Jefferies adds BPCL, SAMIL, others to 'model portfolio', trims IndiGo; Full list here

Brokerage firm Jefferies wrote in its note that MSCI India is up 8% so far in 2025, yet 15% of the stocks it tracks have fallen more than 20%.

It says that although the MSCI India valuation multiple is about 11% above its 10-year average, nearly one third of its covered stocks are trading below their long term averages. This, it says, is making it easier to find value and laggard picks.

Against this backdrop, Jefferies has refreshed its model portfolio.

Godrej Properties, Bharat Petroleum Corporation, JSW Energy, and AU Small Finance Bank have been added. The brokerage has also brought Axis Bank and SAMIL into the portfolio, while reducing exposure to ICICI Bank, NTPC, Tata Steel, CRG and InterGlobe Aviation, the parent of IndiGo.

According to Jefferies, the inclusion of AU SFB is driven by its expectation that the lender will deliver among the strongest growth in its banking coverage, driven by improving asset quality and the ongoing transition from a small finance bank to a universal bank, which could help reduce funding costs and lift fee income.

Axis Bank was preferred over ICICI Bank because it trades at a 20-25% discount on valuations of large banks and is showing improvement in growth and asset quality, which the brokerage believes could aid a re-rating.

SAMIL has been added in place of Belrise after Belrise's sharp rally. Jefferies says SAMIL's operating performance has begun to improve as macro pressures ease, margins in Europe recover, and its non-automotive businesses such as aerospace and electronics grow steadily.

It expects SAMIL's earnings to rise at roughly 25% a year between financial year 2026 and financial year 2028.

JSW Energy replaces NTPC in the refreshed portfolio. Jefferies expects JSW Energy's upcoming capacity additions to drive a strong jump in operating profits between FY25 and FY28, led by a recovery in power demand and steady merchant tariffs.

The brokerage said that JSW Energy's current valuation is lower than the range it traded at after its 2010 listing, when capacity growth was accelerating.

BPCL has also been added, moving the energy sector view from underweight to neutral. Jefferies said that refining operations contribute almost half of the company's operating profits, and it believes that the continuation of current crude oil price trends should remain favourable.

It also said that the stock trades at relatively reasonable valuation multiples while offering a dividend yield of around 3%.

Jefferies adds that Godrej Properties' recent underperformance has pushed its valuation to attractive levels based on long term metrics, even as the company continues to deliver strong pre-sales growth of around 15% to 20% a year.

Crompton Consumer and Tata Steel have been removed from the model portfolio, with the brokerage citing delays related to safeguard duty matters for the latter.

Among the 237 stocks under its coverage, 69 are currently trading below their 10-year valuation averages.

Jefferies says 108 of these stocks are down for the year to date, with 35 falling more than 20%. Its fallen-stocks screen looks for companies that have dropped more than 20% but still carry a buy rating. This basket already included Lodha and Mankind Pharma, and now JSW Energy and Godrej Properties have been added.