Jefferies chose Hal, Siemens, L&T and Kei Industries as the top pics.

New Delhi. Brokerage firm Jeferies has chosen four major companies in the engineering and construction sector as the top pics. These stocks are- Hindustan Aeronautics Limited (HAL), Siemens, Larsen & Toubro (L&T) and Kei Industries. Keeping in mind the strong order books, defense and power sectors, and operating leverage, Jeferies have taken a bullish stance on these stocks.

According to Jefferies, the defense order flow has seen an increase of 89% year-on-year, which is a positive signal for these companies. Brokerage believes that operating laverage in the current financial year can improve the results of these companies. At the same time, there is also good clarity about future growth in power and defense segment, while the outlook of the railway sector is also seen to be improving.

The bull case target of jefferies on Siemens is ₹ 4,500, which shows a 36% increase. According to this, if India becomes a manufacturing hub for the parent company and the margin crosses the old levels, then the stock is possible. However, in the base case, only 12% upset is estimated with a target of ₹ 3,700.

Larsen & Toubro (L&T)

Larsen & Taubro (L&T) shares have already gained 9% in the last one month, but Jeferies see the possibility of a 9% increase in the base case. The base target of ₹ 3,965 includes 18% CAGR revenue growth and improvement in margin. The target of ₹ 4,310 in the bull case will be possible when there is a fast recovery in the macro investment cycle.

Different risk in the four stocks are also kept in front such as delay in ordering in defense, margin pressure, decline in exports or improving inventory bicycle. Nevertheless, strong fundamentals and sector tailwinds of these companies make them attractive for long -term investment.

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