Jefferies has spotlighted five financial companies with market capitalisation around or above $5 billion, predicting a 25% compound annual growth rate (CAGR) in operating profit over the next three years. The brokerage firm has issued Buy ratings for all five, anticipating robust earnings growth to drive investor returns despite higher valuations.
Groww, with a target price of Rs 240, offers a 23% upside. Analysts highlight potential for a 30% PAT CAGR from FY26-29, driven by new initiatives such as margin trading and wealth management. The addition of US stocks in FY27 could further boost FY28 earnings by 5-9%.
Paytm is expected to see a 21% upside with a target price of Rs 2,100. The company is capitalising on its extensive merchant base and evolving loan-origination model to achieve a 25% revenue CAGR over FY26-29, which will significantly enhance EBITDA and profit.
PB Fintech has been assigned a target price of Rs 2,050, indicating a 14% upside. The digital broker is benefiting from increased insurance penetration and a shift to online channels, expecting a 35% CAGR in premiums over FY26-29. This growth is supported by strong operating leverage and an expanding renewal book.
AU Small Finance Bank is projected to achieve a 17% upside with a target price of Rs 1,250. The bank's transition to a Universal bank is expected to lower funding costs and enhance growth, with a forecasted 22% credit growth CAGR and 29% PPP growth over FY26-29.
Poonawalla Fincorp is set for a 25% upside with a target price of Rs 560. The company anticipates a 34% AUM CAGR over FY26-29, driven by new product scaling and increased disbursement yields, supporting NIM expansion.
Background
Jefferies' recommendations highlight the potential for significant growth in the financial sector, driven by strategic initiatives and market dynamics. Investors should monitor these developments closely to capitalize on emerging opportunities.
Jefferies' analysis underscores the promising outlook for these financial stocks, with strategic initiatives expected to drive substantial growth. Investors should keep an eye on these companies as they navigate the evolving market landscape.
