What Are Jefferies Top 11 Picks In India For Next Five Years?

India's capital expenditure cycle theme drives the global brokerage firm’s top 11 picks for the next five years
What Are Jefferies Top 11 Picks In India For Next Five Years?

Global brokerage firm Jefferies said continued reforms should maintain India’s ‘fastest growing large economy’ status and the country’s gross domestic product (GDP) will likely touch $5 trillion over the next four years, making it the third-largest economy as continued reforms lay the foundation of around 7% long-term GDP growth.

The consistent and fast growing domestic flows will likely complement foreign portfolio investors’ inflows to sustain the Indian capital market performance, Jefferies said in an investor note.

The brokerage said India's capital expenditure cycle has turned from its FY20 bottom and should last another five years as the housing and corporate capex cycle play out.

“The capex cycle theme drives several of our top picks,” which are likely to deliver a 15%-25% CAGR returns over the next five years, it added.

Jefferies said its 11 Top Picks for the next five years are Amber Enterprises India Ltd., Ambuja Cements Ltd., Axis Bank, Bharti Airtel Ltd., JSW Energy Ltd., Larsen & Toubro Ltd., Macrotech Developers Ltd., Max Healthcare Institute Ltd., State Bank of India, TVS Motor Company Ltd. and Zomato Ltd.

Following are the key snapshots from Jefferies’ view on its 11 Top Picks:

Amber Enterprises

  • A key beneficiary of India's manufacturing growth story.

  • Core competency in air conditioners (ACs) and diversification into components, with support from the production-linked incentive (PLI) scheme, to drive over 36% earnings CAGR over FY24-FY30.

Ambuja Cements

  • Strong cement demand from capex upcycle to drive 19% EBITDA CAGR as Ambuja nearly doubles capacity (helped by potential acquisitions), cuts costs and invests in green power.

Axis Bank

  • 17% loan/18% EPS CAGR over FY24-FY29 expected as Axis Bank leverages on improvement in deposit franchise, ramp-up of digital & lending platforms and ramp-up of its subsidiaries.

Bharti Airtel

  • Strong EBITDA growth (13% India CAGR, as average revenue per user rises faster than nominal GDP), along with moderating capex will drive a 21% CAGR in Bharti Airtel’s free cash flow to equity over FY24-FY30 and will push up the company's return on capital employed to over 25%.

JSW Energy

  • 3x jump in power capacity to 20 gigawatts by FY30, with renewable share rising to over 80% from about 50% to drive significant upsides over five years.

Larsen & Toubro

  • L&T, the largest Indian contractor, will be able to achieve over 15% revenue CAGR over FY23-FY30E, driven by broad recovery in India capex cycle, market share gains and execution ramp up.

  • Alongside, operating leverage to drive margin expansion and strong stock gains. Also some room for re-rating.

Macrotech Developers

  • Strong housing cycle to drive 17.5% CAGR pre-sales growth.

  • Alongside, Mumbai infra upgrade to drive over 10% CAGR pricing uptick in large township land, driving significant rerating and over 150% stock gains.

Max Healthcare

  • Under-penetration in quality healthcare and doubling of Max's bed capacity by FY30 to drive 17% revenue/20% EBITDA CAGR over next five years.

State Bank of India

  • 13% loan growth driven by retail, SME and corporate, alongside return on assets expansion beyond 1% as cost-to-income ratio declines to drive 18% earnings growth.

  • Improving investor perception can drive some re-rating.

TVS Motor

  • Key beneficiary of revival in Indian two-wheeler demand and transition to electric two-wheeler should drive a 12% volume and 26% EPS CAGR, triggering strong stock returns.


  • Low penetration levels in core segments offer a long runway to growth with both food delivery (19% gross order value CAGR over FY24-FY30) and quick commerce (40% CAGR) expected to jump.

  • Profits to rise 20x over FY24-FY30, driving target price of 400 rupees, offering over 150% returns.

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