Global brokerage firm Jefferies has maintained a positive stance on the industrials sector, highlighting power and defense as standout areas. Its top stock picks include Siemens, Hindustan Aeronautics Limited (HAL), Thermax, and Larsen & Toubro (L&T).

HAL: Jefferies has reaffirmed its ‘Buy’ rating with a price target of ₹5,500 per share, representing a potential upside of 32% from Wednesday’s closing price.

Thermax: The brokerage also retains a ‘Buy’ rating for Thermax, with a price target of ₹6,100 per share, which implies a 55% potential upside from the last closing level.

L&T: A ‘Buy’ recommendation is upheld, with a target price of ₹4,600, indicating a 25% upside potential from Wednesday’s closing price.

Company-specific triggers

1) Siemens is expected to benefit from revenue and margin recovery in its Power Transmission & Distribution (T&D) division. Improved visibility on spending in this area and the power business demerger serve as additional trigger.

2) Thermax will likely benefit from its transition into a company focused on clean energy.

3) HAL: With a projected 20% compound annual growth rate (CAGR) in earnings per share (EPS) over the next five years, driven by indigenisation efforts, HAL’s valuation multiples are expected to remain elevated.

4) L&T has low investor expectations built in that could lead to stock upside if the company delivers on its guidance.

Broader sector outlook

In its 2025 Industrials outlook, Jefferies noted that 2024 presented contrasting halves. The election result outcome was a negative surprise, with a BJP coalition replacing the previous standalone majority.

Post-election, order flow growth decelerated, and investor concerns regarding growth and valuations surfaced.

However, BJP’s victory in the Maharashtra elections has alleviated some of these concerns. The upcoming budget will be a decider on whether the government maintains its focus on capital expenditure.