As the Indian stock market is facing pressure from rising bond yields, global investment bank Jefferies sees an opportunity emerging beneath the broader market weakness in largecap stocks, where valuations have fallen below historical averages and the earnings gap with midcaps is expected to narrow.
Jefferies increased weight in the company and said Reliance has been added at an attractive valuation. The stock is trading at 8.4 times one-year forward EV-to-EBITDA, around 23% below its 10-year average. The brokerage also sees scope for upgrades if refining margins improve.
Jefferies cited the removal of leadership overhang, potential acceleration in growth from current levels of 15%+ and an attractive valuation. The stock trades at 1.8x FY27E price-to-adjusted book value (P/ABV), around 50% below its 10-year average.
Jefferies has also added Welspun Corp, which it expects to benefit from a multi-year upcycle in oil and gas infrastructure spending across the US and Middle East, supported by local manufacturing. The brokerage expects this to drive EBITDA and EPS compound annual growth of more than 30% over FY26-29E.
The Wall Street investment bank has trimmed weight in the two-wheeler major. Eicher shares have slipped over 8% in the last one month and remain 5% lower since the beginning of the year.