With the markets slipping into red territory, many investors are wondering where to seek refuge. The brokerage firm Motilal Oswal’s latest report has rolled out a fresh list of its top sectoral picks and buys. According to the brokerage, the answer lies in selective plays across financials, real estate, and banking, all primed for long term growth despite near term volatility.
From NBFCs and banks to real estate majors, here is a look at where the brokerage is putting its faith, and why.
Motilal Oswal on NBFCs
According to the brokerage, the fourth quarter of FY25 has been “very unlike the typical 4Q” for NBFCs, primarily due to the absence of seasonal tailwinds. Demand and collection trends remained muted, and asset quality did not improve significantly as it usually does in the final quarter of a fiscal year.
“Earnings are flat YoY for our NBFC coverage universe owing to sticky credit costs and lower NII growth,” Motilal Oswal noted. However, excluding microfinance institutions, the firm still expects an approx. 5% YoY growth in profit after tax.
Top picks in the NBFC space:
The brokerage top picks in this space include-
The firm sees potential in vehicle financiers due to the prospect of NIM expansion from future repo rate cuts. Gold loan providers, too, are showing promise. “Vehicle financiers are projected to report ~20% YoY AUM growth, while gold lenders may see approx. 29% growth including non-gold products,” the report stated.
Motilal Oswal on Banking sector
The brokerage foresees a short term squeeze on banks net interest margins (NIMs), mainly due to the downward movement in the repo rate cycle. The benefit of rate cuts is being passed on to borrowers, potentially putting pressure on yields.
“We expect banks’ NIMs to have a downward bias in the near term while growth will be slower particularly in unsecured loans,” the brokerage noted in its report.
Top picks among banks:
In this segment, the brokerage house top picks include-
Despite muted short-term growth, the brokerage expects the sector’s earnings growth to bottom out in FY26 and gradually recover thereafter, projecting an 11.8% CAGR over FY25-27E.
Motilal Oswal’s Buy call on Prestige Estates
In the real estate space, Prestige Estates Projects (PEPL) has caught the brokerage’s eye. The report places a BUY rating on the stock with a revised target price of Rs 1,725.
According to the brokerage report, “PEPL has a diverse portfolio with a presence in residential, office, retail, and hospitality segments.” The company’s incremental business development of 15 million sq ft in 9MFY25 and its robust launch pipeline of Rs 800 billion are expected to drive a 14% pre sales CAGR over FY24-27E.
Additionally, the company is expanding its commercial and hospitality portfolio, which is projected to drive exponential income growth.
“Commercial rental income is likely to clock a 53% CAGR to reach Rs 19.5 billion and hospitality revenue would post a 20% CAGR to Rs 13.7 billion over FY24–27E,” the brokerage said.
Real Estate Sector: Cautiously positive, Multiple buys
Beyond Prestige Estates, the brokerage is cautiously optimistic about the broader real estate sector. As per the brokerage report, several developers have shown resilience and adaptability in the face of regulatory and pricing changes.
The report maintains a BUY rating on the following real estate stocks-
The optimism comes even after the Maharashtra government raised Ready Reckoner (RR) rates from April 1, 2025, impacting transaction costs. According to the brokerage, this may cause “a marginal rise in transaction costs”.
“Stakeholders must continue to monitor market movements and strategically navigate these regulatory changes to optimize their investments and maintain financial efficiency,” added the brokerage report.