The markets are right now muted but investors are keen about identifying stock-specific opportunities. International brokerage house Jefferies has highlighted three stocks from a gold loan-focused financial player to cement majors navigating cost pressures. It sees reasonable room for upside, with as much as 34% upside potential in one of the stocks.
Here is a detailed analysis of the investment rationale driving the bullish call on these three stocks.
Jefferies on Manappuram Finance
In the financial space, Jefferies has turned positive on Manappuram Finance. The brokerage has assigned a ‘Buy’ rating with a target price of Rs 360. This implies an upside potential of around 22% from current levels.
According to the brokerage report, the company’s fourth-quarter performance surprised positively. “Manappuram Finance Q4 PAT of Rs 400 crore (+69% QoQ) beat our Rs 290 crore on Rs 130 crore provisions release from ECL reset at Asirvad.”
Loan growth has also been strong, particularly in gold loans.
Jefferies noted, “Consolidated AUM grew 22% QoQ (48% YoY) to Rs 63,800 crore led by 31% QoQ growth in gold AUM (99% YoY).”
However, margins have been under pressure. Net interest margin (NIM), which shows the difference between interest earned and paid, declined during the quarter.
Furthermore, the brokerage believes the worst may be over. “We believe NIMs have bottomed and provisions have peaked.”
Looking ahead, Jefferies expects a sharp recovery in profitability. “Profit should grow 2.6x and ROE should improve to 13% (7% FY26) over FY26-28 estimates.”
Jefferies on Ambuja Cements
In the cement space, Jefferies has maintained a ‘Buy’ rating on Ambuja Cements, setting a target price of Rs 595. This indicates an upside potential of about 34%.
That said, the recent quarter was not strong. According to the brokerage report, “Ambuja Cements delivered a weak March quarter, with EBITDA down 22% YoY as costs remained sticky.”
The company has highlighted execution challenges. As per Jefferies report, “Management acknowledged a reset on the operational front after failing to deliver the performance promised to shareholders.”
Costs have been a major concern, particularly due to energy and logistics expenses. The report highlighted that “Costs have been impacted by higher branding costs, packing costs…and additional goods tax in certain states,” added the brokerage house report.
The brokerage sees scope for improvement if cost controls are implemented effectively. The company is also recalibrating its expansion plans, pushing some targets further out to stabilise existing operations.
Jefferies on ACC
Jefferies has also retained a positive view on ACC, another key player in the cement sector. The brokerage has set a target price of Rs 1,830, implying an upside potential of around 29%.
Similar to Ambuja, ACC has faced challenges linked to costs and execution. The brokerage noted that expectations have been moderated, with earnings estimates trimmed slightly.
“Mananagement acknowledged disappointment with cost performance in Q4 & FY26, driven partly by execution failures in turning around acquired entities,” the report said.
At the same time, the company is focusing on improving efficiency and stabilising operations before expanding further. Capacity expansion timelines have been revised, and capital expenditure plans have been scaled down in the near term.
Demand conditions also remain moderate. The report suggests that industry growth may stay around 5% in the near term, although companies are targeting higher growth through market share gains.
What investors need to watch
In the case of Manappuram Finance, the focus is on recovery after margin and provisioning pressures. For Ambuja Cements and ACC, the focus revolves around execution challenges and cost management.
According to the brokerage report, while near-term headwinds exist, valuations and future growth potential are the key reasons behind the ‘Buy’ stance.
Disclaimer: Investment views and target prices mentioned above are based on reports by a third-party brokerage and do not constitute personal investment advice or a solicitation to buy or sell. Given the volatility inherent in specific equity segments, readers are strongly advised to consult a SEBI-registered investment advisor before making any financial decisions.
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