3 ‘Buy’ recommendations by Jefferies with up to 28% upside potential

Jefferies, however, believes that each company continued to offer room for gains despite differing business trends during the quarter. They raised target prices for Reliance Industries and Poonawalla Fincorp, while making a marginal increase for UltraTech Cement, with implied upside ranging from 19% to 28%.

Jefferies on Reliance Industries: ‘Buy’

Jefferies retained its ‘Buy’ rating on Reliance Industries and raised its target price to Rs 1,705 from Rs 1,675, implying an upside of 28%.

According to Jefferies, Reliance Industries delivered consolidated Earnings Before Interest, Taxes, Depreciation and Amortisation broadly in line with expectations during the June quarter. The brokerage said upstream operations exceeded its estimates, while the oil to chemicals business came in marginally below expectations. 

The retail business remained the weak spot during the quarter as core retail growth slowed and margins declined because of investments aimed at expanding hyperlocal commerce. Jefferies lowered its estimates for Earnings Before Interest, Taxes, Depreciation and Amortisation for the retail segment for FY27 to FY29 by 1% . The brokerage also remained constructive on the oil-to-chemicals business. It said refining profitability should remain healthy in the near term because disruptions to refining infrastructure in the Middle East and Russia continued to support margins. It also expected petrochemical spreads to improve as feedstock supplies gradually normalised. Jefferies further noted that Reliance Industries continued to build large scale artificial intelligence ready data centres and expected the first artificial intelligence data centre capacity to be commissioned by the end of calendar year 2026.

“Retail business missed our estimates. Margin declined year on year, largely due to investments in hyperlocal to drive digital commerce share,” Jefferies said.

Jefferies on UltraTech Cement: ‘Buy’

Jefferies retained its ‘Buy’ rating on UltraTech Cement and marginally raised its target price to Rs 14,065 from Rs 14,050, indicating an upside potential of 20%.

Jefferies said UltraTech Cement posted another quarter of strong execution, supported by healthy volume growth and improved pricing. Consolidated Earnings Before Interest, Taxes, Depreciation and Amortisation increased to Rs 5,015.5 crore during the June quarter from Rs 4,410.3 crore in the year ago period. Cement sales volumes rose to 41.3 million tonnes during the quarter from 36.8 million tonnes a year earlier, while blended realisations also improved.

The brokerage said demand remained healthy across most regions, with western and central India recording particularly strong growth. It added that management expected cement prices to remain stable through the monsoon despite higher industry costs. Jefferies also said UltraTech Cement remained confident of achieving its profitability target by the fourth quarter of Financial Year 2028. The brokerage noted that the company’s planned entry into the wires and cables business remained on track, with commercial launch expected during the third quarter of Financial Year 2027. After the modest earnings beat, Jefferies made only marginal changes to its estimates and continued to identify UltraTech Cement as its preferred pick in the cement sector.

“The June quarter reflected another quarter of strong execution on both earnings and volume growth,” Jefferies said.

Jefferies on Poonawalla Fincorp: ‘Buy’

Jefferies maintained its ‘Buy’ rating on Poonawalla Fincorp and increased its target price to Rs 560 from Rs 490, implying an upside of 19% for teh share price.

The brokerage said the non-banking financial company reported June quarter earnings broadly in line with its expectations. Profit after tax increased to Rs 307.7 crore during the June quarter from Rs 62.6 crore in the corresponding quarter last year. Assets under management grew to Rs 67,054 crore from Rs 41,273 crore over the same period, supported by healthy disbursement growth and continued expansion across newer lending products.

Jefferies said the company benefited from higher-yielding products, which supported margin expansion during the quarter. Net interest margin improved to 7.5% during the June quarter from 6.65% in the corresponding period last year. The brokerage also noted that asset quality remained stable, with gross Stage 3 assets easing to 1.4% from 1.8%, while collection efficiency remained steady.

The brokerage expected newer businesses, including gold loans, education loans and consumer durable financing, to account for a larger share of the loan book over the coming years. 

“AUM growth was strong, new products are scaling up well. Asset quality was steady with vintage delinquency trends improving,” Jefferies said.

Conclusion

Jefferies maintained its ‘Buy’ rating on all three companies after reviewing their June quarter performance, although the reasons differed across businesses. The brokerage continued to back Reliance Industries on the strength of its long-term earnings potential despite weakness in retail. 

It remained positive on UltraTech Cement because of sustained operating performance and healthy demand, while its recommendation on Poonawalla Fincorp rested on strong loan growth, improving profitability and stable asset quality. 

Disclaimer: The stock recommendations, target prices, and financial projections highlighted in this report are based on research published by Jefferies and are presented solely for informational and educational context. They do not constitute direct investment advice, nor do they represent an offer or solicitation to buy, sell, or hold any security. Equity market investments carry inherent risks, and projected price targets or future upsides are speculative and not guaranteed. Readers are advised to perform their own due diligence and consult a SEBI-registered financial advisor before making any investment decisions.

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