs.
Sector-wise, the Nifty Auto Index was the top performer, ending at 25,994.85 with a gain of 219.40 points or 0.85%. Mahindra & Mahindra Ltd led the rally, jumping 6%, while TVS Motor Company Ltd, Eicher Motors Ltd, and Hero Motocorp Ltd also advanced by up to 1%. The Nifty India Consumption Index also posted gains, rising 61.80 points, or 0.5%, to close at 12,358.70. Key contributors included Mahindra & Mahindra Ltd, Colgate-Palmolive (India) Ltd, Britannia Industries Ltd, and Apollo Hospitals Enterprise Ltd, all gaining up to 6%. The Nifty Financial Services Index also performed well, climbing 120.85 points, or 0.5%, to close at 25,853.4.
Among the major losers, the Nifty India Defence index plunged the most on Thursday’s trading session. The index decreased by -132.35 points, or -1.7%, closing at 7,545.25. Data Patterns (India) Ltd was the major loser, dropping -4.1%, followed by other defense stocks, including Garden Reach Shipbuilders & Engineers Ltd, BEML Ltd, and Cochin Shipyard Ltd, which declined by up to -3.9%. The Nifty CPSE Index also closed in red, closing at 6,247.75, losing -80.50 points, or -1.3%. Major losers include Cochin Shipyard Ltd, Oil India Ltd, SJVN Ltd, and Bharat Electronics Ltd, whose shares declined by up to -3.6%.
Asian markets showed a mixed trend on Thursday, with Hong Kong’s Hang Seng Index ending in red at 25,056, declining -287.43 points, or -1.15%. Following the same trend, the Shanghai Composite Index closed at 3,765.88, losing -47.68 points, or -1.27%. However, South Korea’s KOSPI Index closed in green at 3,200.83, up 16.41 points, or 0.51%. Japan’s Nikkei 225 Index also closed in the green at 42,533, up 594.11 points, or 1.4%. The US Dow Jones Futures were trading at 45,295.75, up 24.52 points, or 0.05%, as of 4:48 p.m. IST.
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