The international brokerage firm Jefferies has listed out three stocks: ITC Hotels, AU Small Finance Bank, and Newgen Software, with a ‘Buy’ rating. The brokerage house sees as much as 39% upside in one of these. Here is a detailed analysis behind assigning these ratings.
Jefferies on ITC Hotels
Jefferies maintained its ‘Buy’ rating on ITC Hotels post its quarterly results for Q3 FY26. The brokerage, however, cut the target price marginally to Rs 250 from Rs 255. The new target price implies an upside of over 39% from the current market price.
The company’s RevPAR (revenue per available room) growth remained steady at high single and low double digit YoY, plus the company is seeing a healthy scale-up in management fees. The company also recently signed an owned hotel at a popular MICE location in Delhi. After the December quarter came in line, the brokerage firm tweaked estimates by 1-3% to incorporate the impact of the RE segment (better margins vs estimates).
We also raise capital expenditure assumptions related to a new hotel project. Overall, capex intensity for ITC Hotels is expected to scale up with new greenfield projects and land-related cash outflow.
Jefferies on AU Small Finance Bank
Jefferies raised the target price on AU Small Finance Bank to Rs 1,220 from Rs 1,170, implying an upside of more than 22%. The brokerage maintained its ‘Buy’ rating on the stock.
For the December quarter, AU Bank’s profit of Rs 670 crore was up 26% YoY & ahead of Jefferies’ estimates, while core profits (excluding the new labour law) grew 29% YoY, led by higher margins & lower credit costs, partially offset by higher expenses.
“Bank’s AUM grew 19% YoY, aided by strong momentum in wheels & commercial bank & can improve further as growth in unsecured loans picks up,” said Jefferies. Transition to a universal banking platform is a multi-touch opportunity. The brokerage raised estimates & sees ROA rising to 1.7% in FY27.
Jefferies on Newgen Software
Jefferies has upgraded Newgen Software to a ‘Buy’ rating from ‘Underperform’. However, it has cut the stock price to Rs 760 from Rs 835, still implying an upside of over 21%. Newgen Software’s Q3 FY26 revenue missed estimates, but profits beat. Slower growth in license sales & core markets was the key negative surprise.
License sales have declined in FY26 on a high base & should normalise in FY27, given FY26’s low base. “We cut our EPS estimates by 3-8% to factor in weaker growth & expect 15% EPS CAGR over FY26-28. At 22x PE, on normalised growth expectations, we think risk-reward looks attractive,” said Jefferies.