Jefferies has identified select capital market infrastructure stocks that could offer up to 26% upside, backed by rising equity participation, a younger investor base, and steady growth in market volumes. The brokerage says India’s capital market infrastructure has grown into a Rs 70,000 crore system in FY25, led by brokers at about Rs 50,000 crore and exchanges at nearly Rs 20,000 crore, with RTAs and depositories contributing around Rs 2,000 crore and Rs 1,500 crore, respectively.
Jefferies on India’s capital market infrastructure
According to Jefferies, infrastructure revenues are expected to track volume growth over the next few years, with Mutual Fund AUM rising at a 16% CAGR, Cash ADTO at 15%, and F&O ADTO at 12% through FY28e. The brokerage house notes that stock selection now matters more than broad exposure, as valuations across the sector are elevated. Companies with deeper product offerings, sticky clients, and additional revenue lines are better placed to deliver returns.
Jefferies on India’s market infrastructure play
Within this setup, Jefferies prefers names that combine scale with diversification and manageable regulatory risk. Groww and KFin Technologies stand out for growth and optionality, while CAMS offers steady cash flows with underappreciated non-core businesses. Jefferies is more cautious on BSE and CDSL, where execution has improved but valuations leave limited room for upside.
Jefferies on Groww: ‘Buy’
Jefferies has a buy rating on Billionbrains Garage Ventures with a target price of Rs 180, implying an upside of about 26%. The brokerage says Groww has become India’s largest broker by active clients in less than four years, reaching a 26% market share. While broking remains the core business, Jefferies notes that Groww is expanding into Margin Trading Facility, wealth management, commodities, and bonds to improve monetisation. New businesses that contributed just 1% of revenue in FY25 are expected to account for 20% by FY28e, supporting a 35% EPS CAGR between FY26 and FY28.
Jefferies on KFin Technologies: ‘Buy’
Jefferies has a buy rating on KFIN Technologies and sees the stock rising to Rs 1,300, offering an upside of around 26%. The brokerage points to the Ascent acquisition as a key driver, opening fund administration markets in Europe and the Middle East. The international business is expected to contribute about 20% of revenues by FY27e, up from 5% in FY25. Domestically, KFIN’s 60% share in Issuer RTA folios provides stability, as revenues are not linked to transaction volumes.
Jefferies on CAMS: ‘Buy’
Jefferies has a buy rating on Computer Age Management Services with a target price of Rs 870, implying a potential upside of 19%. According to the brokerage, CAMS remains the leader in the mutual fund RTA space, servicing four of the five largest mutual funds and handling about 68% of MF AUM. Jefferies also flags faster growth in non-MF segments such as KYC Registration, Payments, and AIF services, which are expanding at around 21% annually, even as valuations assign little value to these businesses.
Jefferies on BSE: ‘Hold’
Jefferies has a hold rating on BSE with a target price of Rs 2,850. The brokerage acknowledges the strong turnaround in recent years, driven by gains in SENSEX weekly options and operating leverage, but remains cautious due to reliance on a single product and the regulatory sensitivity of index options, along with rising competition in co-location services.
Jefferies on CDSL: ‘Hold’
Jefferies has a hold rating on Central Depository Services (India) with a target price of Rs 1,450. While the depository continues to benefit from strong broker relationships and steady account additions, Jefferies flags valuation concerns and risks around regulated pricing and the KYC Registration business, leading it to stay cautious at current levels.
Jefferies on capital market infrastructure stocks
Jefferies says brokers and RTAs are in a stronger position than exchanges and depositories when it comes to expanding beyond core businesses. Operating cash flows are being used to build presence in wealth management, AIF and PMS services, and international fund administration. At the same time, regulatory risk is not evenly spread. RTAs face lower exposure, while brokers and exchanges remain more sensitive to changes in derivatives rules. While regulatory oversight remains a factor, especially for derivatives-heavy businesses, Jefferies prefers companies that are widening revenue streams and reducing dependence on a single product.
