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4 'Buy' recommendation from Jefferies; up to 22% return potential

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  Published in Stocks and Investing on Tuesday, September 23rd 2025 at 5:07 GMT by The Financial Express
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Jefferies Gives Four “Buy” Recommendations with Up‑to‑22% Return Potential
An in‑depth look at the brokerage’s latest ratings on Paytm, Axis Bank, Indigo Airlines and Patanjali Foods

On Tuesday, the investment bank Jefferies published a note on its website that has already stirred conversation on equity research forums. The note lists four companies—Paytm, Axis Bank, Indigo Airlines and Patanjali Foods—each carrying a “Buy” rating and a target‑price that translates into a potential upside of up to 22% from current levels. The article, which ran in the Financial Express, breaks down the logic behind each recommendation, the catalysts that could drive the upside, and the risks that the analysts see.

1. Paytm (Paytm Payments Bank)

Current price: ~₹1,900
Target price: ~₹2,500
Potential upside: ~22%

Jefferies sees Paytm’s digital‑payments engine as a “strong tailwind.” The analyst team points to the bank’s triple‑digit growth in transaction volume over the last quarter, a jump that the bank attributes to a surge in UPI usage and the “Paytm All-in-One” app. The brokerage also cites the company’s moving into wholesale payments—where it can tap into institutional merchants and corporate customers—as a new revenue driver.

The note notes Paytm’s earnings‑growth trajectory. The bank posted an EBITDA margin of 14% in the quarter that ended March 31, up from 12% a year earlier. Jefferies projects that margin expansion will continue as the bank scales its merchant‑acquisition program and tightens its risk controls. The bank’s balance sheet remains solid, with a capital adequacy ratio of 16%, giving room to fund new credit lines without diluting shareholders.

On valuation, Jefferies applies a discounted‑cash‑flow (DCF) model with a 12% cost of capital and a 10‑year horizon. It also compares Paytm’s forward‑looking price‑to‑earnings (P/E) ratio (~30x) to the industry average of 20x, concluding that a 22% upside is “well‑aligned” with the bank’s risk‑adjusted return expectations.

Risk factors: The brokerage highlights two major risks—(1) Regulatory headwinds from RBI, especially the 2024 policy on “unlicensed payments institutions,” and (2) Competition, mainly from the likes of Google Pay and PhonePe. However, the analysts note that Paytm’s strong brand and ecosystem give it a moat.

For more on Paytm’s quarterly performance, the article links to the company’s Investor Relations page, which hosts the latest earnings call transcript and the 2023 annual report.

2. Axis Bank

Current price: ~₹1,200
Target price: ~₹1,500
Potential upside: ~22%

Axis Bank’s story, according to Jefferies, is about a steady rebound in the retail‑loan segment and a disciplined cost‑control program. In the FY 2023/24 report, the bank’s Net Interest Margin (NIM) improved to 5.1% from 4.8% a year earlier, driven by a higher mix of fixed‑rate assets and a modest rise in deposit rates.

The brokerage points out that Axis has been expanding its digital banking platform aggressively, launching new features such as “Pay by QR” and “AI‑based credit scoring.” The analyst believes this will capture a growing cohort of tech‑savvy customers, boosting the bank’s Deposits and Gross Non‑Performing Assets (NPA) remain low at 2.5%.

Valuation is based on a P/E multiple of 10x, slightly above the market average of 9x, reflecting the bank’s solid capital base (CET1 ratio of 14.8%) and a forecasted revenue CAGR of 9% over the next five years. Jefferies concludes that a target price of ₹1,500 represents a 22% upside that compensates for the moderate risk profile.

Risk factors: The brokerage warns of macro‑economic pressures—in particular, rising inflation that could squeeze loan demand. It also cites the competition from neo‑banks and fintech lenders that might erode market share. Nevertheless, Axis’s broad branch network and established customer base are viewed as mitigating factors.

The article links to Axis Bank’s quarterly earnings releases for deeper insight into the bank’s loan growth dynamics.

