Jefferies adds Bharat Electronics, Ambuja Cements in Model Portfolio; drops Shriram Finance

Jefferies reshuffles picks amid rising market valuation

Global brokerage firm Jefferies added Bharat Electronics, a key player in India’s defence sector, and Ambuja Cements to its model portfolio. At the same time, it removed Shriram Finance and state-run mining major Coal India from its portfolio.

According to the note, analysts believe that the valuations in Indian equity markets have once again become steep, following a rebound in the indices from their April lows.

“Valuations are demanding, especially considering the projected EPS (Earnings Per Share) growth at a compounded annual growth rate (CAGR) of 11–12 percent between FY2025 and FY2027,” Jefferies said.

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The firm attributed the recent rise in Indian equities to several contributing factors: expectations of a rate-cut cycle by the Reserve Bank of India (RBI), easing trade tensions between the US and China, and signs of reduced geopolitical strain between India and Pakistan.

Jefferies noted that a potential trade agreement between India and the US could also serve as a significant near-term driver for Indian equities.

It also observed that India remains positioned close to neutral or underweight in many global portfolios, but fund managers are now gradually increasing their allocations to the country.

The brokerage warned that the current market rally could trigger an increase in equity supply, much like what was seen through most of 2024. “We expect that trend to continue. If it doesn’t, the risk of a valuation melt-up becomes more likely,” the note cautioned.

Jefferies maintained a positive outlook on both domestic and foreign capital flows, which it believes should support equity supply—thereby limiting how far the market can rise from current levels.

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