International brokerage Jefferies has identified five Indian financial companies, including Paytm, Groww, Policybazaar-parent PB Fintech, AU Small Finance Bank and Poonawalla Fincorp, that can deliver a 25% compound annual growth rate (CAGR) over the next three years, delivering decent investor returns despite higher valuations. In its latest note on what it called ‘The 25% CAGR club of Indian Financials’, Jefferies said these five Indian financial companies that have a market capitalisation of near or above $5 billion can deliver strong earnings growth with healthy revenue growth and economies from scale.

The international brokerage ignores normalisation of credit costs and low base in its calculations. In most of these companies, founders are also CEOs, Jefferies highlighted as it maintained ‘Buy’ calls on all the five stocks..

The international brokerage increased its price target for the stock to Rs 2,100 apiece from Rs 1,600 apiece, while maintaining its ‘Buy’ call. Jefferies highlighted that Paytm stands out on monetisation of its client base in near-zero MDR regime, which is now changing favourably.

9 crore merchant base and strong loan-origination model should drive 25% revenue CAGR over FY26-29, which, along with operational synergies will aid sharp rise in EBITDA and profit, it added. 84 apiece on NSE.

“We believe the company has several levers to drive 30% PAT CAGR over FY26-29,” Jefferies said, adding that this will be driven by 18% growth in broking business led by client vintage and market share gains, new initiatives like margin trading facility and wealth management, and 10 pp margin expansion. 1 lakh crore proposalJefferies on PB Fintech share priceJefferies has a ‘Buy’ call on the shares of PB Fintech, the parent company of Policybazaar, and has maintained its target price of Rs 2,050 apiece for the stock.

“Strong operating leverage and growing renewal book should drive 4x adjusted EBITDA expansion over FY26-29…While risks exist from adverse commission regulations, levers exist in form of " Combined Operating" model and claim support/sales investments,” it added. Jefferies on AU SFB share priceAU Small Finance Bank’s expected transition from a small-finance bank to a Universal bank can lower funding cost, lift fees & strengthen brand to aid growth, Jefferies said as it maintained its ‘Buy’ call for the stock with a target price of Rs 1,270 apiece.

“Promoter (Founder, MD & CEO) Sanjay Agarwal owns 23%, while leadership continuity is ensured as his tenure is approved till April 2029. Growth and profitability aid val premium,” Jefferies said.