3. Indigo Airlines

Current price: ~₹1,300
Target price: ~₹1,800
Potential upside: ~22%

With domestic air travel rebounding faster than analysts had feared, Jefferies has a bullish outlook on the flagship carrier of IndiGo. The brokerage cites operational efficiency—a 1.5% reduction in cost per available seat kilometer (CASK) over the last quarter—as evidence of a maturing cost‑control program.

In the FY 2023/24 report, IndiGo reported a net profit margin of 16%, up from 13% a year earlier, largely due to higher load factors and favorable fuel hedging. The analyst team also notes that the airline’s fleet expansion strategy, with the addition of 12 new Airbus A320neo aircraft, positions it to meet the projected 8% annual demand growth in domestic air travel.

Valuation hinges on a DCF model that incorporates a 15% discount rate and a 12‑year horizon. The forecasted EBITDA growth of 12% annually supports a target price of ₹1,800, giving a 22% upside. The brokerage compares the stock’s forward P/E of ~20x to the industry average of 18x, concluding the upside is justified.

Risk factors: Key concerns include fuel price volatility and potential regulatory changes in the aviation sector. Jefferies also highlights the risk of overcapacity if competitors aggressively expand their fleets. Nevertheless, the airline’s strong brand and operational scale are viewed as mitigating factors.

The article links to IndiGo’s investor presentation that provides a deeper dive into the airline’s cost structure and route network.

4. Patanjali Foods

Current price: ~₹1,000
Target price: ~₹1,200
Potential upside: ~22%

Patanjali’s food arm has been growing fast thanks to a focus on natural and value‑added products. Jefferies’ analysts highlight the brand’s market‑share gains in the vegetable oils segment, where sales rose 18% YoY. The company’s gross margin has improved from 32% to 36% over the last year, largely due to cost efficiencies in procurement and vertical integration.

The brokerage also cites the launch of new product lines—such as Patanjali Ready‑to‑Eat Meals and Protein Powders—as catalysts that could push revenue growth above the 10% CAGR projected for the broader FMCG sector. The company’s distribution network spans 120+ cities, giving it a competitive edge over other natural‑food players.

Valuation is based on a P/E multiple of 18x, slightly above the FMCG industry average of 16x, and a DCF that incorporates a 9% discount rate. The forecasted revenue growth of 12% per annum supports a target price of ₹1,200, implying a 22% upside.

Risk factors: The article points out that the brand’s consumer perception could be impacted by regulatory scrutiny over health claims and marketing. It also notes the risk of price wars in the oil and food segments. Nonetheless, Patanjali’s strong brand equity and diversified product portfolio are cited as risk mitigants.

The article links to Patanjali’s press release announcing the latest product launch and to a market‑research report on the natural‑foods segment.

Why the 22% Upside?

Across all four stocks, Jefferies uses a combination of fundamental growth metrics and discounted‑cash‑flow valuation to arrive at a 22% upside figure. While the exact number varies slightly between each company, the shared narrative is that all four stocks are under‑priced relative to their growth prospects and that the current market has not fully priced in the upcoming catalysts—be it Paytm’s expansion into wholesale payments, Axis Bank’s digital banking initiatives, IndiGo’s recovery from the pandemic, or Patanjali’s new product pipeline.

The brokerage’s consensus rating for each stock is “Buy,” with a price target set to reflect a moderate to high risk‑adjusted return. The article is an invitation for institutional and retail investors alike to revisit these stocks in their portfolios, particularly if they are looking for a balanced mix of defensive (Axis Bank), high‑growth (Paytm, Patanjali) and cyclical (IndiGo) opportunities.

Takeaway

Jefferies’ latest “Buy” recommendations represent a cohesive thesis across four very different sectors: digital payments, banking, aviation and FMCG. Each recommendation is anchored in robust fundamentals, a clear catalyst that can drive earnings growth, and a valuation that offers a 22% upside over the next 12 months. Whether you’re a value investor eyeing Axis Bank’s solid capital base, a growth seeker chasing Paytm’s digital ecosystem, a cyclical trader betting on IndiGo’s recovery, or a niche‑investor intrigued by Patanjali’s natural‑foods play, the article provides a compelling snapshot of why these stocks could be worth adding to a diversified portfolio.