The brokerage firm Nuvama has rolled out a fresh set of “Buy” calls on select stocks. The firm remains particularly optimistic about IT, auto, and defence.
Among its preferred bets are Tata Consultancy Services (TCS) in the IT space, Hyundai Motor India in autos, and Bharat Electronics and Data Patterns in the defence sector.
Let’s take a look at the brokerage’s top picks and the rationale behind it –
Nuvama on TCS: ‘Buy’ with a Target Price of Rs 3,950
Nuvama has maintained a Buy rating on Tata Consultancy Services (TCS) with a revised target price of Rs 3,950.
While the company’s Q1FY26 performance was mixed, Nuvama remains constructive on its medium term prospects. TCS posted a 3.3% decline in revenue in constant currency terms quarter-on-quarter, mainly due to a sharp ramp-down in the BSNL deal. However, EBIT margin expanded 30 basis points to 24.5%, and profit after tax beat expectations at Rs 12,760 crore.
“TCS reported soft numbers, but the international business was largely stable. We reckon growth shall revive as macro headwinds fade,” said Nuvama in its report.
The brokerage added that the deal pipeline remained strong at $9.4 billion, though slightly lower sequentially. It sees potential margin gains as utilisation improves.
“TCS, post its recent underperformance, looks attractive – trading at 21.5x FY27E, in line with long-term averages. We retain our BUY rating with revised TP of Rs 3,950,” the report stated.
Nuvama on Hyundai Motor India: ‘Buy’ with a Target Price of Rs 2,600
In the auto space, Nuvama has initiated coverage on Hyundai Motor India with a Buy rating and a target price of Rs 2,600.
“Hyundai is gearing up for 26 new launches by FY30E. With increased focus on SUVs, premium features like ADAS and sunroofs, and EV play, it’s well-positioned to outpace industry growth,” the brokerage said.
Hyundai’s domestic market share is expected to climb by 1 percentage point to 15% by FY28, driven by launches in compact SUV and micro EV segments.
The brokerage estimates an industry-beating revenue CAGR of 9% and EBITDA CAGR of 12% over FY25-28. Additionally, free cash flows are expected to remain strong at approx. Rs 43 billion annually during FY26-28.
“Hyundai’s strong product pipeline, parent company support, and high return on invested capital (RoIC) make its valuation of 30x Sep-27E PE plus Rs 117/share net cash justified,” Nuvama said.
With an expected RoIC of 57% and cash reserves projected to grow from Rs 7,800 crore in FY25 to Rs 17,200 crore by FY28
Nuvama on Defence Sector: Bharat Electronics and Data Patterns as top picks
Beyond tech and auto, Nuvama has turned bullish on the defence manufacturing space, spotlighting Bharat Electronics and Data Patterns as its top sectoral picks.
“Heightened geopolitical risks across Europe, the Middle East, and Asia have disrupted global defence supply chains. India’s response-accelerated localisation-opens a golden pipeline for private defence players,” noted the report.
According to the brokerage, there are four major tailwinds boosting the Indian defence sector-
- Import embargoes on critical equipment
- Strong export momentum from Indian defence PSUs and private firms
- A modernisation drive to upgrade legacy defence fleets
- Collaborations with foreign OEMs for high-tech defence solutions
Bharat Electronics is expected to benefit from strong order inflows linked to domestic procurement mandates, while Data Patterns stands out due to its niche focus on defence electronics and indigenous R&D capabilities.
“The government’s push for Atmanirbhar Bharat and increased capital outlays in defence will benefit companies with scale, technology depth, and localisation advantage,” Nuvama noted.