These 11 Stocks Will Give You Up To 25% Returns Over Next 5 Years, According To Jefferies

Brokerage firm Jefferies has handpicked 11 stocks, each projected to potentially deliver robust returns with a compounded annual growth rate (CAGR) ranging between 15-25% over the next five years.

These picks span various sectors and were chosen based on their strong fundamentals and potential for long-term growth.

The Thesis: Jefferies’ analysis suggests that with the US dollar exhibiting a compound annual growth rate of around 10%-12% over the past decade, the Indian equity market could attain a market valuation of $10 trillion by 2030.

The firm anticipates that consistent and robust domestic inflows, complemented by foreign portfolio investment (FPI) inflows, will underpin the sustained performance of the Indian market, particularly for stocks with solid fundamentals.

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The resurgence of India’s capital expenditure cycle, rebounding from its lows in FY20, is anticipated to extend beyond five years as both housing and corporate capex initiatives unfold.

Jefferies identifies this capex revival as a driving force behind several of its top stock picks, including names like Ambuja Cements, Axis Bank, JSW Energy, Larsen & Toubro (L&T) and Macrotech Developers.

Here is Jefferies’ list of top picks:

Amber Enterprises: Positioned as a key beneficiary of India’s manufacturing growth story, particularly within the small and midcap segment, Amber Enterprises is expected to witness a robust earnings growth trajectory driven by its specialisation in air conditioners and diversification into components.

Ambuja Cements: Noted as the second-largest cement producer in India, Ambuja Cements is poised to achieve strong operational performance, propelled by factors such as capacity expansion, cost optimisation, and investments in green power.

Axis Bank: Forecasts suggest a promising earnings growth outlook for Axis Bank, supported by enhancements in deposit franchises, digital and lending platform expansions, and the integration of Citibank India.

Bharti Airtel: With a track record of consistent market share gains and an improving pricing environment, Bharti Airtel is anticipated to witness revenue and EBITDA growth driven by market share expansion and higher Average Revenue Per User (ARPU).

JSW Energy: Expected triggers for JSW Energy include increased visibility in renewable energy capacity, commissioning of merchant capacity, and advancements in green hydrogen plants and energy storage batteries.

Larsen & Toubro (L&T): Identified as a significant beneficiary of India’s capital expenditure resurgence, L&T is projected to witness sustained EPS growth and a potential re-rating, contingent upon prudent capital allocation and government spending on infrastructure.

Macrotech Developers: Macrotech Developers stands to benefit from the ongoing housing capex cycle and its substantial land bank in Mumbai’s suburbs, with a medium-term pre-sales CAGR expected to be between 15-20%.

Max Healthcare: With sustained growth momentum in the hospital business, Max Healthcare is forecasted to achieve an average EBITDA growth rate of 20% from 2024-30, driven by new bed additions and operational efficiencies.

State Bank of India (SBI): SBI’s strong deposit base, digital offerings, and leadership in lending segments position it favourably for growth, alongside its ability to raise capital and potential for valuation re-rating.

TVS Motor: TVS Motor is poised to benefit from the resurgence in Indian two-wheeler demand and narrowing profitability gaps with peers, despite concerns over investments in overseas entities.

Zomato: Considered a compelling food delivery investment, Zomato’s potential for EBITDA break-even and visible profit pool growth over the next five years are seen as key drivers, contingent upon prudent capital allocation strategies.

Jefferies’ curated list reflects a blend of sectoral themes and growth drivers, offering investors a diversified array of opportunities to explore for potential long-term wealth creation.

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Posted In: Analyst ColorEquitiesMarketsAnalyst RatingsAmbuja CementsAxis BankBharti AirtelJefferiesJSW EnergyZomato