'Unloved' Zomato To Airtel, Jefferies Lists Top 'Buy' Ideas As Sensex, Nifty Fall

Jefferies has listed its top 20 'buy-rated' Indian stocks amid volatility in markets.

<div class="paragraphs"><p>Stock movement. (Source:&nbsp;<strong><a href="">PxHere</a>)</strong></p></div>
Stock movement. (Source: PxHere)

Jefferies has listed its top 'buy-rated' Indian stocks amid volatility in markets.

Mahesh Nandurkar and Abhinav Sinha, equity analysts at the research house, presented as many as 20 top 'buy' ideas in a note dated Aug. 26.

India's benchmark indices have opened more than 2% lower in early trade on Monday. The rupee also slid to a record low of 80.13 against the U.S. dollar.

Top 'Buys'


  • Rates 'buy' with a target price of Rs 1,100, implying a potential upside of 26%.

  • ICICI Bank is among its top picks across Indian financials as the bank offers among the best risk-rewards across peers with superior growth, improved asset quality and higher return on equities

  • ICICI Bank is well poised to leverage on growth pickup in Indian bank credit from 8-9% (in early CY22) to +14% now. Its strong deposit franchise positions it well in rising rates with ability to gain market share.

  • With improvement in NIMs and low credit costs, ICICI Bank has achieved peer-best ROA levels of ~2% and sustainable ROE will move towards 17-18%.

IndusInd Bank

  • Rates 'buy' with a target price of Rs 1,330, implying a potential upside of 24%.

  • Trading at 1.5 times the 1-year price-to-book ratio, which is the lowest among our covered private banks, IndusInd Bank is attractively priced.

  • Sees potential to ramp-up lending (merchant lending, MFI, non-CV auto loans), defend margins and lower credit costs.

  • Asset quality pressures are behind it as the bank has recognised/ provided for most of the stressed book.

Bandhan Bank

  • Rates 'buy' with a target price of Rs 400, implying a potential upside of 40%.

  • Bandhan Bank is a turnaround play among niche banking platforms in India. While asset quality has seen pressures from Covid and Assam floods, these trends will improve over the next three-six months.

  • Its strong deposit franchise (Casa ratio of 43%) and diversification into new segments (retail loans and ramp-up of housing loans) will support a healthy 24% CAGR in loans over FY22-25.

  • Also sees normalised credit costs moving towards 2.2-2.3% (of average loans) over FY24-25, which will support improvement in ROE towards 24% levels.

ICICI Prudential Life

  • Rates 'buy' with a target price of Rs 700, implying a potential upside of 18%.

  • ICICI Prudential Life Insurance is the top pick among non-lending financials in the context of significant improvement in its profitability, uptick in growth as well as reasonable valuations.

  • Expects ICICI Pru Life to see an uptick in premium growth from FY24 onwards aided by diversification of distribution platforms and expansion in product suite as well as normalisation of base for ICICI Bank (as a channel) and in term protection premiums.

  • Profitability has also improved with industry leading value of new business (margin of 31% (in 1Q); it also has a well capitalised balance sheet with solvency ratio of 204%.

  • IRDAI's permission to life insurance companies to expand into health insurance (indemnity-based) can lift premium growth.

LIC Housing Finance

  • Rates 'buy' with a target price of Rs 450, implying a potential upside of 12%.

  • Healthy disbursements in housing loans and hike in lending rates given 95%+ floating rate book/51% fixed liabilities are tailwinds for NII growth.

  • Concerns around slippages in restructured book is largely priced in.

  • Fall in credit costs should drive 25% EPS CAGR, 14% ROE over FY22-25.

  • Valuations appear attractive.

Tata Motors

  • Rates 'buy' with a target price of Rs 540, implying a potential upside of 16%.

  • Tata is in the early phase of a multi-year turnaround led by confluence of improved strategy and cyclical recovery.

  • Likes Tata given the cyclical recovery and improving franchise in India, early leadership in India EVs, and JLR focus returning to higher margin Land Rover models.

  • Indian truck and PV demand is recovering from the worst downturn in decades, and we forecast double-digit growth in FY23-24.

  • Tata has taken an early leadership in EVs in India passenger vehicle space with about 80% market share.

  • While a global recession is a risk to JLR, the company is in a strong product cycle with the recent launch of new-gen Range Rover and a new Range Rover Sport around the corner, which should drive better product mix. JLR is lagging peers on electrification but has embarked on a new roadmap giving it a fresh chance to catch up.

  • Sees Tata's Ebitda more than doubling from FY22, EPS exceeding the past peak, and net automotive debt falling 75%.

Maruti Suzuki

  • Rates 'buy' with a target price of Rs 10,250, implying a potential upside of 18%.

  • Indian passenger vehicle industry had already suffered its worst downturn before Covid, and is witnessing a strong revival from this low base. Expect demand to remain strong led by low penetration, replacement cycle amid rising age of cars in operation, and shift from shared to personal mobility. Expect 24%/14% industry growth in FY23/FY24.

