The dramatic shift comes as Indian markets trade at an 82% premium to emerging markets versus a 10-year average of just 63%, with nearly 39% of non-financial stocks trading above one standard deviation of their 10-year average PE multiples.
“With market likely to move sideways, bottom-up stock picking will be crucial,” Jefferies warned, as it unveiled its curated list featuring Adani Energy Solutions, Adani Ports, and AWL Agri Business alongside Birla Corp, Belrise Industries, Bharti Airtel, Finlex Cables, IndiGo, M&M, NTPC, and Sagility.
The most striking addition is Adani Energy Solutions, which Jefferies argues offers compelling value despite the group’s recent travails. “AESL has Rs616 bn transmission projects on hand, up 3.6x YoY,” the brokerage noted, highlighting the stock’s 79% discount to its January 2023 peak forward EV/EBITDA.
“AESL is growing 3x+ faster than Power Grid (PGCIL) with 34% EBITDA CAGR in FY25-27E vs 9% for PGCIL,” Jefferies emphasized, setting a bold price target of Rs1,150 based on 15x EV/EBITDA FY27E, a significant premium to the implied 10x target for state-owned PGCIL.
Also Read | 3 Nifty50 stocks in 100x PE club: Are sky-high valuations the new reality?On Adani Ports, the brokerage expects robust growth momentum with “16% FY25-28E EBITDA CAGR led by 14% FY25-28E CAGR in volumes with commissioning/stabilization of operations at new ports.” The stock trades at 16.6x FY26E EV/EBITDA, “broadly similar to 16.1x average since 2009 and 38% discount to JSW Infra.”The brokerage made strategic portfolio shifts, adding fast-growing IT midcap Sagility “by trimming weight on Infosys, keeping IT still at an underweight position.” In the auto sector, Jefferies replaced Eicher with Belrise Industries, “an auto-comp midcap which was recently initiated and provides a strong growth outlook.”
Jefferies has removed Nuvama from the list following the Jane Street debacle.
The value hunt strategy restricts picks to stocks with EV/EBITDA multiples below 18x while incorporating fundamental strength and historical valuation ranges. “This is not a purely valuation screen,” Jefferies clarified, emphasizing its selective approach in identifying “a mix of absolute value picks and relative value bets.”
