Jefferies Picks 3 Stocks: HCLTech, Emmvee Eye 70% Upside

Jefferies has identified three key stock recommendations, with HCL Technologies and Emmvee Photovoltaic Power offering substantial upside potential. The brokerage firm has upgraded its outlook on both companies, citing sector-leading growth and expansion prospects.

HCL Technologies: Target Raised

Jefferies increased its target price for HCL Technologies to ₹1,885 from ₹1,850, maintaining a 'Buy' rating. This implies a 13% potential gain from current levels. The IT major's recent Q3 results surpassed expectations, buoyed by robust revenue growth and strong deal wins. HCL Technologies also raised its FY26 services growth guidance to 4.75-5.25%, the highest among its top Indian IT peers.

The brokerage firm expects HCL Technologies to leverage its infrastructure services expertise and AI strategy to capture greater market share. Jefferies raised its earnings per share (EPS) estimates by 1-2%, projecting a 10% EPS compound annual growth rate (CAGR) for FY26-FY28. Superior growth and free cash flow conversion are expected to justify premium valuations. Revenue estimates were also bumped up by 2-3% to account for acquisitions and stronger organic growth, with a projected 6% YoYcc CAGR in FY26-FY28.

Emmvee Photovoltaic Power: Solar Sector Play

Emmvee Photovoltaic Power received a 'Buy' rating from Jefferies, with a target price of ₹320. This suggests an anticipated return exceeding 70% over the next twelve months, as the stock is trading at a significant discount to its peers. India's solar installations are poised for rapid expansion, projected to grow at a 24% CAGR between FY25 and FY28.

Emmvee's early adoption of TOPCon technology, strong profitability driven by its DCR model, and a well-funded balance sheet provide a distinct competitive advantage. While industry profitability may normalize after FY28, Jefferies anticipates steady state Return on Capital Employed (RoCE) in the high teens. The firm forecasts a 56% EBITDA CAGR for Emmvee over FY25-FY28 and has priced the company at 9 times forward Enterprise Value to EBITDA (EV/EBITDA).

Concerns about future margin pressures exist as Indian photovoltaic (PV) cell/module capacity is expected to significantly outstrip domestic demand by FY28. Additionally, regulatory changes and the capital intensity of backward integration could challenge less established players.

Avenue Supermarts: Hold Rating Maintained

Jefferies kept its 'Hold' rating on Avenue Supermarts, setting a target price of ₹4,050, indicating a modest 6% potential upside. The retail giant, operating under the DMart brand, continues to see revenue growth moderate, with like-for-like growth at 5.6%. Despite this, EBITDA margins expanded significantly to a multi-quarter high, leading to an earnings surprise with a 20% YoY EBITDA growth.

Store additions remain consistent, with DMart adding 10 stores in the third quarter, bringing its total store count to 442. The company is scheduled for a CEO transition in the March quarter. Management anticipates minimal impact from new labor codes, though disclosures remain an area of concern for the brokerage.