The markets are seeing brisk trading today, and if you are looking at top stocks to buy, here are some recommendations from the key brokerage firm, Motilal Oswal. The brokerage has picked three stocks with Buy recommendations. These are CEAT, PNB Housing Finance and Shriram Finance.
A look now at the top triggers-
Motilal Oswal on Shriram Finance: Headwinds to subside shortly
Shriram Finance is expected to see a boost in its net interest margin owing to normalisation in surplus liquidity and declining rate cycle, said Motilal Oswal. Shriram Finance is a combination of market leadership, strategic diversification into high-growth non-auto segments, potential for margin and operating efficiency improvements, and attractive valuations with strong earnings visibility. These factors make the lender a top NBFC pick, with a target price of Rs 800, with a potential upside of 23% from Rs 648.
“We expect these headwinds (temporary challenges in its asset quality and NIM compression) to gradually subside as over the last two years, the company’s execution on AUM growth and asset quality has been far ahead of its peers,” added Motilal Oswal.
Motilal Oswal on CEAT: Expects good demand in tractor and 2W replacement
Motilal Oswal has maintained its ‘Buy’ call on CEAT after meeting the management. The brokerage firm sees a potential upside of 15% in the tyre maker with a target price of Rs 4,159. In Indian business, Ceat’s management continues to expect good demand in the tractor and 2W replacement segments, even as 2W OEM (original equipment manufacturer) demand is now slowing down. While passenger vehicle (PV) replacement is likely to post 0-5% growth, PV OEMs are likely to be flat YoY in FY26.
Going further, the company expects the lower raw material costs to reflect in the second quarter of FY26. Plus, the pricing discipline remains stable, and CEAT has been able to hold on to its pricing so far.
For the Camso deal, CEAT would pay about 60% of the consideration value of $225 million within a month and the balance over the next 1-3 years, when it is due.
Motilal Oswal on PNB Housing Finance: May pass-through near contraction in NIM
The brokerage house has reiterated its ‘Buy’ rating on PNB Housing Finance. The broker maintained its target price of Rs 1,230, with a potential upside of 16.4%. The housing financier has strengthened its housing finance franchise over the last 2-3 years, said Motilal Oswal. Further, it is expected that PNB Housing Finance is well-equipped to successfully navigate the potential near-term contraction in NIM and gradually mitigate it through a favourable product mix. The company has positioned itself deftly to navigate the current declining interest rate environment.
Motilal Oswal said that asset quality improved in FY25 of PNB Housing, with GS3 declining to 1.1% as of Mar’25 (from 1.5% in March 2024). The FY25 witnessed provision write-backs, driven by recoveries from the written-off pool. “We expect these recoveries to continue and model credit costs of -10 bps in FY26,” said the brokerage firm.
“We expect PNBHF to deliver a healthy 19% CAGR in the loan book and 18% CAGR in net profit over FY25-27, with an RoA/RoE of 2.5%/13.3% by FY27,” said Motilal Oswal on PNB Housing Finance.