  • Maruti Suzuki also has an order book of about 3,50,000, which provides about 2 month of volume visibility. MSIL’s exports have risen sharply from monthly runrate of 8,000-9,000 in FY19-21 to 20,000 in FY22 and 23,000 in Q1, which is further boosting volumes.

  • Maruti Suzuki's new models are featurerich, which should appeal to consumers and help revive market share. On a 3 to 5-year view, MSIL’s SUV and electrification strategy would be key for its franchise.

  • MSIL's Ebitda margins were in a 10-15% band for most of FY05-20 but fell to an historical low of 6.5% in FY22, partly due to by a sharp metal price rally. With commodity cost pressures behind, Jefferies factors Ebitda margins recovering to 10.1%/11.8% in second half of FY23/FY24.

TVS Motor

  • Rates 'buy' with a target price of Rs 1,200, implying a potential upside of 26%.

  • The abnormal 35% fall in industry over FY19-22 has created a favorable base for double-digit CAGR in coming years, and expect 17% volume CAGR over FY22-25. TVS should be a key beneficiary of Indian 2W demand recovery.

  • TVS has been improving its franchise across multiple segments with attractive product propositions.

  • After a long period of subdued margins, TVS is narrowing the gap with peers and increasing its Ebitda share in industry.

  • TVS has been turning more aggressive on EVs and has been increasing EV capacity & launching new variants of its E2W iQube in 2022.

  • TVS's valuation appears rich but is justified, given strong earnings growth outlook and improving franchise.

  • Risk of lower share in EV vs ICE scooters has been a key concern, which should be mitigated with rising EV volumes; Jefferies see a potential for stock valuations to expand if TVS is able to garner a similar market share in EVs as in ICEs.


  • Rates 'buy' with a target price of Rs 2,215, implying a potential upside of 18%.

  • L&T’s engineering and construction revenue and Ebitda rose at 12% and 10% CAGR in FY10-19, despite the weak capex environment.

  • L&T should benefit from execution and margin recovery as negative impact of supply disruptions and sharp rise in commodity prices in Q4 continues to ease.

  • Housing sector upturn (house call) will also be beneficial for L&T as Buildings and factories was 28% of announced order flows at the peak, and is currently only around 15%.

  • The peak of non-core investments in behind and L&T has potential to surprise on execution and order flow expectations. Prudent capital allocation and ROE improving to 16% in FY25 from 11% in FY21 (14% in FY20) are other triggers.


  • Rates 'buy' with a target price of Rs 850, implying a potential upside of 21%.

  • DFC connectivity to ports is showing road to rail shift signs already and assured transit time and higher double stacking are already beginning to benefit Concor on volumes and margins.

  • Our 20% volume CAGR assumption for Concor in FY21-25 (traffic rising 2.1x) factors the company maintaining its 73-75% market share as traffic from road moves to rail with DFC commissioning.

  • Privatisation and outflow for land lease agreement vs our outflow expectation of Rs 7,500 crore are triggers.

Godrej Properties

  • Rates 'buy' with a target price of Rs 2,125, implying a potential upside of 54%.

  • The residential markets continue to do quite well in 2022, firmly putting India in the 2nd year of what should be a 7-10 year long upturn. Pricing gains are now visible pan India with 10%+ gains across markets now. The pricing gains are also more than enough in setting off the input cost increases.

  • Godrej Properties utilised the cyclical downturn to add to its project pipeline and is currently well spread across the nation, even as others now try to imitate its partnership model of expansion.

  • Expects Godrej sales to stay strong over the medium term. The company has a medium term sales target of Rs 20,000 crore. Its balance sheet is under-levered (0.1x gearing) and provides scope to add large new projects, with a target to add Rs 15,000 crore worth in FY23.

  • Profitability is partly improving but much more is expected as the upcoming quarters as some of its more profitable projects from FY18 onwards, start getting completed and recognized.

  • Stock is down from its Rs 2,500+ peak on weak sales, management churn and slow project additions; but Jefferies believe steady pre-sales in FY23 and new project adds should help the stock.


  • Rates 'buy' with a target price of Rs 1,420, implying a potential upside of 33%.

  • The stock is down from its Rs 1,500+ peak, partly as market worry on impact of higher rates. However, presales are holding well and higher pricing provides strong NAV leverage given large land bank.

  • Its expansion strategy, through the partnership model, is well thought out and is targeting the areas in Mumbai with lower penetration and new geographies of Pune and Bangalore. The same provides visibility on its 20% CAGR target for pre-sales in medium term.

  • Macrotech is India's second-largest residential developer by pre-sales and the largest listed developer by land bank. The company enjoys an almost even mix of premium and affordable housing segment; almost all of it based out of Mumbai.

Godrej Consumer Products

  • Rates 'buy' with a target price of Rs 1,000, implying a potential upside of 10%

  • Godrej Consumer is a good turnaround candidate as the new CEO, Sudhir Sitapati, is undertaking several structural initiatives, which should yield results over the medium term.

