Amber Enterprises , Ambuja Cements, Axis Bank, Bharti Airtel, JSW Energy, (L&T), Macrotech Developers , Max Healthcare, State Bank of India, TVS Motor Company and Zomato are the top 11 picks by Jefferies India Pvt Ltd for next five years.
These stock ideas as per Jefferies are likely to deliver 15-25% cagr returns over the next 5 years. The analysts team has identified the ideas that fit in to major themes.
India is the fifth largest market and by 2030, India's market capitalization is projected value is projected to touch $10 trillion as per Jefferies. India GDP is likely to cross $5 trillion, ranking third in the world economy over next four years.
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The themes as housing and corporate capex cycle should play out as India's capex cycle has turned around from its FY20 bottom and is expected to continue for at least five years more. Ambuja Cements , Axis Bank, JSW Energy, Larsen & Toubro (L&T) , Macrotech Developers are themes on Capex cycle.
Among other themes, government's manufacturing push should help Amber Enterprises, SOE reforms should help State Bank Of India as financialisation of savings should help Axis Bank and State Bank of India. The themes that should benefit from rising penetration include Max Healthcare and Zomato, while key consumer and bottom-of-pyramid ideas as per Jefferies include Bharti Airtel and TVS Motor.
For Amber Enterprises having core competency in Air Conditioning and diversification into components. the support from the PLI scheme should help Amber see earnings grow at compounding rate of 36% over FY24-30.
For Ambuja Cements, Jefferies expects the capex upcycle driving cement demand and Ambuja clocking 19% ebitda CAGR (compound annual growth rate). Ambuja is also expected to nearly double its capacity supported by inorganic growth, cutting costs and investing in green power.
Ebitda stands for earnings before interest, tax, depreciation and amortisation
For Axis Bank, Jefferies expects 17% loan and 18% earnings CAGR over FY24-29 . It expects Axis Bank leverage on improvement in deposit franchise, ramping up of digital and lending platforms and ramp-up of its subsidiaries.
For Bharti Airtel Jefferies expects robust Ebitda growth of 13% in India CAGR, helped by increase in ARPUs even faster than the nominal GDP and combined with moderation of investment (Capex), which would propel Bharti's Free cash flow to equity expand at a 21% CAGR during FY24–30 and raise the company's ROCE to cross 25%.
JSW Energy is expected to see a three fold increase in in power capacity to 20GW by FY30. JSW Energy should see renewable share rising to 80% plus from 50% helping driving significant upsides for JSW Energy over next 5-years.
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Larsen & Toubro or L&T being the largest Indian contractor is pegged by Jefferies to achieve 15%+ revenue CAGR over FY23-30. This for L&T is likely to be helped by broad recovery in India capex cycle, market share gains and execution ramp up. Alongside, for L&T the operating leverage should drive margin expansion and help the stock see good gains and even a rerating.
Macrotech Developers should benefit from the strong housing cycle which will help Macrotech clock 17.5% CAGR pre-sales growth as per Jefferies.
For Max Healthcare the benefits are expected as quality healthcare remains underpenetrated and doubling of Max's bed capacity by FY30 should help Max see 17% revenue and 20% ebitda CAGR over next 5 years as per Jefferies.
For State bank of India loan growth is expected at 13% driven by retail, SME & corporate. This works in tandem with ROA growth above 1% as the cost-to-income ratio drops to propel earnings growth of 18% for SBI as per Jefferies. Certain rerating may also be prompted by better investor perception for SBI.
TVS Motors remains as a major gainer from the revival of the two-wheeler market in India. TVS shift to electric two wheelers should propel 12% volume and 26% EPS growth annually, resulting in robust stock returns.
For Zomato, it is the low penetration levels that offer a good opportunity for growth for both food delivery and quick commerce. Zomato's net profit is expected to rise 20 times over FY24-30, driving target of Rs400, offering 150% plus returns for the stock as per Jefferies.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
analyst team, dovetailing into some key themes highlighted in our report
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First Published:
18 Mar 2024, 10:44 AM IST
