Jefferies Targets 25% Upside in Five Indian Financial Stocks

Jefferies has issued Buy ratings on five Indian financial companies, projecting that each can achieve a 25% compound annual growth rate in operating profit through FY29. The brokerage attributes this outlook to robust revenue expansion and economies of scale, despite the group’s relatively elevated valuations. According to the report, these firms are positioned to deliver strong earnings compounding that should drive investor returns over the next three years.

The selected companies include Groww, Paytm, PB Fintech, AU Small Finance Bank, and Poonawalla Fincorp. Each entity exhibits distinct growth drivers, ranging from digital insurance penetration to wealth management initiatives. Jefferies emphasizes that the combination of healthy top-line growth and improved monetization strategies supports the projected profit expansion across this diversified financial basket.

Digital Wealth and Payments Leaders

Groww is projected to post a 30% profit after tax CAGR from FY26 to FY29, supported by new initiatives in margin trading and wealth management. The brokerage notes that the addition of US stock offerings in late FY27 could contribute an additional 5-9% to FY28 earnings, underpinning a target price of Rs 240.

Paytm’s strategy focuses on monetizing its 49 million merchant base as merchant discount rates improve from near-zero levels. This shift is expected to drive a 25% revenue CAGR through FY29, fueled by a strong loan-origination model that enhances EBITDA and overall profitability.

Insurance and Banking Sector Expansion

PB Fintech benefits from rising insurance penetration and a customer shift toward online channels. The company, which operates India’s largest online insurance platform, anticipates a 35% CAGR in premiums over the next three years. This growth, combined with operating leverage and an expanding renewal book, is expected to result in a fourfold increase in adjusted EBITDA.

AU Small Finance Bank is transitioning to a universal banking license, a move designed to lower funding costs and strengthen brand recognition. This structural change supports a forecast of 22% credit growth CAGR and 29% growth in personal and property loans, marking the highest expansion rates in Jefferies’ coverage universe.

Non-Banking Financial Company Growth

Poonawalla Fincorp aims for a 34% asset under management CAGR through FY29, driven by the scaling of new products that currently represent 16% of its portfolio. The company expects higher disbursement yields and rapid growth in prime and gold loan segments to support net interest margin expansion.

This analysis was reported by GN stocks/banks, highlighting the specific operational levers each company will utilize to meet its financial targets. The brokerage’s recommendations are based on detailed assessments of revenue diversification and cost efficiency within the Indian financial sector.