Brokerage firm Jefferies named Hindustan Aeronautics (HAL), Siemens, Larsen & Toubro, and KEI Industries as its top investment picks in the engineering and construction sector. The call is based on strong order flow trends and improved earnings visibility across defence and infrastructure-related companies.
According to Jefferies, defence order flows for companies under its coverage have surged 89 percent year-on-year. It expects this trend to sustain through the current financial year, supported by continued operating leverage across key players. The brokerage also flagged that power and defence stocks enjoy high visibility at present, while sentiment around the railway sector has turned more positive.
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For HAL, Jefferies sees significant upside, with a bull case target of Rs 7,500—implying a 50 percent jump from current levels. Even under its base case scenario, the stock could move up to Rs 6,475, translating to a 30 percent gain. A visible order pipeline of around Rs 1.7 lakh crore gives comfort on revenue growth, while the bull case assumes quicker approvals and new tenders in defence.
Siemens too features among Jefferies’ favourites, backed by expectations of stronger exports to its parent company, better asset turnover, and margins rising above previous peaks. Its bull case price target stands at Rs 4,500, suggesting a 36 percent upside, while the base case target of Rs 3,700 offers a more modest 12 percent potential.
In the case of L&T, the brokerage sees the stock reaching Rs 3,965 in its base case, supported by an estimated 18 percent CAGR in revenue and margin improvement in hydrocarbon and heavy engineering businesses. This represents a 9 percent upside from current levels.
KEI Industries stands out as the stock with the highest upside potential among the four. Jefferies projects a bull case target of Rs 5,625—an increase of 59 percent. The brokerage expects KEI’s earnings to grow at an annualised rate of 31 percent between FY25 and FY27, with improving retail margins adding to the upside.
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