The MSCI India Index is up 8% so far this year but Jefferies pointed out that 108 out of 237 stocks it tracks are down for the year, and 35 have dropped more than 20%, showing a wide gap between the index and individual company performance. As a result it has overhauled its India Model Portfolio, with six new entries that the brokerage believes can deliver meaningful gains in a market where the index looks expensive but many individual stocks remain beaten down.
Jefferies says this unusual split between a strong index and weak individual stocks is the main reason for reshaping the portfolio. The new names Axis Bank, AU Small Finance Bank, Godrej Properties, JSW Energy, Samvardhana Motherson and BPCL all carry a ‘Buy’ rating, which for Jefferies means an expected return of at least 15% over the next year. The firm expects all six additions to benefit from either improving demand, better profitability or more reasonable valuations compared with their long-term history.
Here is a detailed analysis of Jefferies’ investment rationale for each of these six stocks-
Jefferies on Godrej Properties: ep-value real estate bet
Jefferies calls Godrej Properties (GPL) one of its most attractive recovery ideas. The share has fallen 25% this year and now trades well below its typical valuation bands. Even with this correction, the company continues to see steady home demand, with sales rising at 15–20% annually. The brokerage expects earnings to grow 53% between FY25 and FY27, making GPL a combination of low valuation and high growth. It says the stock may benefit if project execution remains on schedule and if demand stays strong.
Jefferies on AU Small Finance Bank: Shift to a universal-bank model
AU Small Finance Bank has been added because Jefferies expects it to remain one of the strongest-growing banks in its universe. The bank trades below its historical valuation levels, which the brokerage sees as favourable given the pace of its growth. Jefferies says AU is improving on loan quality, building a stronger deposit base and earning more fees. As the bank transitions toward operating like a full-service lender, it expects profitability to improve further, supporting the case for its inclusion.
Jefferies on Axis Bank: Valuation call against larger peers
Axis Bank enters the model portfolio mainly due to valuation comfort. Jefferies notes that Axis trades at a clear discount to larger private banks such as ICICI Bank and HDFC Bank. It believes the bank has room to re-rate if asset quality and loan growth keep steady. At the same time, the brokerage trimmed ICICI Bank because of possible short-term uncertainty around leadership changes. Jefferies says shifting part of that exposure to a cheaper, improving name like Axis Bank makes strategic sense.
Jefferies on JSW Energy: Capacity-led earnings ramp
JSW Energy joins the portfolio because Jefferies expects its earnings to rise meaningfully once new power projects come online. The brokerage notes that the company is priced lower than usual because of concerns about debt, but it expects strong earnings growth between FY25 and FY28 to outweigh those concerns. It adds that timely project completion will be important for how the stock performs.
Jefferies on BPCL: Refining-led upside case
BPCL enters at what Jefferies considers an appealing valuation. The company trades at 7.7 times projected FY27 earnings, offers a 3% dividend yield and is expected to deliver 24% earnings growth between FY25 and FY27. Jefferies says refining continues to be the main driver of the company’s profits and should support returns if margins remain firm. It notes, however, that any major drop in crude oil prices could affect BPCL’s performance.
Jefferies on SAMIL: Replacement for high-momentum names
Samvardhana Motherson has been added in place of Belrise, which had rallied significantly. Jefferies says SAMIL is improving in its overseas units and expanding into new areas beyond auto components. It believes SAMIL may benefit from a recovery cycle as long as the company continues to execute well across businesses.