Synopsis: As Jefferies moves toward cheap stocks with better growth visibility, it reorganizes its model portfolio, adding BPCL, JSW Energy, AU SFB, Axis Bank, SAMIL, and more while reducing IndiGo and other stocks.
Jefferies, a global brokerage, has rearranged its model portfolio, indicating a move toward cheap stocks with better growth potential. The firm has added new investments in energy, financials, autos, and real estate while reducing holdings in industries that are losing steam in a market where broad indices are still strong but many individual names trade below long-term averages.
Leading global brokerage, Jefferies has reshuffled its model portfolio, highlighting a few new stocks as it searches for value openings in a market where MSCI India is up 8 percent YoY but nearly one-third of the covered stocks are still trading below the average long-term valuations.
The brokerage added Godrej Properties, BPCL, JSW Energy, AU Small Finance Bank, Axis Bank, and Samvardhana Motherson International, indicating trust in a wide range of sectors from energy and financials to autos and real estate. The moves are justified by the abundance of tailwinds specific to the companies.
According to the brokerage, AU Small Finance Bank is likely to present the strongest growth scenario as it evolves from a small finance bank to a universal bank; Axis Bank is now the stock to watch rather than ICICI Bank due to its cheaper valuations and asset quality getting better. Meanwhile, it states that Godrej Properties’ recent underperformance in the market has made it valuations attractive based on long-term metrics, aided by strong pre-sales growth of around 15 percent to 20 percent a year.
SAMIL has been added in place of Belrise as it can increase its margins worldwide, supported by the easing of macroeconomic factors and the faster growth of the non-auto segments such as aerospace and electronics, and expects its earnings to rise at roughly 25 percent between FY26-28. JSW Energy took the place of NTPC due to its robust capacity pipeline and bright demand outlook, while BPCL was given the green light due to good refining economics and attractive valuations.
Meanwhile, Jefferies has reduced its stakes in IndiGo, ICICI Bank, NTPC, Tata Steel, and has also taken Belrise and Crompton Consumer out of the portfolio. The brokerage thinks some of these stocks might encounter difficulties in the near term or have already been priced in substantially.
In conclusion, the reshuffle shows that Jefferies is taking a measured view by stepping up into undervalued stocks with strong earnings visibility and backing off in sectors where there has been a slowdown of the momentum.
Written by Satyajeet Mukherjee
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