These three large-cap stocks are trouncing the Sensex in 2025—so far

Yet, a handful of heavyweight stocks have bucked the trend—surging over 25% and delivering market-beating returns.

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In this piece, we spotlight three such large-cap outperformers, unpack the catalysts behind their rally, and assess whether their momentum can hold. Can these stocks still deliver upside, or is the best already behind them?

#1 Bajaj Finance

Bajaj Finance has rallied 29% year-to-date, handily outperforming the broader market. The bounce came after a surprise rebound in the December 2024 quarter, which restored investor confidence in the company’s ability to grow despite macro headwinds.

A stalwart in India’s non-bank lending space, Bajaj Finance posted a 23% year-on-year rise in net interest income to ₹9,380 crore for Q4FY25, while net profit jumped 18% to ₹4,310 crore—fuelled by operational efficiencies and a growing loan book.

The rally got an additional boost after the Reserve Bank of India lowered risk weights on bank lending to non-banking finance companies (NBFCs), a move that could reduce borrowing costs and support the company’s expansion plans.

Investor sentiment was further lifted when Anup Kumar Saha was announced as the incoming managing director, succeeding long-time head Rajeev Jain. Saha, a seasoned insider, is seen as well-positioned to drive the firm’s ambitious five-year plan, dubbed “BAF 3.0.”

That roadmap aims to grow assets under management (AUM) to ₹4 trillion and the customer base to as high as 210 million by FY29. The company also expects to disburse more than 40 million loans and expand its retail credit market share to over 4%.

Over the past five years, the company has scaled up its loan book 2.4 times, while growing net profit at a compounded annual growth rate (CAGR) of 26%.

Additionally, consistently low non-performing assets (0.30%-0.4% since FY18), and a solid return on equity (RoE) of 17.6%, Bajaj Finance remains one of the most dependable names in Indian financial services.

For FY26, the company expects to add 14–16 million customers and grow AUM by 24–25%, supported by new business lines. It has also guided for return on assets (RoA) of 4.4-4.6% and RoE of 19–20%, aided by surplus capital.

Axis Securities has a ‘Buy’ rating with a target of ₹10,500. Still, the stock’s premium valuation—5.7x price-to-book versus an industry average of 1.9x—suggests that much of the optimism may already be baked in.

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#2 Cholamandalam Investment and Finance

The second stock riding the NBFC rally is Cholamandalam Investment and Finance Co. Ltd (CIFC), up 27.8% in 2025. Its steady loan book expansion, strong asset quality, and consistent profitability have made it a standout performer in the sector this year.

CIFC, a part of the Chennai-based Murugappa Group, provides vehicle finance, home loans, and loans against property. It has a strong foothold in vehicle finance—accounting for 58% of its assets under management (AUM)—and has been gradually diversifying into home loans and SME lending, with a focus on self-employed borrowers.

The company delivered a solid performance in FY25, with broad-based growth across disbursements, profitability, and asset quality. Total income rose 36% year-on-year to ₹13,570 crore, driven by a 14% rise in disbursements to ₹1.0 trillion. Net profit grew 24% to ₹4,259 crore.

Asset quality also improved. Gross Stage 3 assets declined to 2.81% in March 2025 from 2.91% in December, while net non-performing assets (NPAs) fell to 2.63%. The company maintained a strong capital adequacy ratio of 19.75%, comfortably above the 15% regulatory minimum.

Importantly, FY25’s performance is part of a broader trend. Over the past five years, CIFC has reported a 27% CAGR in AUM, a 32% CAGR in net profit, and a 40% CAGR in disbursements—reflecting consistent execution across business segments.

As part of the Murugappa Group, CIFC benefits from group synergies and a wide client base. Its five-year average return on equity stands at a healthy 18%, underlining its ability to scale profitably while keeping risk under control.

Looking ahead, the company expects 20–25% AUM growth in the medium term, driven primarily by non-vehicle portfolios. It also plans to enter gold loans and consumer durable financing in FY26, targeting existing customers who currently borrow from outside sources. To support this, it will add 120 dedicated gold loan branches—requiring specific infrastructure such as vaults and tighter controls—in the South and East, where pilots are underway.

Axis Securities expects robust momentum to continue, led by sustained growth in the vehicle finance portfolio and accelerating traction in newer segments, supporting a projected 24% CAGR in AUM over FY25–27E. The largely fixed-rate VF book, combined with a declining cost of funds, is expected to support margins.

Axis has a ‘Buy’ rating on the stock with a target price of ₹1,780. Still, at a price-to-book multiple of 5.4x—well above the industry average of 1.9x—the stock isn’t cheap.

#3 IDBI Bank

IDBI Bank has surged 31% in 2025, far outperforming the Sensex, driven by a mix of reform momentum and renewed investor interest as the government pushes ahead with its strategic disinvestment plans.

The spotlight returned to IDBI Bank after the Centre reiterated its intention to complete the long-pending stake sale by the end of the year. Together, the government and Life Insurance Corp. of India (LIC) currently hold over 94% of the bank. As part of the proposed divestment, they aim to sell a combined 61% stake—split roughly equally between the government’s 30.48% and LIC’s 30.24%.

The revived timeline has rekindled market interest. While the Centre no longer sets explicit disinvestment targets, the IDBI stake sale is expected to be a key contributor to FY26’s budget estimate for miscellaneous capital receipts, pegged at ₹47,000 crore.

A successful divestment could bring in private capital, strengthen management autonomy, and improve strategic execution—unlocking further value.

Even before the divestment, IDBI Bank’s fundamentals have steadily improved. Net profit has grown at a 21% CAGR over the past five years, driven by rising advances and improved core income. Return on equity has risen from just 4% to 13.5% in FY25, reflecting the success of its turnaround strategy.

In FY25, the bank posted a record net profit of ₹7,656 crore. Total business (deposits plus net advances) crossed ₹5 trillion for the first time.

Asset quality also strengthened sharply. Gross NPAs fell to 2.98% from 4.53% a year ago, while net NPAs dropped to just 0.15% from 0.34%. The provision coverage ratio rose to 99.48%, including technical write-offs.

Capital buffers remain robust. The capital adequacy ratio improved by 279 basis points year-on-year to 25.05%, with Tier 1 capital at 23.51%.

On the disinvestment front, shortlisted bidders have completed due diligence and are reviewing the bank’s data room. Negotiations over the share purchase agreement are currently in progress.

Meanwhile, the stock trades at a price-to-book multiple of 1.8x—above its historical median of 1.3x and the industry average of 1.3x.

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Still, the rally hinges on timely execution of the stake sale. Any regulatory delays or shifts in government stance could dampen sentiment. With much of the upside likely priced in, the room for error remains narrow.

Conclusion

These large-cap stocks have clearly outperformed the Sensex in 2025—but their sharp rallies call for measured optimism.

Much of the good news may already be priced in, leaving limited margin for error. Valuations for some names now exceed historical averages, increasing vulnerability to earnings misses, policy shifts, or broader market volatility.

For more such analysis, read Profit Pulse.

With global uncertainties still in play, markets may stay choppy in the near term. Investors would do well to stay anchored to fundamentals, avoid chasing momentum, and consider staggered entries over lump-sum bets.

About the author: Ayesha Shetty is a research analyst registered with the Securities and Exchange Board of India. She is a certified Financial Risk Manager (FRM) and is working toward the Chartered Financial Analyst (CFA) designation.

Disclosure:The author does not hold shares in any of the companies discussed. The views expressed are for informational purposes only and should not be considered investment advice. Readers should conduct their own research and consult a financial professional before making investment decisions.