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 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. According to the report, the common thread is growth compounding: investors may continue to pay higher valuations for companies that can sustain rapid profit growth over several years. All five companies have 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. The international brokerage ignores normalisation of credit costs and low base in its calculations, while maintaining 'Buy' calls on all five stocks.
Paytm leads the fintech picks with a ₹2,100 price target versus the reference price of ₹1,752.25, implying significant upside potential. Jefferies expects the company to benefit from its 4.9 crore merchant base and strong loan-origination model, which should drive 25% revenue CAGR over FY26-29. The brokerage highlighted that Paytm stands out on monetisation of its client base in near-zero MDR regime, which is now changing favourably. Initiative in credit on UPI, cloud AI inference models, wealth offering and foray into overseas markets can lift growth, with Jefferies increasing earnings estimates for FY28-29 by 20-25% to factor 25 bps MDR on UPI. For Groww, Jefferies has a ₹240 target against ₹194.60, implying roughly 23% upside. The brokerage expects operating profit to compound at around 30% through FY29, helped by 18% growth in broking business led by client vintage and market share gains, new initiatives like margin trading facility and wealth management, and 10 pp margin expansion. Groww is adding US stocks to its platform later in FY27, which Jefferies believes could add 5-9% to the broker's FY28 earnings.
AU Small Finance Bank has a ₹1,270 target against ₹1,061, implying around 20% upside. Jefferies expects the bank's transition towards a universal bank, stronger deposits and credit growth to support earnings. The brokerage noted that promoter Sanjay Agarwal owns 23%, while leadership continuity is ensured as his tenure is approved till April 2029, which aids valuation premium. Poonawalla Fincorp has a ₹560 target versus ₹448.50, implying around 25% upside, with the brokerage expecting a 34% AUM CAGR through FY29, driven by expansion in personal loans, gold loans and other products, alongside improving credit costs. According to Business Standard, Jefferies' top banking picks include ICICI Bank, State Bank of India and Axis Bank, while among mid-cap banks they favour AU Small Finance Bank and IndusInd Bank.
Jefferies has initiated coverage on Vodafone Idea with a Buy rating and a target price of ₹20 per share, representing approximately 28.9% potential upside based on the September 9 closing price of ₹15.52. However, HSBC has retained its Reduce rating and raised its target price to ₹8.25 from ₹7.70, implying roughly 47% downside from the share price around ₹15.47. The stark disagreement reflects contrasting assumptions about Vodafone Idea's turnaround potential, with Jefferies expecting subscriber stabilisation, tariff hikes and operating leverage to drive significant improvement, while HSBC remains more concerned about future funding and spectrum-payment requirements. According to Equentis, the disagreement is less about whether Vodafone Idea has potential and more about whether its operating improvement will be sufficient to overcome long-term funding requirements.
According to the report, the domestic growth backdrop has remained resilient despite the Middle East conflict, higher energy and freight costs and currency volatility. As reported by The Financial Express, the domestic demand environment continues to support broad-based earnings opportunities across multiple sectors. The report emphasizes that the opportunity set is becoming much wider, with some winners tied to household consumption, others to credit and financialisation, and an increasingly important group tied to India's investment in power, manufacturing, defence, digital infrastructure and new technologies.
The most striking part of Jefferies' framework identifies six 2030 themes as major new opportunities: space, semiconductors, data centres, electronics, solar manufacturing, and aerospace. According to the report, space represents a 5x expansion of the space economy to $45 billion, while semiconductors involve $20 billion investment already with a new $13 billion incentive plan. Data centres are rising towards 10GW capacity, and solar manufacturing is targeting 90% of the manufacturing chain localised. These themes are interconnected, with data centres increasing power demand and semiconductor manufacturing creating opportunities for specialised materials and electronics.
