9 ‘Buy’ recommendations by Jefferies, with up to 25% to 42% upside potential

Jefferies, in its recent report, has turned bullish on India’s non-lending financial and life insurance plays, naming stocks such as Max Financial Services, SBI Life Insurance Company, HDFC Asset Management Company, among its top picks, with “Buy” ratings and sees upside potential ranging from 25% to 42% in select stocks.

The brokerage says the sector is entering a phase where market volatility, shifting insurance demand, and rising financialisation of household savings are driving differentiated growth across insurers, asset managers, and capital market-linked firms. Despite near-term pressures on premiums and assets under management, Jefferies expects companies with strong distribution, improving margins, and exposure to retail participation trends to emerge as key beneficiaries over the medium term.

Jefferies on HDFC Asset Management Company: ‘Buy’

Jefferies has rated it ‘Buy’ with a target price for the stock is Rs 2,960 which indicates a 26% upside potential for shareholders. Jefferies forecasts a 20% growth in assets under management led by healthy net flows of 12% to 14% and market gains of 7% to 8%. With a stable core cost to income ratio, the earnings per share are expected to grow at a compound annual rate of 14%.

Jefferies on ICICI Lombard General Insurance: ‘Buy’

The brokerage firm rates it ‘Buy’ with a price target of Rs 2,185 which suggests an upside of 26%. ICICI Lombard is a leading private general insurer that maintains very strong relationships with corporate clients and original equipment manufacturers in the motor sector.

Jefferies forecasts that gross written premiums and profit after tax will grow at compound annual rates of 14% and 21% respectively. Despite facing some near term headwinds, the company is expected to maintain a healthy return on equity of 17% to 18%. The combined ratio is projected to improve from 104% down to 101% by the end of the 2028 financial year. Potential gains from the transition to new international financial reporting standards and stronger growth in motor premiums could act as catalysts for the stock price.

Jefferies on ICICI Prudential Asset Management Company: ‘Buy’

Jefferies has rated ‘Buy’ with a price target for this life insurer is Rs 655 implying a 27% upside potential. While the company lost some market share in recent years, Jefferies believes that the challenges related to commission structures and specific product resets are now in the past. Growth in the value of new business is expected to reach 14% driven by a favorable base for annualized premium equivalents and tailwinds from goods and services tax changes in retail protection.

The agency channel is also being ramped up to support these growth targets. Margins are estimated to improve by 100 basis points to reach 25% by the 2028 financial year. Key catalysts include an increasing share of protection policies in the overall business mix and better business persistency figures.

“We think these challenges are now in the past, and expect VNB growth of 14% till FY28e,” notes the research by Jefferies.

Jefferies on Max Financial Services: ‘Buy’

Jefferies has rated it ‘Buy’ with a target price for Max Financial is Rs 2,125 which represents a substantial upside of 42%. The company has expanded its market share over the last three years due to heavy investments in agency and direct distribution channels. Jefferies expects industry leading growth in annualized premium equivalents as fifty five thousand new agents become more productive and new initiatives take hold at Axis Bank.

There is also a significant opportunity for the company to expand in categories where it has a limited presence such as credit life insurance. Margins are projected to expand to 26% leading to growth in the value of new business that outpaces the average of its private sector peers. A closer partnership with Axis Bank and the scale up of the protection business remain the primary catalysts for the company.

“Axis Max Life has expanded its market share over the last 3 years led by its investment in agency and direct distribution,” reports Jefferies.

Jefferies on Nippon Life India Asset Management: ‘Buy’

The brokerage has assigned a price target of Rs 1,040 with a ‘Buy’ rating for the company which indicates an upside of 25%. Nippon Life India Asset Management is one of the most prominent asset managers in the country with a history spanning three decades and a strong presence in smaller towns. Jefferies analysts believe the firm is well placed to benefit from the increasing penetration of mutual funds across India. A diversified product mix that includes exchange traded funds and offshore funds positions the company to grow across multiple segments. Assets under management are forecast to grow at a 22% compound annual rate while profits are expected to rise by 16% over the next two years. Top equity funds have been outperforming the market and a continuation of this trend would be a significant positive trigger.

