..... . VALI disclosures . .....: 05/08/25, Bullish Stocks in View of Jefferies the Global brokerage firm Jefferies has picked three stocks for a 'Buy' rating in its latest research note, forecasting potential upside of up to 33%.

Tuesday, August 5, 2025

05/08/25, Bullish Stocks in View of Jefferies the Global brokerage firm Jefferies has picked three stocks for a 'Buy' rating in its latest research note, forecasting potential upside of up to 33%.

TATA STEEL

Tata Steel has received a buy rating with a price target of Rs 200, implying a 31% upside. The steel major reported a 11% YoY growth in Q1 EBITDA, surpassing Jefferies estimates by 4%.

"Tata’s European operations turned EBITDA profitable in Q1 after 10 quarters," noted the report.

Jefferies sees some pressure on margins in Q2 due to softer Indian steel prices. However, the recent recovery in China's export HRC prices (up 6% in the past month) and an 11% rise in Asian conversion spreads could offer relief in the second half of the fiscal year.

The report forecasts a strong 35% EBITDA CAGR over FY25-27. Tata Steel is also ramping up its 5 mtpa capacity, with a healthy 8% volume CAGR expected in the India business over the next three years.

"We expect standalone EBITDA/t of Rs 15.2K/Rs 16.4K in FY26/FY27E…Our FY26-27E EPS are 10-16% above street," Jefferies said.

The brokerage believes the stock offers good value, currently trading at 1.9x FY26E P/B with a 14% ROE, compared to the long-term average of 1.1x P/B and 9% ROE.

JSW ENERGY

Jefferies has maintained a 'Buy' rating on JSW Energy, projecting up to 36% upside from current levels with a target price of Rs 700, with an upside potential of 33%

Jefferies noted, “1QFY26 was an operational beat, driven by better integration of KSK acquisition and utilisation from 930 MW renewable energy assets organically added from 4QFY25.”

Management has indicated a much faster rollout than previously assumed, aiming to add another 2.5-3 GW of capacity in the next nine months of FY26.

One of the key triggers ahead, as per Jefferies, is the gradual improvement in JSW Energy's balance sheet. Net debt-to-EBITDA is projected to fall from 8.3x in FY25 to 5.6x in FY26, and further to 5.3x by FY28, as cash flows from expanded capacity begin to kick in. By FY30, this metric could improve to 5.1x, with net debt-to-equity stabilising at 2.3-2.4x.

"We believe this B/S improvement is a key re-rating driver for JSWE hereon," said the brokerage.

However, Jefferies has slightly adjusted earnings expectations, trimming FY26-27 EPS estimates by 3-5%, factoring in higher depreciation and interest costs linked to the ramp-up.

APTUS

Jefferies has set a target price of Rs 420 for Aptus Value Housing, indicating a 24% upside from current levels. According to the brokerage, the company's performance in the first quarter of FY26 was largely in line with expectations, with profit after tax (PAT) rising 28% year-on-year to Rs 2.2 billion.

"AUM should grow at a 23% CAGR in FY25-28E…We expect 21% EPS CAGR and 19-21% ROE in FY25-28E. Buy," Jefferies stated in its note.

The report also highlights a recent credit rating upgrade by CARE, from AA- to AA, which is expected to lower the company's cost of funds. Management has already seen a dip in funding costs, with standalone HFC rates falling to 8.05%-8.1%, and NBFC costs dropping to 8.5%-8.6%.

While gross NPAs rose slightly to 1.5%, Jefferies noted this increase to seasonal factors and temporary collection lags in April and May, noting that collection efficiency improved in June and July.

"Aptus has a strong, concentrated franchise in its select states and is expanding slowly in new states…It is better placed among most AHFCs to benefit from easing rates," the note added.

Report by The Financial Express

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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Tuesday, August 5, 2025

05/08/25, Bullish Stocks in View of Jefferies the Global brokerage firm Jefferies has picked three stocks for a 'Buy' rating in its latest research note, forecasting potential upside of up to 33%.

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05/08/25, Bullish Stocks in View of Jefferies the Global brokerage firm Jefferies has picked three stocks for a 'Buy' rating in its latest research note, forecasting potential upside of up to 33%.

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