- Jefferies identifies five Indian financial firms with 25%+ annual profit growth potential
- Key picks include fintechs Groww, Paytm, PB Fintech, plus AU Small Finance Bank and Poonawalla Fincorp
- Paytm target price set at Rs 2,100; benefits from merchant base and financial services growth
Jefferies has identified five Indian financial companies that it expects can deliver at least 25% annual growth in operating profit over the next three years, making them its preferred growth plays despite their relatively high valuations. The brokerage's list spans fintechs, a bank and an NBFC: Groww, Paytm, PB Fintech, AU Small Finance Bank and Poonawalla Fincorp.
Jefferies rates all five Buy, arguing that sustained earnings compounding can support investor returns even when valuations are elevated.
The list is built around companies with market capitalisations of around or above $5 billion, with Jefferies looking for businesses capable of maintaining strong revenue growth while benefiting from operating leverage and scale.
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Paytm, Groww Lead Fintech Picks
Paytm is among the brokerage's key picks, with a Rs 2,100 price target versus the reference price of Rs 1,752.25. Jefferies expects the company to benefit from its large merchant base, growing financial-services business and operating leverage. It also sees scope for earnings to improve as monetisation of the payments ecosystem increases.
For Groww, Jefferies has a Rs 240 target against Rs 194.60, implying roughly 23% upside. The brokerage expects operating profit to compound at around 30% through FY29, helped by growth in broking clients, market-share gains, margin-trading facilities, wealth management and newer initiatives.
PB Fintech, the parent of Policybazaar and Paisabazaar, has a Rs 2,050 target versus Rs 1,799.30, implying nearly 14% upside. Jefferies expects insurance penetration and the shift towards online channels to support premium growth, while operating leverage and a growing renewal book could drive a sharp expansion in adjusted EBITDA.
Bank And NBFC Round Out The List
AU Small Finance Bank has a Rs 1,270 target against Rs 1,061, implying around 20% upside. Jefferies expects the bank's transition towards a universal bank, stronger deposits and credit growth to support earnings.
Poonawalla Fincorp has a Rs 560 target versus Rs 448.50, implying around 25% upside. The brokerage expects a 34% AUM CAGR through FY29, driven by expansion in personal loans, gold loans and other products, alongside improving credit costs.
The common thread, according to Jefferies, is growth compounding: investors may continue to pay higher valuations for companies that can sustain rapid profit growth over several years.
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