A lender, a property developer, a power financier and a restaurant operator may not appear to have much in common. However, the link that ties them all in this article is the fact that they all feature in Motilal Oswal’s latest ‘Buy’ recommendations.
The domestic brokerage Motilal Oswal in its latest report has given a ‘Buy’ rating to a select number of stocks. Interestingly, they are quite a few stocks that falls under the Rs 500 price bracket, though the brokerage has not made any special mention of this.These include companies from four different sectors – banking, real estate, power financing and quick service restaurants.
The four stocks are Rural Electrification Corporation (REC), Mahindra Lifespace Developers, DCB Bank and Sapphire Foods. According to the brokerage report, the expected upside ranges from 20% to 34%.
So, what is supporting the brokerage’s optimism? Let’s take a closer look –
Sapphire Foods: Can improving restaurant demand support further upside?
Motilal Oswal has maintained its ‘Buy’ rating on Sapphire Foods with a target price of Rs 240. This implies an upside of nearly 34%.
Motilal Oswal in its report noted that the company’s KFC business has started showing gradual improvement in both same-store sales growth and profitability.
The report noted, “KFC is witnessing a gradual improvement in operating performance, with positive trends in both SSSG and margins, supported by Sapphire’s initiatives to enhance consumer engagement.”
The brokerage believes improving consumer demand, better execution and stronger operating efficiencies could continue supporting earnings over the coming quarters.
Another important development is the proposed merger between Devyani International and Sapphire Foods.
As per the brokerage house report, “the proposed Devyani-Sapphire merger is likely to unlock scale synergies and strengthen execution across brands and geographies.”
While demand trends remain an important monitorable, the brokerage believes operational improvements could support future growth without depending heavily on further price increases.
DCB Bank: Better asset quality remains the key focus
Motilal Oswal also remains positive on DCB Bank, retaining its ‘Buy’ rating with a target price of Rs 235. This translates to an upside potential of 26% from the current market price.
The report added that the bank delivered an in-line quarterly performance, while improving asset quality helped offset weaker non-interest income.
Furthermore, Motilal Oswal report highlighted that management expects margins to improve as the cost of deposits gradually declines.
It also said, “Business growth remained healthy, supported by an increased focus on higher-yielding segments such as mortgages.”
The brokerage expects improving operating efficiency, better net interest margins and healthier asset quality to support future profitability.
It added, “We largely maintain our estimates for FY27 and project an FY27E RoA/RoE of 1.03%/15.2%.”
Mahindra Lifespace: Can project launches sustain the momentum?
The brokerage is also constructive on Mahindra Lifespace Developers, assigning a target price of Rs 470, indicating nearly 25% upside.
The company reported record quarterly pre-sales during the June quarter, driven largely by successful project launches.
The report noted that one project alone contributed nearly half of the quarterly bookings.
It also expects several new launches during the current financial year to support sales momentum.
According to Motilal Oswal, “Five more projects are expected to be launched in FY27, and the company has reiterated its FY27 pre-sales guidance of Rs 45-50 billion.”
The brokerage further added that it continues to expect strong growth over the next few years and has therefore maintained its positive recommendation.
REC: Attractive valuation but growth remains the key monitorable
Power sector lender Rural Electrification Corporation (REC) is the other stock.
Motilal Oswal has maintained its ‘Buy’ recommendation with a target price of Rs 435, suggesting an upside of around 20%.
REC’s latest quarterly performance remained relatively subdued. This is because of loan growth was modest and disbursements continued to remain weak.
The report stated, “REC trades at an attractive valuation of 1x FY27E P/ABV.”
While loan growth remains a key monitorable, the brokerage believes stable asset quality and controlled credit costs continue to support the investment case.
Motilal Oswal report also said, “We model REC’s credit costs to remain benign at ~20bp over FY27-FY28.”
Despite near-term pressure on margins, the brokerage expects the company to continue generating healthy returns over the medium term.
What investors need to watch next?
Although these companies belong to completely different sectors, Motilal Oswal believes improving business execution, earnings visibility, operational efficiency and attractive valuations remain the common themes supporting its positive outlook.
Disclaimer: The stock recommendations, ratings, and target prices mentioned in this article are derived from brokerage research and are provided for informational purposes only. They do not constitute financial advice, an offer, or a solicitation to buy, sell, or hold any security. Equity investments are subject to market risks, and past performance or target estimates are no guarantee of future returns. Readers should conduct their own research and consult a SEBI-registered financial advisor before making any investment decisions. This disclaimer has been generated using AI to support user well-being and responsible content consumption.