3 ‘Buy’ recommendations by Jefferies, with up to 23% upside potential

Let’s take a look at the stocks the brokerage house is bullish on and the reasons behind its optimism.

Jefferies on Patanjali Foods: ‘Buy’

Jefferies has retained its ‘Buy’ rating on Patanjali Foods with a target price of Rs 560, implying a potential upside of 23%. The brokerage said the company’s March quarter performance was impacted by weaker-than-expected profitability in the Foods and Fast-Moving Consumer Goods business and a high base in edible oils margins, though it sees improving conditions ahead.

Patanjali Foods reported revenue growth of 15% year-on-year during the March quarter, driven by volume growth and higher realisations in edible oils. Earnings before interest, tax, depreciation and amortisation (EBITDA) declined 14% year-on-year to Rs 445.4 crore, coming in below Jefferies’ estimates. Sequentially, however, the edible oils business showed improvement, with revenue rising 13% and earnings before interest and tax increasing 29% as volumes recovered and pricing actions took effect.

The brokerage noted that palm oil and soybean oil prices increased by more than 20% during the quarter, a trend it believes could support stronger realisations and volume growth in the coming quarters. Within the Foods segment, staples remained weak and weighed on overall performance, although biscuits continued to register healthy growth. The Home and Personal Care business also delivered a strong showing, supported by growth in skincare and steady traction in dental care.

Jefferies said management expects higher commodity prices to support the edible oils business and has maintained its long-term guidance of 3% to 4% volume growth with earnings before interest, tax, depreciation and amortisation margins in the 2% to 4% range. The brokerage also pointed to expectations of high single-digit growth in Foods and mid-teen growth in Home and Personal Care over the longer term.

“We expect a pickup in edible oils perf on higher commodity prices and GST cut to benefit Foods & FMCG. Retain ‘Buy’,” Jefferies said while reiterating its positive view on the stock.

The brokerage made marginal changes to its FY27-FY29 estimates and continues to forecast a 23% profit after tax compound annual growth rate over FY26-FY29.

Jefferies on Titagarh Rail Systems, ‘Buy’

Jefferies has reiterated its ‘Buy’ recommendation on Titagarh Rail Systems and raised its target price to Rs 990 from Rs 810. The revised target suggests a potential upside of 23%.

The brokerage said Titagarh Rail Systems delivered March quarter earnings before interest, tax, depreciation and amortisation that were 7% ahead of its estimates, aided by better-than-expected execution and stronger margins. The company dispatched 25 metro coaches during the quarter, compared with 21 coaches during the entire first half of FY26, signalling a meaningful improvement in execution.

Jefferies said the passenger rail business remains the key earnings driver. Revenue from the segment jumped 92% year-on-year during the quarter. While the company delivered 64 coaches in FY26 against management’s earlier target of 100 to 120 coaches, the brokerage noted that execution delays in the first half of the year were largely responsible for the shortfall.

Management now expects deliveries of 200 to 220 coaches in FY27. On the Vande Bharat project, the company remains confident of delivering two trains in FY27, with prototype supply targeted for December 2026.

The brokerage also highlighted a significant improvement in passenger segment profitability. Margins reached 19% during the March quarter, substantially ahead of its estimate of 12%, driven by stronger execution of the Bengaluru Metro project. While management expects margins to settle at lower levels in the near term, it anticipates a gradual improvement as the company moves further up the technology value chain.

Although freight wagon sales declined 29% year-on-year because of supply-side challenges, Jefferies believes the company retains strong earnings visibility due to its order book of 6,500 wagons. The brokerage also referred to recent reports suggesting Indian Railways may place an order for one lakh wagons, which could provide an additional boost to the sector.

“We believe Titagarh is a key beneficiary of rising passenger and metro coach demand led by government initiatives,” Jefferies noted.

The brokerage estimates a 44% earnings per share compound annual growth rate over FY26-FY30 and believes sustained execution improvement could support further gains in the stock.

Jefferies on IndiGo: ‘Buy’

Jefferies has maintained its ‘Buy’ rating on IndiGo with a target price of Rs 5,380, implying a potential upside of 22%.

The brokerage acknowledged that the airline’s March quarter performance was weak and broadly in line with expectations, but said its long-term investment case remains intact despite a challenging near-term operating environment.

According to Jefferies, IndiGo faced elevated cost pressures during the quarter. Excluding foreign exchange movements and exceptional items, profit after tax stood at around Rs 190 crore, down 37% year-on-year. Capacity growth also remained muted, while yields softened during the period.

The brokerage said costs excluding fuel and foreign exchange increased around 7% year-on-year, driven by higher United States dollar-linked expenses, lower aircraft utilisation and rising airport and maintenance costs. Management has guided for continued cost pressure during FY27.

Despite those headwinds, Jefferies pointed to encouraging pricing trends. Management expects mid-teen growth in unit revenue during the first quarter of FY27, supported by fare increases and fuel cost pass-through. The brokerage noted that IndiGo has been able to recover part of the increase in fuel costs through a combination of fuel surcharges and higher base fares, while demand has so far shown limited sensitivity to higher ticket prices.

Jefferies also highlighted the airline’s increasing focus on profitability rather than aggressive expansion. Capacity growth assumptions have been reduced, with management prioritising route optimisation, network adjustments and the return of less efficient damp-leased aircraft. Capacity allocation is also being tilted towards the domestic market in the near term.

“Mgmt is pivoting to optimize capacity (JEFe: 5–6% ASK growth vs 10% earlier) & profitability in FY27. We cut ests but retain ‘Buy’, anchored on the long-term leadership story,” Jefferies said.

While the brokerage lowered its earnings estimates for FY27 and FY28, it continues to view IndiGo as the strongest player in Indian aviation and expects its market position to support earnings growth over the longer term.

Conclusion

Jefferies’ latest research notes place Patanjali Foods, Titagarh Rail Systems and IndiGo among its preferred stock ideas, with each carrying a ‘Buy’ rating and more than 20% potential upside based on the brokerage’s target prices. While near-term challenges remain across consumer goods, rail manufacturing and aviation, Jefferies believes improving operating trends, execution gains and long-term growth drivers continue to support a constructive outlook for all three companies.

Disclaimer: The stock investment insights, target prices, and sectoral growth expectations discussed in this broker-led strategy note are based on institutional equity research reports from Jefferies and do not constitute direct buy, sell, or hold recommendations for retail investors.

Equities across consumer staples, heavy manufacturing/railways, and the aviation sector are subject to distinct structural headwinds. Packaged food and FMCG companies are heavily exposed to global agricultural commodity and energy price fluctuations that dictate input margins. Railway engineering and capital goods firms depend heavily on long-term government infrastructure capex allocations, contract execution speeds, and supply-chain dependencies. Meanwhile, commercial aviation companies operate under thin margins highly sensitive to foreign exchange volatility, crude oil pricing cycles, and fleet utilization constraints. Because individual risk tolerance and asset distribution targets differ significantly, readers are strongly advised to consult a SEBI-registered investment advisor or a qualified financial consultant before deploying fresh capital based on these target estimates.