Motilal Oswal's top picks: TCS, SBI, Biocon, Dalmia Bharat & others

Motilal Oswal bets on TCS, SBI, Biocon, Dalmia Bharat, Astra Microwave Products and others; here's why

Stocks picks by Motilal Oswal Financial Services Research desk.

LargeCap

TCS – Target: ₹4,400

TCS, at its analyst day, outlined its ambition to become the world’s largest artificial intelligence (AI)-led technology services company, driven by an AI-first operating model, redefined AI-led services, an AI-fluent talent strategy, industry-specific client solutions, and a broad AI ecosystem spanning partnerships, mergers and acquisitions (M&A), and new ventures. 

 

TCS disclosed annualised AI services revenue of $1.5 billion, growing 16 per cent quarter-on-quarter (Q-o-Q), and outlined a build-partner-acquire strategy across the AI stack. It emphasized ecosystem-led scaling and an AI-first data center strategy with Tier-3+ facilities built to NVIDIA specifications. TCS’s market leadership and disciplined execution sustain industry-leading margins and superior returns. We expect 4.5 per cen/7.2 per cent year-on-year (Y-o-Y) constant currency (CC) growth in FY27/FY28, driven by demand recovery and scaled AI adoption, with 25 per cent Earnings before interest and tax (Ebit) margins and valuations at a discount to historical averages.

 

SBIN – Target: ₹1,100

SBIN continues to demonstrate resilience and market leadership, leveraging its broad customer base and structural advantages. In Q2FY26, the bank reported profit after tax (PAT) of ₹20,160 crore (10 per cent Y-o-Y), supported by strong net interest income (NII) growth (4.7 per cent Q-o-Q) and exceptional gains from the Yes Bank stake sale, while core PAT stood at ₹16,700 crore, largely in line with expectations. Net interest margins (NIMs) expanded 7 basis points (bps) Q-o-Q to 2.97 per cent, and asset quality improved (GNPA/NNPA at 1.73 per cent/0.42 per cent). 

 

Credit growth was healthy at 13 per cent Y-o-Y, with momentum across retail, SME, and corporate segments. Management guides for loan growth of 12–14 per cent in FY26 and NIMs above 3 per cent. Structural initiatives like Project Saral and a robust corporate pipeline (₹7 trillion) support long-term efficiency and growth. Maintain ‘Buy’ and expect FY27E return on asset/return on equity (RoA/RoE) at 1.1 per cent/15.5 per cent reflecting confidence in SBIN’s resilient core operations, improving asset quality, and strong long-term growth prospects.

MidCap

Biocon -Target: ₹460

Biocon’s complete consolidation of Biocon Biologics removes the holding-company discount and gives full strategic control across biologics, generics, and Contract Development and Manufacturing Organisation (CDMO). The combined platform is positioned for stronger scale-up driven by upcoming launches such as insulin as part, expansion in generics, and operating leverage in Syngene. The acquisition of the remaining 23.3 per cent stake is being executed through a share swap and a cash payout funded via bridge financing and a qualified institutional placement (QIP). 

 

Management noted that minority interest will disappear post-merger, while equity issuance will dilute earnings per share (EPS). Leadership changes will follow integration. While the equity dilution and QIP process may create a near-term drag on stock price, business prospects remain encouraging on the back of a) product launches (namely insulin aspart) in the biologics segment and subsequent market share gain, b) scale-up of generics business, and c) growth/operating leverage in Syngene business.

Dalmia Bharat – Target: ₹2,660

Dalmia Bharat’s recent quarterly performance reflected operational strength amid transitional headwinds. On the downside, demand in the first half was muted due to heavy rainfall and goods and services tax (GST)-related disruptions, leading to deferred purchases. Rising petcoke prices and INR depreciation are likely to exert incremental cost pressure in the near term. On the positive side, Earnings before interest, tax, depreciation and amortisation (Ebitda) grew around 60 per cent Y-o-Y, with margins expanding over six percentage points to 20 per cent, supported by improved realizations and lower variable costs. Profitability surged on a low base, aided by higher other income and a favorable tax rate. 

 

Management indicated that the GST rate benefit has been passed on to consumers and expects demand to recover meaningfully in the second half. Ongoing capacity expansions at Belgaum and Kadapa remain on schedule, reinforcing medium-term growth visibility. 

 

We maintain a ‘Buy’ rating, as Dalmia Bharat’s strong execution, margin recovery, and disciplined cost management offset near-term input cost pressures, supporting a constructive long-term outlook.

SmallCap

Astra Microwave Products – Target: ₹1,100

Astra Microwave Products (AMPL) designs and manufactures RF and microwave systems in India and is transitioning from a subsystem supplier to a full system solutions provider, targeting opportunities in AESA and Uttam radars, meteorological projects, Navy repeat orders, and counter-drone systems. 

 

AMPL had an ₹2,200 crore order book as of Sep’25 and delivered 13 per cent revenue CAGR in FY21–25, with Ebitda margins rising to 25.6 per cent from 12.3 per cent. We expect 18 per cent revenue CAGR in FY25–28, margins nearing 26 per cent, and PAT CAGR of 23 per cent. We view AMPL as a compelling long-term opportunity in defense electronics, with revenue growth expected to accelerate during FY27–30 as larger orders are awarded by the MoD and defense PSUs.

Nuvama Wealth – Target: ₹1,820

Nuvama Wealth continues to strengthen its position across wealth and private segments, supported by improving retention and healthy client inflows. In Q2FY26, operating revenue grew 4 per cent Y-o-Y to ₹770 crore, led by 19 per cent and 37 per cent growth in the Wealth and Private businesses, offset by weakness in AMC and Capital Markets. PAT stood at ₹250 crore, flattish Y-o-Y but 9 per cent above estimates, aided by better cost control. 

 

Management maintained its PAT growth guidance of 20–25 per cent, expecting recovery in the asset services segment over the next few months and sustained momentum in wealth flows. Operating efficiency is expected to improve, with opex growth guided at 8–10 per cent for FY26. We expect Nuvama to deliver a 15 per cent/16 per cent revenue/PAT CAGR over FY25–28E.

 

(Disclaimer: This article is by Motilal Oswal Financial Services Research desk. Views expressed are his own.)