Indian equities could be heading into a better earnings phase as nominal gross domestic product growth accelerates and corporate profit growth broadens, according to Jefferies. The brokerage expects Indiaās nominal GDP growth to rise to around 11.5-12% in FY27 from about 9% in FY26, supporting stronger corporate revenue growth and earnings.
Jefferies expects MSCI India earnings growth to improve to 14% in FY27 from 10% in FY26. June 2026 quarter results were stronger than expected, while the share of companies seeing earnings upgrades reached 52%, the highest level in the past 10 quarters.
At the sector level, Jefferies is overweight on lenders, power, metals, property and hospitals. At the same time, it cautioned that elevated valuations and heavy equity supply through initial public offerings, promoter sales, private equity exits and government disinvestment could limit broad market gains.
Banks: HDFC Bank, Axis Bank and SBI top large-cap picks
Jefferies expects larger banks to deliver around 13% profit CAGR, with valuations looking reasonable after recent underperformance. HDFC Bank, Axis Bank Ltd. and State Bank of India are its preferred large-bank picks, while AU Small Finance Bank and IndusInd Bank are preferred among mid-sized banks.
Within the sector, Jefferies has a target price of Rs 1,700 for Axis Bank, implying 35% upside, while its target for HDFC Bank Ltd. is Rs 880, implying 24% upside. ICICI Bank has a target of Rs 1,750, implying 22% upside.
Jefferies expects bank credit growth to settle at more sustainable levels of around 13-15% over FY27-FY29 after the recent acceleration. Credit growth has already risen sharply, led by corporate lending and higher working-capital requirements.
Power: Adani Energy, JSW Energy and Torrent Power stand out
Power is one of Jefferiesā strongest sector preferences, with capacity additions and rising electricity demand supporting earnings visibility. The brokerage expects private-sector power generation to grow at a 9% CAGR between FY26 and FY30, compared with 4% for public-sector generation.
Among utilities, Adani Energy Solutions Ltd. has the highest target-based upside at 49%, with a target price of Rs 2,060. Jefferies also has a target of Rs 1,780 for Torrent Power, implying 46% upside, and Rs 720 for JSW Energy, implying 39% upside.
Adani Power has a target of Rs 270, implying 33% upside, while Adani Green Energy has a target of Rs 1,695, implying 35% upside. NTPC and Power Grid have targets of Rs 425 and Rs 315, respectively.
Jefferies expects JSW Energy to deliver an 18% EBITDA CAGR through FY29, while Adani Energy Solutions could post 31% EBITDA growth annually on a compounded basis CAGR as its transmission pipeline, smart-meter rollout and energy-solutions business scale up.
Metals: Steel and zinc remain preferred
Jefferies also lists metals among its preferred sectors. Its broader view is supported by improving earnings expectations and favourable commodity trends.
JSW Steel is expected to benefit from capacity expansion, stronger steel prices and a significant increase in earnings over FY26-FY29. Hindustan Zinc is another key name, with higher zinc and silver prices supporting earnings. Jefferies expects Hindustan Zinc’s FY27 earnings to receive a strong boost, with its zinc price assumptions still below prevailing levels at the time of the report.
Property: DLF, Lodha and Godrej Properties are top picks
The property sector is another major preference as residential demand picks up and organised developers continue gaining market share. Jefferies expects residential property value sales to grow 10-15% in FY27, while listed developers could maintain 15-20% sales growth.
DLF, Lodha and Godrej Properties are Jefferies’ top sector picks. DLF is preferred on valuation, Lodha offers exposure to its data -centre opportunity, while improving financial performance supports the case for Godrej Properties.
Low inventory levels are also supporting property prices. Jefferies expects residential price growth of around 6-8%, while disciplined capital allocation and strong cash flows have kept developer debt under control.
Hospitals: Fortis and Medanta preferred as bed additions accelerate
Jefferies expects hospital companies to benefit from a multi-year capacity expansion cycle. Companies under its coverage are expected to add 13-23% of their existing operational beds by FY29, with Max Healthcare leading the group on planned additions.
Fortis and Medanta are preferred plays, with Jefferies also remaining positive on Apollo Hospitals Enterprise and Max Healthcare Institute. Fortis Healthcare Ltd. is expected to benefit from faster break-even on new brownfield beds, while Medanta is positioned for capacity ramp-up.
Across its hospital coverage, Jefferies expects EBITDA growth of 18-24% CAGR through FY29, led by Dr Agarwal’s Healthcare at 24%, followed by Medanta at 21%, Apollo at 20%, Max Healthcare at 19% and Fortis at 18%.
Earnings recovery faces one key valuation hurdle
Jefferies’ constructive earnings view comes with a valuation warning. MSCI India is trading at around 20 times one-year forward earnings, close to its 10-year average but at a sizeable premium to emerging-market peers. About 38% of the index weight trades more than 10% below historical valuation averages, while 31% trades more than 10% above them.
The brokerage therefore sees stronger earnings as the main support for selected sectors rather than a broad-based market re-rating. Its preference remains concentrated in areas where earnings visibility is supported by credit growth, capacity additions, infrastructure spending, stronger commodity conditions and improving domestic demand.
Disclaimer: The information provided in this article is for informational and educational purposes only and should not be construed as investment advice. Stock market investments are subject to market risks, and past performance, analyst estimates or brokerage targets do not guarantee future returns. Readers should conduct their own research and consult a qualified financial adviser before making any investment decisions.