“It is well-placed to benefit from increasing penetration of MFs,” states the report from Jefferies.

Jefferies on Nuvama Wealth Management: ‘Buy’

Jefferies has put the target price at Rs 1,600 with a ‘Buy’ rating suggesting a 36% upside for shareholders. Nuvama is the second largest non-bank wealth manager in the country and operates a highly diversified capital markets platform. The wealth management segment is expected to continue its healthy growth through improved relationship manager productivity and a wider office network. Jefferies believes that the segment can sustain this growth even beyond the 2028 financial year as the asset management business scales up. A rising share of recurring revenues could eventually lead to a re-rating of the stock price. Faster than expected shifts in the revenue mix and stronger performance in capital markets are identified as potential catalysts.

“Wealth mgmt segment should continue to deliver through improving RM productivity and network expansion,” observes Jefferies.

Jefferies on SBI Life Insurance Company: ‘Buy’

Jefferies rates it ‘Buy’ allocating a target price of Rs 2,500 which represents an upside of 36% for market participants. SBI Life remains the largest private life insurer in the country with a 16% market share in retail weighted premiums. Jefferies expects growth to accelerate as the parent bank channel rebounds and the company ramps up its agent recruitment efforts.

Expansion in non-participating and participating savings policies is also expected to contribute to higher premium volumes. Margins are projected to improve by 160 basis points to reach 29% which should keep the return on embedded value above 18%. Improving the productivity of their agency channel and tweaks in product structures that add to margins are viewed as positive triggers.

“SBI Life is the largest private life insurer in India with 16% market share in retail weighted premiums,” according to Jefferies.

Jefferies on Star Health and Allied Insurance: ‘Buy’

Jefferies rates ‘Buy’ and has set the target price for Star Health is Rs 585 suggesting an upside of 27%. As the leading standalone health insurer in India, the company dominates the retail health segment with a 33% market share. Jefferies expects premium growth of 16% to be supported by new product launches and investments in their distribution channels.

The loss ratio is predicted to improve as claim frequencies stabilize and recent price hikes lead to higher earned premiums. The expense ratio is also expected to benefit from lower renewal commissions and the introduction of automated processing systems. Earnings are forecast to grow at a very strong 64% compound annual rate over the next two years. Lower claim costs through hospital empanelment and higher than average growth in the retail sector would act as catalysts.

“Star Health is the leading private health insurer in India, with dominance in retail health segment,” reports Jefferies.

Jefferies on KFIN Technologies: ‘Buy’

Jefferies has rated ‘Buy’ with a target price for KFin Tech is Rs 1,200 which indicates a potential upside of 32%. The company is seen as a direct play on the increasing trend of savings moving into financial products like mutual funds and wealth management services. International expansion is offering new growth levers and helping to reduce the concentration of risk in the domestic market.

Jefferies expects revenue and profit after tax to grow at rates of 18% and 23% respectively. While many market participants are currently assigning no value to the international operations, Jefferies believes that business could be worth Rs 5,000 Crore. A faster conversion of new international contract wins into active service and limited dilution in domestic yields would be positive for the company’s valuation.

“KFin is a play on increasing financialization of savings,” states the findings by Jefferies.

Conclusion

Jefferies remains optimistic about the long term prospectsbased on strong fundamentals and a structural shift toward the financialization of household savings in the country.

While global events and regulatory changes pose ongoing risks, the combination of expanding distribution networks and improving operating efficiencies suggests that these entities are well positioned to deliver healthy returns over a longer time period. l.

Disclaimer: The following report summarizes specific investment recommendations and price targets issued by Jefferies. These projections and upside percentages are based on third-party brokerage research and should not be construed as a direct offer or solicitation by this publication. Equity investments are subject to market risks, including volatility driven by macroeconomic shifts and regulatory changes.

Before making any investment decisions based on these “Buy” ratings, readers are strongly advised to consult with a SEBI-registered financial advisor to ensure such products align with their specific financial goals and risk tolerance. Past performance of these financial services and insurance entities is not a guaranteed indicator of future results.

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