7 'Buy' recommendations by Jefferies with 9% to 51% upside potential

Global investment bank Jefferies has 'Buy' ratings on seven stocks, with upside ranging from 9% to 51%. The stocks span sectors including metals, food chains, consumer durables, and pharmaceuticals.

Here are the seven recommendations and Jefferies' investment rationale behind it:

Tata Steel

Jefferies has a 'Buy' rating on Tata Steel with a target price of Rs 240 apiece, implying an upside of 30% from the current market price of Rs 185.24.

Jefferies raises its FY27-29 earnings per shrew (EPS) view by 2-5% on higher India prices and higher Netherlands profitability, partly offset by weaker UK profitability.

Rise in domestic steel prices will support margins hereon. The company expects realisations in India to rise by Rs 3,500 sequentially in the December quarter, which should more than offset the $15 higher coking coal and should drive a margin expansion ahead. However, Regulatory challenges in the Netherlands around coke and gas plant closures and steel slag management persist, Jefferies said.

Voltas

Jefferies has a 'Buy' rating on Voltas with a target price of Rs 1,445 apiece, implying an upside of 33% from the current market price of Rs 1,084.1. The investment bank said to buy the stock on favourable risk-reward.

Jefferies expects revenue to rise at 14% on a compounded annual growth rate (CAGR) basis over FY27 to FY29, while EBITDA will rise at 24% CAGR.

"Base of Q3 and Q4 LY is higher vs H1 as these qtrs. saw improved demand due to BEE change, strong summer. Factoring Q2 miss and margin headwinds, we cut FY28-29e EPS by -3%, while FY27e cut is sharper," it said.

Divi's Laboratories

Jefferies has a 'Buy' rating on Divi's Laboratories with a target price of Rs 12,550 apiece, implying an upside of 9% from the current market price of Rs 11,526.5 apiece.

Divi remains the best-in-class CRDMO franchise in Jefferies' coverage, with high growth visibility for long term and several potential blockbuster pipeline products, including complex peptides and GLP.

"We increase our FY27-29 EPS estimates by 17-22%, driven by higher sales growth and EBITDA margin. We value Divi's at 62x Dec-28 EPS (unchanged and largely in-line with the sector)..." it said.

Bharti Hexacom

Jefferies has a 'Buy' rating on Bharti Hexacom with a target price of Rs 2,080 apiece, implying an upside of 23% from the current market price of Rs 1,678.

Bharti Hexacom's faster growth outlook should keep its valuation at a premium to Bharti Airtel's India operations. Despite the 11% rally in the last one month, the stock is trading at 14 times, which is a 10% premium to Bharti Airtel (India ops), against the 22% average premium since its listing, which is attractive, Jefferies said.

Bharti Airtel

The global investment bank has a 'Buy' rating on Bharti Airtel with a target price of Rs 2,380 apiece, implying an upside of 16% from the current market price of Rs 2,052.

Jefferies expects a 10% tariff hike in April. It lowered Airtel's India revenue and EBITDA estimate for FY27-FY29 by 2-3%, to reflect the earnings miss for September quarter and expects the company to deliver 13%/14% CAGRs in India (ex-tower) revenue/ EBITDA.

Inventurus Knowledge Solutions

The global investment bank has a 'Buy' rating on Inventurus Knowledge with a target price of Rs 2,030 apiece, implying an upside of 20% from the current market price of Rs 1,694.9.

Jefferies cut FY27 and FY28 estimates by 2-4% to reflect integration expenses and interest costs, but raised FY29 estimates by 2% as it expects revenue synergies to start in FY29.

"Over FY27-29, we expect IKS to deliver a 26% CAGR in EPS. After the 27% underperformance vs NiftyIT since July, the stock trades at 27.5x PE, making the risk-reward profile favourable," it said.

Jubilant FoodWorks

Jefferies has a 'Buy' rating on Jubilant FoodWorks with a target price of Rs 650 apiece, implying an upside of 51% from the current market price of Rs 430.5.

Jefferies sees EBITDA margin rising over 200 basis points in the medium term, while additional levers are available. The dine-in and takeaway operations can add further 1-2 percentage points to LFL, supporting growth and margins.

Strong momentum continued in Popeyes, with revenue rising over 50% on LFL basis, and sustaining "very high" growth for the last four quarters. Store expansion plans support the revenue aspiration of over Rs 1,000 crore over the next 3-4 years, it said.

Jefferies' Buy recommendations: Key drivers

The 'Buy' recommendations by Jefferies are primarily driven by the outlook for these companies after the Q2 results. The revenue guidance, order visibility and key business expansion plans for a key role in driving the company's fundamentals ahead. Jefferies has outlined the key growth levers for the companies.