IDLC Securities picks 5 stocks for long-term investment, adds 15 to watchlist

The research team at IDLC Securities Limited – one of the country's leading brokerage firms – has identified five fundamentally strong stocks for long-term investment, providing forecasts based on their historical performance and projected business trajectories. 

A subsidiary of the country's largest non-bank financial institution IDLC Finance, the brokerage house has also added 15 stocks to a watchlist, highlighting their potential for future business opportunities that could deliver significant returns for investors. 

These recommendations were revealed in a recent research report titled "2025 Outlook: Are Ripples of Reform Priced In?" which offers insights into market trends and stock performance projections. 

IDLC Securities has identified its top picks, which include Marico Bangladesh, Square Pharmaceuticals, IBN Sina Pharma, BRAC Bank, and IT Consultants (ITC) as strong candidates for long-term investment. 

Additionally, the firm has highlighted a broader watchlist, comprising Olympic Industries, Kohinoor Chemical, Walton, MJL Bangladesh, Robi, Runner Auto, Beximco Pharma, ACI Formulation, Acme Laboratories, Envoy Textile, Matin Spinning, Square Textile, Popular Life Insurance, Reliance Insurance, and Berger Paints Bangladesh.

Tanay Kumar Roy, head of Equity Research at IDLC Securities, told The Business Standard, "As part of our commitment to providing research-based services to our investors and clients, we have identified stocks that we believe are well-positioned for long-term investment."

"We prioritise companies with a strong competitive advantage, a leadership position in their respective business segments, and a track record of consistent earnings growth with strong prospects for the future. Other key criteria include robust corporate governance, low leverage, regular dividend payouts, and attractive valuations," he added. 

Roy further emphasised that their recommendations and forecasts are designed to help investors make informed decisions for long-term investments. However, he noted that analysis-based projections may not always align with actual outcomes, as market conditions and external factors can impact results.

Referring to the watchlist, he explained, "We suggest these stocks as potential investment opportunities for investors to monitor. While some of these stocks may currently face business challenges, they also present significant future potential. Investors may consider these stocks, particularly when they become undervalued, as strong picks for long-term growth," he added.

2025 Outlook

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), experienced a significant decline of 16.49% or 1,030 points in 2024, reflecting ongoing market volatility and economic challenges that undermined investor confidence.

According to market insiders, investors endured a turbulent year marked by the removal of floor price restrictions, widespread student protests, the fall of the Awami League government, and sweeping regulatory reforms. 

These factors put considerable pressure on the market, leading to substantial losses that overshadowed a modest year-end recovery.

While the DSE faced these challenges, peer countries like India, Sri Lanka, and Pakistan outperformed, with investors in these markets seeing substantial returns on their stock investments. 

In its report, IDLC Securities highlighted how the stock markets of Sri Lanka and Pakistan rebounded after they successfully reduced inflation, enabling them to lower interest rates. 

Additionally, both countries secured foreign loans from the IMF and World Bank, which played a crucial role in restoring investor confidence.

Tanay Kumar Roy said, "Domestic investors in Pakistan and Sri Lanka faced heightened market volatility during the reform period. However, markets began to bottom out and recover as investors gained confidence in structural reforms and economic recovery. A change in political backdrop, and a decline in interest rates – were key factors that generated substantial returns from market lows in both countries."

He said the exchange rate in Bangladesh appears more stable now, as the current account deficit has narrowed. But inflation remains a key challenge. Persistent food inflation, driven by supply chain bottlenecks and floods, continues to weigh on the economy. 

"That said, we see potential silver linings. Historically, food prices tend to drop during winter and Ramadan. Also, rice prices should decline as the Boro harvest begins in April-June. These positive factors are likely to counter food inflation, potentially taming overall inflation in the 2nd half of 2025," he added.