Asset quality remains healthy with credit costs well below 50 basis points, while improvements in the cost-to-income ratio are expected to keep RoA above 1% over FY27-28E.
Among additions, the brokerage included ICICI Prudential AMC, citing sustained market share gains driven by strong fund performance, scaling up of the non-mutual fund business to over 15% of revenue, and best-in-class profitability.
Jio Financial Services has also been added, with the brokerage highlighting its platform-scale opportunity and ecosystem-led model spanning multiple growth engines. Payments, asset management, and insurance businesses are seen as offering significant optionality.
AU Small Finance Bank is another new entrant, with expectations of around 24% loan CAGR over FY26-28E, supported by its transition toward a universal bank, improved diversification, and better operating leverage. Asset quality and operating metrics are also expected to improve, with lower credit costs aiding earnings momentum.
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The brokerage has maintained an overweight stance on new-age platforms, increasing allocation by 100 basis points to Eternal and introducing Lenskart to the portfolio. Lenskart is seen benefiting from strong competitive moats in a structurally underpenetrated segment, with expectations of a 25% revenue CAGR.
In IT, it has reallocated weights by increasing exposure to Infosys by 100 basis points, while maintaining an overall underweight stance on the sector.
Manufacturing, defence and commodities
Motilal Oswal remains overweight on defence and EMS names and has added Hindustan Aeronautics to the portfolio, citing the cheapest valuation at 28x and 22x P/E for FY27 and FY28, respectively. The brokerage noted that current valuations factor in delays in Tejas Mk1A deliveries and rising competition, while a strong order book of Rs 2.54 trillion provides revenue visibility for the next 7-8 years.
While continuing to stay underweight on metals, the brokerage has introduced Jindal Stainless alongside its existing exposure to Tata Steel.
Waaree Energies has also been added, with plans to expand domestic capacity to 25.0 GW (modules), 15.4 GW (cells), and 10.0 GW (ingot-wafer), along with 4.2 GW module capacity in the U.S. by FY27. This expansion is expected to drive EBITDA and PAT CAGR of 43% and 40%, respectively, over FY25-28.
In healthcare, Mankind Pharma has been added, with earnings expected to have bottomed out and early signs of recovery emerging in the domestic formulations business following strategic corrective measures.
Within the SMID segment, where the brokerage remains overweight, LT Foods has been introduced, backed by rising global basmati consumption and demand tailwinds from an expanding South Asian diaspora, supported by strong brand recall and farmer relationships.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)