  • This includes new hires (Indo CEO, business transformation and digital head), renewed focus on access packs (without worrying about potential cannibalisation), inventory correction, step-up in market development efforts, etc. More steps are underway, with focus on simplification, growing category penetration and better co-ordination across geographies. See this course correction as a journey, which would span across several quarters.


  • Rates 'buy' with a target price of Rs 100, implying a potential upside of 61%

  • From an exuberance at the time of listing last year, Zomato is now unloved, having underperformed peers year-to-date. Worries of Fed tightening & investor focus on cash flow have been weighing on the Internet names, including food tech, globally.

  • Zomato management has also accelerated its journey towards better unit economics. Management is targeting Ebitda break-even (ex-Blinkit) by March 2023 or latest by September 2023 - this would be led by better profits in food delivery. The company was already cashflow positive in Q1.

  • Following a 60% correction from the peak, the stock now trades at 1.3x 1Y forward EV/GMV and 4.2x EV/revenue. While this is at a premium to global and regional peers, this is justified in the context of long growth run-way along with higher explicit medium-term forecasts on GMV (30% for Zomato vs. 10-20% for peers).

  • Also sees a consistent improvement in profitability in food delivery despite strong 30% CAGR over FY22-25 (well ahead of global/regional peers).

Laurus Labs

  • Rates 'buy' with a target price of Rs 650, implying a potential upside of 13%

  • Laurus has attained a lion’s market share in antiretroviral-APIs and now API business is expected to be driven by non-onco, non-ARV APIs.

  • Company had doubled its oral solids capacity to 10Bn units, in view of increasing demand. Laurus has new contracts from European players for generic formulations, which provides further visibility into growth for the FDF division.

  • CDMO division will have its own 200,000-square-feet R&D facility operational by FY23 and greenfield manufacturing units by FY24. The company has two large contracts with European players, on of which is multiyear, multi product contract.

Fortis Healthcare

  • Rates 'buy' with a target price of Rs 311, implying a potential upside of 7%

  • Fortis plans to add around 1,300 brownfield beds in next 4-5 years, which will lead to steady double digit top-line growth in hospitals divisions for long period. The beds growth addition is staggered rather than concentrated in a year and being brownfield expansion breakeven will be very fast.

  • Return of international patients, ramp up of Chennai hospital, turnaround/divestment of low margin hospitals are among the several levers for Ebitda margin improvement.

  • Top line double-digit growth sustainable from FY24 onwards; FY23 growth low on high base of FY22.

Bharti Airtel

  • Rates 'buy' with a target price of Rs 875, implying a potential upside of 17%

  • Structurally, there is immense headroom for tariffs to go up as average revenue per user/per capita GDP ratio in India at 1.3% is much lower than 2% for countries with comparable per capita income.

  • A pick-up in Jio's subscriber additions post its subscriber cleanup, stabilizing market shares and hefty spectrum commitments will induce telecom companies to raise tariffs towards end-CY22. With carriers’ focus now shift on boosting realisations, the overall tariff environment remains healthy.

  • While the government’s relief measures have ensured Vodafone Idea's survival in the medium term, subscriber market share gains in favour of Bharti Airtel will continue to play out, albeit at a slower pace.

  • During Q1, Bharti delivered an free cash flow of Rs 8,100 crore—highest in seven years. Tariff hikes would result in significant improvement in Bharti’s cash flows and return ratios.

  • Over FY22-25, expect Bharti Airtel to deliver 17% CAGR in revenues and 22% CAGR in Ebitda—among the highest in telecom sector globally.

Indian Hotels

  • Rates 'buy' with a target price of Rs 325, implying a potential upside of 19%

  • Indian Hotels is best positioned to capitalize on the surging recovery in hotel industry in India, with occupancies & RevPARs expected to rise over FY23-FY25e. Occupancies have rebounded sharply for industry, crossing pre-Covid levels in 1QFY23, and likely to remain in uptrend.

  • Will be a top beneficiary of the trend with its strong pipeline of hotels and new signups, improving margin profile, mix of leisure and business hotels, incremental asset light strategy, new initiatives like food delivery, staycation villas.

  • With its No. 1 position in listed hotel space in India, IHCL can trade at a premium to historical valuations given it can capture an outsized portion of hotel segment recovery and its improving margins/return profile.

Crompton Consumer

  • Rates 'buy' with a target price of Rs 505, implying a potential upside of 23%

  • Crompton is the market leader in fans, and has typically outpaced industry growth led by premiumisation, market share gains (650 bps over FY16-22, to 28% now), reach expansion.

  • Butterfly integration to help boost revenue. In South India, Butterfly is ranked No. 1 in Wet Grinders and LPG Stoves, No. 2 in Mixer Grinders, and No. 3 in Pressure Cookers. Pan-India, it is among Top 3 in kitchen appliances.

Dixon Technologies

  • Rates 'buy' with a target price of Rs 5,305, implying a potential upside of 30%

  • Dixon has received total five PLI approvals. Dixon plans to grow further in wearables and is manufacturing for BoAT.

  • Stay bullish on the indigenisation opportunity in India, wherein Dixon could be a key beneficiary, its expansive product slate and 5 PLIs received.