Jefferies has identified 11 stocks within its India coverage that offer attractive value amid a challenging environment for finding value versus growth in non-financial sectors.
The brokerage firm has added newly listed auto component company Belrise Industries Ltd., IT firm Sagility India Ltd., and Adani Energy Solutions Ltd. to its model portfolio, emphasising the importance of bottom-up stock picking as the market is likely to move sideways.
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"MSCI India ex-financials trades at 26.4x 1-year forward PE, making it expensive," Jefferies noted. The firm highlighted that finding attractive value versus growth has become tough in non-financials.
Among the 147 non-financial stocks under Jefferies' coverage, nearly 39% are trading above 1 standard deviation of their 10-year average PE, while approximately 8% are trading at 2 standard deviations above.
Jefferies' value buy stocks include Adani Energy Ltd., Adani Ports & Special Economic Zones Ltd., AWL Agri Business Ltd., Birla Corp., Belrise Industries Ltd., Bharti Airtel Ltd., Finolex Cables Ltd., IndiGo operator InterGlobe Aviation Ltd., Mahindra & Mahindra Ltd, NTPC Ltd., and Sagility India Ltd.
"We add newly listed auto comp Belrise, IT company Sagility, and Adani Energy (AESL) from the 'value' list to the model portfolio," Jefferies stated.
Sagility was added by trimming weight on Infosys Ltd., while Belrise replaced Eicher Motor Ltd. in the auto sector. Adani Energy Solutions was added as a fast-growing utility, replacing Nuvama following recent regulatory action on derivatives trading.
Jefferies emphasised the need for bottom-up stock picking in the current market environment, stating, "With market likely to move sideways, bottom-up stock picking will be crucial." These value stocks offer a favourable risk-reward profile and are well-positioned for growth in the coming quarters.
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