Leading domestic brokerage Motilal Oswal Financial Services (MOFSL) has issued 'Buy' recommendations for four prominent Indian equities, forecasting significant upside potential. The firm projects gains of 20% to 24% for Tata Steel Ltd, IDFC First Bank Ltd, Solar Industries India Ltd (SOIL), and Mahindra & Mahindra Financial Services Ltd (MMFSL).
IDFC First Bank: Poised for Profitability Recovery
MOFSL has set a target price of Rs 105 for IDFC First Bank, implying a 23% upside. Analysts highlight the bank's substantial progress in strengthening its deposit base, maintaining robust loan growth, and systematically de-risking its balance sheet. The bank is well-positioned for a sustainable recovery in profitability, driven by healthy business expansion, improved operating leverage, and controlled credit costs.
"The bank has strengthened internal controls and governance processes and has lowered its credit cost guidance, underscoring strong asset quality trends. We estimate GNPA/NNPA to moderate to 1.4 per cent/0.4per cent by FY28E," MOFSL stated.
The brokerage anticipates IDFC First Bank to achieve a 42% PPoP CAGR over FY26-28E, with the C/I ratio improving to 69% in FY27 and 65% in FY28, translating into a Return on Assets (RoA) of 1.2% and Return on Equity (RoE) of 11.9% by FY28E.
Tata Steel: Strong Domestic Earnings Expected
For Tata Steel, MOFSL projects a target price of Rs 220, indicating a 20% upside. Despite the seasonally soft quarter, domestic steel prices have surged due to maintenance shutdowns, lean channel inventory, enhanced consumption, and rising input costs. This trend is expected to drive strong earnings for Tata Steel's Indian operations in Q2.
MOFSL remains optimistic about Tata Steel, citing ongoing capacity expansions, favorable steel pricing, and resilient demand as key factors positioning the company to capitalize on long-term domestic opportunities. The performance of Tata Steel Europe, however, remains dependent on regulatory decisions and spread movements amidst volatile pricing and energy costs. A gradual stabilization in the European operations could present a significant earnings and re-rating opportunity.
Solar Industries (SOIL): Evolving into an Integrated Defense Manufacturer
MOFSL initiated coverage on Solar Industries India Ltd (SOIL) with a 'Buy' rating, setting a target price of Rs 23,000, which suggests a 24% upside. The brokerage noted SOIL's strategic transition from a supplier of explosive materials to an integrated defense manufacturer. This evolution includes moving up the defense value chain, from high-melting explosives (HMX) to ammunition, rockets, and counter-drone systems.
Successful trials and commissioning of systems like Nagastra, Rudrastra, and Bhargavastra are expected to further diversify the company's revenue streams beyond its existing Pinaka and HMX products.
Mahindra & Mahindra Financial (MMFSL): Leveraging Technology for Growth
Mahindra & Mahindra Financial Ltd (MMFSL) received a 'Buy' rating from MOFSL, with a target price of Rs 430, indicating a 21% upside. The brokerage highlighted 'Udaan' as a crucial competitive advantage for MMFSL, enabling faster turnaround times (TAT), data-led underwriting, and automated Central Processing Centers (CPC), which support growth, productivity, and dealer conversion.
MOFSL anticipates that increasing adoption of 'Samur.AI' and higher branch-led cross-selling initiatives will provide further operating leverage and fee-income opportunities. The firm projects a Profit After Tax (PAT) CAGR of 23% over FY26-FY28E, with RoA/RoE reaching 2.4%/14.5% by FY28E.