Motilal Oswal has picked three stocks to bet on: Bharat Electronics, Avenue Supermarts, and M&M. The brokerage firm sees as much as 37% upside in one of these stocks. Here’s a detailed analysis of why Motilal Oswal picked these stocks.
Motilal Oswal on Bharat Electronics: Emergency procurement from Army to help
Motilal Oswal has a ‘Buy’ rating on Bharat Electronics, with a target price of Rs 490, which implies an upside of 37% from the current price. “We expect the company to benefit from emergency procurement and the finalisation of larger platform orders from the Army, Navy and Air Force,” said Bharat Electronics.
The company’s revenue growth was aided by a strong order book, though it was affected to some extent by geopolitical issues. The order book was strong at Rs 74,900 crore, and order inflows stood at Rs 7,600 crore. The company has maintained its guidance on revenue and order inflows and expects margins to remain strong at 27%.
Motilal Oswal on Avenue Supermarts: High single LFL growth led net profit
The brokerage house retained its ‘Buy’ rating on Avenue Supermarts and raised the target price to Rs 4,950 from Rs 4,500, implying an upside of 16% from the current share price.
“We raise our FY26-28 EBITDA and net profit by 2-4% as the increase in CoR (primarily related to staff costs to improve service levels) normalises,” said Motilal Oswal.
The brokerage built in a consolidated revenue growth of 19%, EBITDA increase of 20%, and a net profit rise of 18% CAGR over FY25-28, driven by 14-15% CAGR in retail store per area and a high single-digit like-for-like (LFL) growth. During the analyst meet, the management indicated acceleration in store additions as the utmost priority. Further, the management believes the margin contraction due to improving service levels over the past several quarters is largely behind.
Motilal Oswal on M&M: Outperformed own earnings growth targets
Motilal Oswal maintained its ‘Buy’ call on Mahindra & Mahindra with a target price of Rs 3,687, implying an upside of 15%. While M&M has outperformed its own targets of earnings growth and RoE (return on equity) of 18%, management remains committed to delivering 15-20% EPS growth and 18% RoE. This ensures sustained profitability and shareholder value, said the brokerage house.
The brokerage said M& M’s Q1 FY26 net profit of Rs 3,440 crore was ahead of estimates of Rs 3,070 crore due to higher other income, even as EBITDA margin came in line. While the FES (farm equipment sector) segment’s margin improved 140 basis points YoY to 19.8%, the auto segment’s margin remained steady at 8.9%, affected by the contract manufacturing margin for its e-SUVs.