What if three companies from three completely different worlds – food delivery, steel, and cars all had one thing in common? International brokerage house, Jefferies has maintained its ‘Buy’ rating on Swiggy, Tata Steel and Mahindra & Mahindra (M&M), with target prices indicating upside potential ranging from around 22% to as much as 47% from the current market price.
What is driving Jefferies’ positive outlook? Let’s take a look –
Swiggy: Can profitability improve further?
Jefferies has maintained a ‘Buy’ rating with a target price of Rs 415. This implies an upside potential of about 44% from the current market price.
The food tech giant has reached contribution margin (CM) break-even, meaning the money it earns from each order now covers the direct cost of delivering it.
The brokerage said, “Swiggy delivered CM break-even in Q/C, though mgmt rightfully plans to reinvest & keep margins flat to -100bps in the ST.”
According to the brokerage report, the bigger discussion now revolves around earnings before interest, taxes, depreciation and amortisation (EBITDA), where losses remain elevated despite management outlining a clear roadmap towards profitability.
Jefferies also noted, “Food growth was broadly inline even while losses in Toing were high, but mgmt appears confident on product-market fit.”
The brokerage expects to revisit its financial estimates after the company’s analyst meeting scheduled for August 6.
Tata Steel: Domestic business remains the key strength
Jefferies has also maintained a ‘Buy’ rating on Tata Steel with a target price of Rs 275, indicating an upside potential of around 47%.
The company’s June quarter earnings before interest, taxes, depreciation and amortisation (EBITDA) remained broadly in line with expectations. Domestic operations continued to perform well, supported by higher volumes and better profitability.
However, according to the report, tEurope, though, tells a rougher tale. Profit per tonne in the Netherlands business shrank to just $3, and the UK operations stayed in losses, even if those losses eased a bit quarter-on-quarter (QoQ).
Jefferies also highlighted Tata Steel’s announcement to expand its Neelachal Ispat Nigam Limited (NINL) facility by 4.8 million tonnes per annum.
Mahindra & Mahindra: Volumes up, margins under pressure
Jefferies has retained its ‘Buy’ rating on Mahindra & Mahindra with a target price of Rs 4,000. This indicates an upside potential of around 22%.
As per Jefferies report, commodity inflation affected margins during the June quarter, even though vehicle volumes remained strong.
The automobile business continues to deliver healthy sales volumes, while the company is preparing to launch a new sport utility vehicle platform from calendar year 2027.
Jefferies further noted, “We expect core EPS to grow 7% in FY27, followed by 17% CAGR over FY27-29.”
The tractor business, a major profit driver, faces a possible slowdown in the second half of FY27 (the financial year running April 2026 to March 2027), largely due to worries over weak monsoon rains.
On the brighter side, new sports utility vehicle (SUV) launches are lined up from calendar year 2027 (CY27), and the company’s market share in this segment has more than doubled since FY21.
What should investors watch?
Although Swiggy, Tata Steel and Mahindra & Mahindra operate in very different industries, Jefferies’ investment case has a common theme. According to the brokerage reports, improving earnings visibility, business expansion and long-term growth opportunities remain the key reasons behind its positive stance.
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