As the final countdown begins for the Budget, several key sectors are in focus including power, defence and infrastructure. As per a report by international brokerage Jefferies, recent meetings with investors in the United Kingdom and Europe indicated a renewed interest, though selective, in Indian industrial stocks linked to defence, power demand and infrastructure execution.
According to the Jefferies report, investor interest in India has been impacted by two key factors – expectations around a potential United States-India trade deal and a slowdown in capital flows into artificial intelligence-related themes. Let’s take a closer look at the key takeaways from the Jefferies report.
Infrastructure execution finds takers again
Infrastructure-linked companies have come back into focus as concerns around margins begin to ease. Larsen & Toubro remains on Jefferies ‘Buy’ list, with the brokerage noting that investor confidence around the company’s ability to manage margins has improved compared with a year ago. According to the report, margin concerns have eased even as execution challenges continue in certain businesses.
For Larsen & Toubro, Jefferies has set a price target of Rs 4,715. This suggests a possible upside of around 24%.
As per the brokerage report, “L&T (Buy), margins not as much of a concern.” Jefferies believes that as the year progresses, the company could deliver positive surprises on order inflow guidance, with some potential upside to revenue as well.
The report also pointed to several developments that could influence sentiment over the next five to six months. These include the unveiling of L&T’s five-year strategic plan with its annual results in May 2026. Other factors highlighted include possible semiconductor investments, the Hyderabad Metro project moving off the balance sheet, and a potential sale of the Nabha power project.
Power demand moves back to centre stage
The conversation around power stocks has shifted from capacity concerns to demand trends. National Thermal Power Corporation (NTPC) has been closely tracked in this context, with Jefferies maintaining a ‘Buy’ view as power demand trends come back into focus. The brokerage said recent demand weakness was largely due to above average monsoon conditions, which temporarily weighed on consumption.
In the list of power sector names, for NTPC, Jefferies has target price of Rs 440. This implies a potential upside of roughly 28%.
As per the brokerage report, “NTPC (Buy), power demand revival a positive.” Jefferies expects demand to normalise over the coming quarters, which could support a re-rating of the stock.
The report added that once demand stabilises, execution on capacity additions and new projects could become the next driver for stock performance.
Defence remains in focus, but preferences tweaked
Defence stocks continue to draw investor interest, with Jefferies retaining a ‘Buy’ stance on Bharat Electronics (BEL). According to the report, investors remain comfortable with BEL due to its execution track record and medium-term earnings visibility.
In this defence sector space, Bharat Electronics continues to be tracked closely. Jefferies has assigned a target price of Rs 510 for the stock, which indicates an upside potential of about 22% from current levels.
As per the brokerage report, “There is comfort on BEL’s execution track record and medium term double-digit earnings growth trajectory.”
In contrast, Hindustan Aeronautics (HAL) is described as relatively under-owned. Jefferies believes that the company’s strong order pipeline, high share of recurring service income and debt-free balance sheet are not fully reflected in investor positioning.
The brokerage noted that HAL’s longer term profit potential depends largely on improvements in execution.
Multiple demand themes support select industrial plays
Beyond large infrastructure and defence names, companies exposed to multiple end markets are also seeing interest. KEI Industries also featured in discussions, with Jefferies holding a ‘Buy’ view on the stock due to its exposure to several end markets. The brokerage highlighted the company’s links to power transmission, housing, industrial capital expenditure and exports.
For, KEI Industries, Jefferies has set a price target of Rs 5,460. This suggests an upside of around 43%.
Jefferies added that newly commissioned capacity at Sanand in Gujarat has reduced concerns around production constraints.
Margins seen as the swing factor for global engineering firms
Global engineering firms Siemens Energy and Hitachi Energy were discussed as potential opportunities, with Jefferies highlighting margin expansion as a key factor.
Jefferies has set a target price of Rs 3,700 for Siemens Energy, which implies an upside potential of around 68% from the current market price. Similarly, Jefferies has set a target price of Rs 25,000 for Hitachi Energy, indicating a potential gain of about 48% from current levels.
As per the brokerage report, “expect margin expansion to drive upside.” Operating leverage, according to Jefferies, could support faster earnings growth if execution remains on track.
Execution, not quarters, in focus for JSW Energy
JSW Energy rounds out the list of stocks highlighted in the report, with Jefferies continuing to maintain a ‘Buy’ rating despite a weak December quarter. The brokerage believes the focus now shifts to execution, cash flow improvement and balance sheet strength.
For, JSW Energy with Jefferies assigning a target price of Rs 660. This translates into an upside potential of roughly 50%.
Conclusion
Overall, Jefferies interactions suggest that global investors are not chasing short-term rallies. Instead, they are focusing on companies with clearer execution visibility, strong order pipelines and balance sheet comfort.