Stocks to Buy: A steep correction is being witnessed in the markets and as per Jefferies India Ltd, more than a fifth of the stocks under its coverage are trading below the June election results lows while around 30% are down more than 20% from Year to date peaks. Jefferies like many others now is expecting a bounce back. A pick-up in government spending or capex during the second half FY25, improved seasonality and somewhat better relative (to region) valuations are some of the reasons that can provide trigger for a potential short term bounce back in the market after the recent correction, as per Jefferies.
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From these beaten up bucket 14 key ideas as per Jefferies
These include Hindustan Aeronautics Ltd, Coal India Ltd, InterGlobe Aviation Ltd (Indigo), Godrej Consumer Products Ltd, Punjab National Bank, Macrotech Developers Ltd (Lodha), Cholamandalam Investment and Finance Company Ltd, Dabur India Ltd, GMR Airports Infrastructure Ltd , Supreme Industries Ltd, IDFC First bank Ltd, KEI Industries Ltd, Mahanagar Gas ltd, Honasa Consumer Ltd,
Key factors to drive upside
Hindustan Aeronautics– Jefferies expects addressable opportunity for India defence players to rise at 14% CAGR in FY24-30 driven by a) government’s indigenization efforts driving 13% CAGR in domestic defence spends versus. 8% CAGR in total defence spends and b) 18% CAGR in exports.
Coal India– India’s strong economic growth outlook, rising power consumption and thermal capacity additions should fuel healthy 5% volume growth for COAL over FY24-27 as per Jefferies estimates.
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InterGlobe Aviation -IndiGo is one-of-its kind strong franchise with a dominant at over 60% market share in domestic air travel. Recent stock underperformance represents a sharp miss in 2Q results as per Jefferies. This was driven by higher costs of groundings and related (inefficient) capacity mitigating measures. IndiGo’s story, however, remains intact with ramp up in capacity for IndiGo amidst cap constraints for most peers (positive for yields). Inferior cost curve for peers remains a winner for IndiGo
Godrej Consumer Products– Under a new CEO , GCPL has taken several structural initiatives including a management revamp, focus on access packs, a step-up in ad-spends, new product innovations, business simplification etc. More steps are underway, with focus on strengthening product efficacy, growing category penetration and enabling deeper rural outreach.
Punjab National Bank -PNB stock price has corrected 20% on the back of correction in PSU stocks. With this, stock trades at 1x FY26 adjusted Price to Book value
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Macrotech Devopers (Lodha) – Driven by demand from data centers & industrial / warehousing developments, the land values at the 4,500 acre township land in MMRs have risen by ~5 times over past three years to Rs125m/acre. Residential values have meanwhile moved up only ~20%; but a large jump is likely as infra triggers play out.
Cholamandalam Investment and Finance Company- Cholamandalam has corrected 23% from recent peak and around 18% in last month and now trades at 3.6 times FY26 estimated Book Value and 19 times FY26 estimated price to Earnings (PE).
GMR Airports Infrastructure– GMR has recently corrected by ~20% from its peak amid concerns around consumer slowdown and broader mid cap correction. This could be transient as per Jefferies.
Supreme Industries– Given Supreme’s superior execution in terms of continued strong volume growth (outpacing peers) and margin resilience, Jefferies forecast higher earnings CAGR over FY24-27 at more than 22% versus historical 15% plus over FY18-23.
IDFC First Bank– Jefferies expects bank deliver 22% CAGR (compounded annual Growth) in loans and improve Return on assets from 0.6% in FY25 to 1.3% in FY27. In that context Jefferies feel valuations look fairly attractive
KEI Industries– Jefferies believe exports has positive surprise scope as China+1 opportunity is reflecting in US among other regions
M:ahanagar Gas Ltd- Mahangar Gas stock has corrected sharply and trades at 10% discount to Indraprastha Gas on forward price to earnings despite stronger volume growth outlook, said Jefferies
Honasa Consumer: Jefferies expect Honasa to reach double-digit Ebitda margins by FY26 estimated versus 7% in FY24.
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
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