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Jefferies upgraded BPCL stock due to a steep discount and less impact from marketing losses in diesel till national elections. Target price of Rs 890 set, valuing it at 2.8x fwd P/B for 14% ROE in FY25.
Jefferies said the rerating in shares of public sector undertakings (PSUs) - the top performers in the past three months - has more legs citing cheaper valuations compared to the Nifty and the government's focus on 'value maximisation' for these companies. SBI, Coal India, and NTPC are its top picks among state-owned companies.
With farmers reassessing expenses, particularly for compact tractors, Deere said it now expects net income for fiscal 2024 in the range of $7.50-billion to $7.75-billion
PSU stocks have rallied, partly supported by the govt's capex push but sector-specific reasons have also helped. The PSU Bank index has advanced 78% YoY, outperforming the private banks by 70 ppt, while oil PSUs have seen a sharp rally since October 2023 as the govt chose not to cut auto fuel prices despite a busy election calendar and a drop in crude oil prices.
The flagship company of Adani Group has incubated multiple businesses in ports, power, city gas distribution, transmission, and FMCG over the past decade, and Jefferies believes that the new businesses — Green Hydrogen, Airports, Data Center, Roads, Copper – will emerge as industry leaders in the future.
BAT's potential stake sale in ITC could result in a supply overhang of about $2.5 billion. BAT is facing challenges from declining cigarette volumes in key markets, including the US. The company also holds $40 billion in net debt, accounting for 3x Ebitda and nearly 60% of the market cap.
Chris Wood, in his Greed & Fear weekly newsletter, said he was pleasantly surprised at the Budget which was almost devoid of vote-buying populism despite coming just ahead of the Lok Sabha elections later in the year. In Wood's global long-only portfolio, the investment in HDFC Bank will be reduced by two percentage points, while the investments in Axis Bank and TSMC will be increased by one percentage point each.
Over the last three years, ITC stock has given a return of more than 3x from led by strong cigarette volume growth, scale-up in FMCG, improved capital allocation, & increase in FII holding.