Adani Ports, ICICI Bank, JSW Energy, Bharti Airtel shares among Jefferies' top India 2024 picks

Foreign brokerage Jefferies said Nifty is now trading at 20 times one-year forward earnings per share, which is higher than the past 10-year average, but relative to emerging markets (ex-China), India's premium at 67 per cent is only somewhat higher than historical average.

The foreign brokerage said India's on price/earnings to growth ratio basis, Indian market appears reasonable, as it suggested a December 2024 Nifty target of 24,000, implies 12 per cent total return. Jefferies said the current valuation multiple will sustain, helped by 12 per cent EPS growth compounded annually and strong flows.

Jefferies remained positive on domestic economy and the capex theme and said its key picks are large banks such as Axis Bank and ICICI Bank), developers Macrotech Developers Ltd (Lodha) and Godrej Properties Ltd. It also like plays on power sector such as Coal India Ltd and JSW Energy; two-wheeler makers such as TVS Motor Ltd and Eicher Motors Ltd, telecom operator Bharti Airtel and capital goods firms namely Adani Ports & Special Economic Zone Ltd (Adani Ports) and Kajaria Ceramics Ltd.

Jefferies said the approaching national elections will keep the welfare spending imperative high, and same may be visible during the 1st Feb interim budget. Post elections, there is a risk of higher taxation. Slower incremental government capex growth could be a near-term negative for Larsen & Toubro (L&T), railways and defence stocks. This brokerage has moved some weight from L&T to Adani Ports (privatisation beneficiary) in it model portfolio.

Meanwhile, Jefferies said banking sector has benefitted from the sector rotation (into large caps) seen in December 2023. But even beyond that near-term trade, the sector stands out as the only sector with below average multiples and possible earnings surprise if asset quality holds up, it said.

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"Also, more foreign flows from global mandates suit the large banks/financial theme well," it said.

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