As the markets navigate through macroeconomic shifts and sectoral dynamics, the brokerage firm Jefferies has reaffirmed its bullish stance on select stocks. Among the key picks at this hour, HDFC Bank, Voltas, Samvardhana Motherson stand out, with the brokerage maintaining a ‘Buy’ rating on both – Voltas and HDFC Bank and Samvardhana Motherson is their preferred pick in the auto components space.
Let’s take a look into the details of what the brokerage say of these stocks
Jefferies on HDFC Bank: A top pick amidst improving macro trends
Jefferies has maintained a ‘Buy’ rating on HDFC Bank and set a target price of Rs 2,120 per share. This means the stock could rise by 25% from current levels.
According to the brokerage, HDFC Bank’s long-term growth prospects, citing an improving macroeconomic environment, strong deposit market share gains, and strategic digital investments remains a key area in highlight.
The brokerage in its report highlighted that HDFC Bank has been steadily gaining deposit market share, with an incremental market share of 15-16% compared to its stock share of 11%.
The bank has also lowered its Loan-to-Deposit Ratio (LDR) by 12 percentage points in the past year, bringing it down to 98%. Management aims to reduce it further to 90% over the next two years, which should fuel loan growth.
“Among home loan borrowers, 96% open savings accounts with reasonable balances that almost double within a year of opening,” the brokerage noted in its report.
The firm believes that larger Indian banks, including HDFC Bank, are well-positioned to capitalise on macro improvements. “Near-term margin pressures will be largely due to timing gap on loan repricing, but core margins (excluding rate cuts) are holding up well.”
The brokerage maintains a ‘Buy’ call with a price target of Rs 2,120, valuing the stock at 2.3x FY27 adjusted price-to-book (PB).
Jefferies on Voltas: A stock with cool potential
The brokerage has also given Voltas a ‘Buy’ rating and set a target price of Rs 1,990 per share, suggesting that the stock could rise by 42% from its current price.
With rising demand for cooling products and increasing consumer spending, according to the brokerage report, the company is expected to see steady revenue growth.
“We estimate Voltas growth to normalize in Q4FY25e vs its 9MFY25 rate, factoring significant high base LY. RAC volumes grew by +72%YoY in Q4FY24. We estimate Voltas FY25e topline growth at +25%YoY (+29% in 9MFY25) and OPM at 7.2% (7.4% in 9MFY25). Voltas Unitary Cooling Products’ (UCP) sales grew by +42% YoY vs comparable +27%YoY for Bluestar,” the brokerage said in its report.
The brokerage highlighted in its report that Voltas focus on expanding its premium product range and improving distribution channels should further bolster sales. The company’s ability to maintain market leadership while enhancing profitability through better cost control remains a key positive.
“We have Buy on voltas, with PT at Rs 1,990. Our target PE of 47x is broadly in-line with stock’s hist 5-Y avg PE,” added the brokerage.
Jefferies on Samvardhana Motherson: A preferred pick among auto components
The brokerage firm sees Samvardhana Motherson as a strong contender for growth, due to its expansion into electronics manufacturing. The company has partnered with Hong Kong-based BIEL Crystal, a supplier to Apple, to enter the consumer electronics glass manufacturing business.
With an investment of Rs 2,600 crore, Motherson has already launched its first production facility in Q3 FY25, and two more plants are set to begin operations in FY26 and FY27, the brokerage noted.
According to Jefferies, companies like Motherson, known for their strong manufacturing capabilities and global partnerships, are well-positioned to benefit. The brokerage also notes a trend where Indian auto-component makers are expanding into electronics, boosting their long term growth prospects.