Stocks to buy for long term: From HDFC Bank, ITC to Infosys— Hedged founder bullish on these 5 shares; do you own any?

Stocks to buy for long term: The Nifty’s three-day fall, largely due to foreign capital outflow, caution ahead of the Q3 earnings season and geopolitical uncertainties, has dragged it below the level of 26,150.

On January 7, the index ended at 26,140.75, losing 0.14%. Over the last three consecutive sessions, it has shed 0.71%. FIIs remain in a selloff mode. In January so far, they have sold Indian stocks worth ₹4,650 crore in the cash segment.

Market sentiment appears weak, and many large-cap stocks, despite having healthy fundamentals, are witnessing selling pressure. However, experts say long-term investors should not stress over the current sombre phase of the market. Instead, they should use it as an opportunity to buy or accumulate quality stocks for the long term.

Rahul Ghose, Founder and CEO of Octanom Tech and Hedged.in., suggests the following five stocks to buy for the long term:

Stock picks for long-term

HDFC Bank | Core compounder at a reasonable valuation

Ghose underscored that HDFC Bank remains the bellwether of India’s private banking sector, with a long track record of superior asset quality, granular retail liabilities and consistent earnings growth.

Even after the merger and the subsequent period of integration, the bank continues to deliver healthy profitability, with a return on equity in the mid-teens and a strong capital position to support future growth.

Following post-consolidation-related volatility, the stock has de-rated from its peak multiples and now trades at around 2.8–3 times book value and low 20s price-earnings ratios, which represents a discount to its own historical average premium for a franchise of this quality.

As integration synergies play out, funding costs normalise, and loan growth gradually accelerates, there is room for both earnings compounding and some valuation repair over a three‐to‐five‐year period.

“We have a 3–5 year target price of ₹1,500–1,600, assuming mid‐teens loan and earnings growth, stable asset quality and a price‐to‐book multiple in the 3–3.2 times range as market confidence in the post‐merger trajectory improves,” said Ghose.

“Within a long‐term value‐biased portfolio, HDFC Bank serves as a core compounding position- not statistically cheap, but a business where the probability of sustained earnings growth and balance‐sheet strength is high, and current pricing does not fully reflect the long runway for profitable financial deepening in India,” Ghose said.

ITC | Near‐term pain, long‐term optionality

ITC has come under sharp near-term pressure following the latest excise duty hike on cigarettes, with the stock sliding to fresh 52-week lows and delivering a rare negative year-over-year return.

The immediate concern for the market is the impact of higher taxes on cigarette volumes and margins, alongside fears of further regulatory tightening, which has led to earnings downgrades and target price cuts from several brokerages.

Ghose underscored that in the short term, there is limited visibility on how quickly ITC can pass on the excise hike through price increases without hurting legal volumes, so volatility and negative sentiment are likely to persist.

However, he added that historically the company has generally managed tax shocks through calibrated price hikes and cost efficiencies over time, using its dominant market share and brand strength to gradually restore profitability.

Ghose pointed out that the strategic argument for ITC as a long‐term holding rests on three pillars:

(i) A highly cash‐generative cigarettes franchise that, despite regulatory risk, continues to throw off substantial free cash flows even under more stringent tax regimes.

(ii)A steadily scaling FMCG portfolio with improving margins and brand strength across foods, personal care and other categories, which diversifies earnings away from tobacco.

(ii) Ongoing value‐unlocking in capital‐intensive segments like hotels (demerger/listing), and a presence in paperboards and agri‐business that benefits from structural consumption and packaging demand.

“We have a 3–5 year target price of ₹450–475, assuming ITC gradually passes on the tax hike, stabilises cigarette volumes, continues to improve FMCG profitability and executes on hotel demerger‐led value unlocking; this aligns with updated but still constructive long‐term brokerage targets,” said Ghose.

“From a portfolio construction perspective, ITC currently looks optically weak on momentum but increasingly attractive on a long‐term risk‐reward basis- cash flows remain robust, diversification is improving, and the starting valuation after the drawdown offers a margin of safety for investors willing to look through the near‐term earnings reset,” Ghose said.

Infosys | Global IT services at a reasonable price

Infosys remains one of India’s most trusted IT services companies, with a large global client base, a strong balance sheet, and consistent free cash flow generation.

After a period of slower growth and sector-wide de-rating, the stock trades at a discount to its assessed intrinsic value, while still offering mid-teens returns on equity and high cash payouts.

Ghose highlighted that as of early January 2026, Infosys trades around ₹1,630–1,650 per share, with intrinsic value estimates clustered near ₹1,900–1,950, indicating upside even on conservative assumptions.

“With expectations of an earnings revival in FY26 and beyond, driven by cost‐optimisation deals, cloud and AI‐related projects, the valuation today looks closer to fair than expensive for a top‐tier franchise,” said Ghose.

“We have a 3–5 year target of ₹2,250–2,350, assuming high single‐digit to low double‐digit earnings growth, continued high payout, and a modest re‐rating towards intrinsic value.

Infosys fits the brief of a high‐quality, visible‐earnings business available at a reasonable valuation relative to its own history and cash‐generation capability,” Ghose said.

Asian Paints | Franchise strength at a fair valuation

Asian Paints is India’s dominant decorative paints and home décor company, with over eight decades of operating history, strong brands and a deeply entrenched distribution network.

The business consistently generates high return on capital (ROCE above 25%) and has maintained a healthy dividend payout, underlining the resilience of its cash flows.

Ghose underscored that the stock is not optically cheap on traditional metrics, trading at a price-earnings multiple in the mid-60s and over 13 times book value; however, this has historically been supported by strong profitability and brand strength.

“Recent years have seen slower sales and profit growth, which has already led to some valuation compression, bringing the price closer to fair value territory relative to its intrinsic value estimates near ₹2,650–2,650,” said Ghose.

“We have a 3–5 year target of ₹3,600–3,800, assuming a gradual improvement in demand, stable competitive intensity, and earnings growth in high single to low double digits from a high‐ROE base. In a diversified long‐term portfolio, Asian Paints offers a high‐visibility, consumer‐facing cash‐compounder; the valuation is fair rather than cheap, but supported by a very durable franchise,” said Ghose.

State Bank of India | Scale, visibility and still‐reasonable valuations

The State Bank of India (SBI) combines the advantages of a dominant public-sector lender with a steadily improving franchise across retail banking, corporate lending, and digital platforms.

Over the last few years, SBI has delivered significant improvements in asset quality and profitability, with credit costs normalising and the return on equity moving into the mid-teens.

Ghose said that brokerage and strategy notes for CY26 repeatedly highlight SBI as a preferred pick to play the earnings revival in Indian equities, citing reasonable valuations compared to private peers and healthy visibility on loan growth.

Ghose pointed out that the stock trades at a discount to the best-in-class private banks on price-to-book multiples, offering value for investors willing to hold on.

“We see a potential upside of 50–70% if credit growth sustains in low double digits, asset quality remains benign, and the valuation multiple inches closer to high‐quality private banks,” said Ghose.

“As part of this basket, SBI adds scalable exposure to India’s credit cycle with visible earnings and a valuation profile that still sits in the cheap‐to‐fair zone relative to its improving fundamentals,” Ghose said.

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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of the expert, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.