The Brokerage firm Jefferies has highlighted three ‘fallen angels’ as its top contra picks for the next 12 months, pointing to strong potential for a cyclical recovery despite their premium valuations.
While the brokerage acknowledges that these stocks are “not cheap by any stretch of imagination,” it believes the fundamentals are set for an upturn that could drive share prices higher.
Jefferies also notes that even if its recovery thesis doesn’t fully materialize, the downside risk from current levels appears limited, making these picks attractive contrarian bets in the current market environment. In this article, we take a closer look at these three stocks.
1. Hindustan Unilever Ltd
With a market capitalization of Rs 5,88,690 Crores, the share price of Hindustan Unilever Ltd was trading 0.20% up to hit an intraday high of Rs 2,514 per share from its previous closing price of Rs 2,509 per share.
Brokerage Outlook
Despite keeping its price target for Hindustan Unilever unchanged, Jefferies noted that the company has faced multiple challenges in recent years, which is evident in its largely stagnant stock performance. However, the brokerage sees a potential recovery on the horizon.
In its latest note, Jefferies highlighted a key shift in the company’s strategy: a renewed focus on growth over margins as a positive signal. It also pointed to the parent company’s strong emphasis on the Indian market as another factor that could support a turnaround in the coming quarters.
About the Company
Hindustan Unilever (HUL) is India’s leading FMCG company with over 90 years of presence and a portfolio of 50+ popular brands across Home Care, Beauty & Personal Care, and Foods & Refreshment. It operates across the country with a strong distribution and manufacturing network.
Home Care is the largest segment, contributing 38% of revenue (Rs 22,972 cr) with strong volume growth. Foods & Refreshment contributes 25% (Rs 15,294 cr), followed by Beauty & Wellbeing at 22% (Rs 13,073 cr) with the highest margin of 32%, and Personal Care at 15% (Rs 9,168 cr).
Looking ahead, HUL expects moderate gross margins and will step up investments in innovation and high-growth categories. EBITDA margins are likely to stay in the 22–23% range, with growth expected to pick up gradually, led by volume-driven performance and portfolio transformation.
The company reported a revenue of Rs 63,121 crore in FY25, up by 1.9 percent from its FY24 revenue of Rs 61,896 crore. Coming to its profitability, the company reported a net profit rise of 3.8% to Rs 10,671 crore in FY25 from Rs 10,282 crore in FY24. It maintains a healthy financial profile with a ROCE of 27.8% and ROE of 20.7%, reflecting efficient capital and equity utilization.
2. Asian Paints Ltd
With a market capitalization of Rs 2,29,938 Crores, the share price of Asian Paints Ltd was trading 0.25 % up to hit an intraday high of Rs 2,405 per share from its previous closing price of Rs 2,399 per share.
Brokerage Outlook
Jefferies has taken a bullish turn on Asian Paints, issuing a rare double-upgrade on the stock shifting its rating from “underperform” to “buy” while significantly raising the price target from Rs 2,000 to Rs 2,830.
The revised target suggests a potential upside of 12.6% from Tuesday’s closing price. According to the brokerage, while competition from Birla Opus will continue to build, the initial impact appears priced in. Jefferies expects a gradual recovery in Asian Paints’ earnings beginning in FY26.
About the Company
Asian Paints, India’s largest paints and home decor company, has been a market leader since 1967. Founded in 1942, it offers a wide range of products including paints, waterproofing, adhesives, modular kitchens, wardrobes, sanitaryware, lighting, and furnishings.
For Q1 FY26, the company expects demand to improve, especially in urban and rural areas, aided by a normal monsoon and government spending. While competition remains high, Asian Paints will focus on brand strength and growing its industrial business. It also expects some relief from easing raw material prices.
The company reported a revenue of Rs 33,906 crore in FY25, down by 4.5 percent from its FY24 revenue of Rs 35,495 crore. Coming to its profitability, the company reported a net profit decline of 33.2% to Rs 3,710 crore in FY25 from Rs 5,558 crore in FY24. It maintains a healthy financial profile with a ROCE of 25.7% and ROE of 20.6%, reflecting efficient capital and equity utilization.
3. Varun Beverages Ltd
With a market capitalization of Rs 1,64,919 Crores, the share price of Varun Beverages was trading 0.35% up to hit an intraday high of Rs 491.75 per share from its previous closing price of Rs 490 per share.
Brokerage Outlook
Even as it lists Varun Beverages among its top contra picks, Jefferies has trimmed its earnings outlook for the stock, citing a weaker-than-expected summer season. The brokerage cut its EPS estimates by 9–10% for the June 2026 period.
Despite the revision, Jefferies maintained its “buy” rating, citing attractive valuations. However, the price target has been lowered from Rs 650 to Rs 560, reflecting the near-term earnings pressure.
About the Company
Varun Beverages Ltd. (VBL) is one of the largest franchisees of PepsiCo in the world (outside the U.S.) and a key player in the global beverage industry. The company manufactures, distributes, and sells a wide range of PepsiCo’s carbonated and non-carbonated beverages such as Pepsi, Mountain Dew, Mirinda, Sting, Slice, Tropicana, Gatorade, and Aquafina. VBL has been associated with PepsiCo since the 1990s and has steadily expanded its footprint by increasing its licensed territories and product portfolio.
In India, VBL holds franchise rights across 26 States and 6 Union Territories, covering nearly 90% of PepsiCo India’s beverage sales volume. Internationally, VBL operates in countries like Nepal, Sri Lanka, Morocco, Zambia, Zimbabwe, and South Africa, with distribution rights in additional African markets.
The company reported a revenue of Rs 20,008 crore in FY24, up by 24.7 percent from its FY23 revenue of Rs 16,043 crore. Coming to its profitability, the company reported a net profit rise of 25.3% to Rs 2,634 crore in FY24 from Rs 2,102 crore in FY23. It maintains a healthy financial profile with a ROCE of 24.8% and ROE of 22.5%, reflecting efficient capital and equity utilization.
Written By Rohan Pandey
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