HDFC Bank To Indian Hotels: Motilal Oswal Shares Large, Mid And Small-Cap Picks For 2025

Motilal Oswal Financial Services Ltd. has shared its top stock picks for calendar year 2025, which includes India's largest private lender HDFC Bank Ltd., second-largest telecom player Bharti Airtel Ltd. and infrastructure major Larsen & Toubro Ltd. in the large-cap space.

In the mid and small-cape segment, the brokerage is betting on companies like Indian Hotels Ltd., Coforge Ltd. and Godrej Properties Ltd., among others, according to a note issued on Wednesday.

"Among large-caps, we favour HDFC Bank, Bharti Airtel, SBI, L&T, HCL Tech, M&M, Zomato, Titan Company, Mankind Pharma, and Dixon Tech," Motilal Oswal said.

"Among mid- and small-caps, we are bullish on Indian Hotels, Cummins India, Kaynes, BSE, Godrej Properties, Coforge, Metro Brands, IPCA, Angel One, and JSW Infra, it added.

Motilal Oswal chose to remain cautiously optimistic on Indian equities given the NSE Nifty 50 has given lesser return in calendar year 2024 compared to last two years.

The brokerage is upbeat on informational technology, healthcare, banking and financial services, and consumer discretionary, industrials, and real estate sectors with a distinct bias towards large-caps.

The NSE Nifty 50 rose for nine years in a row to mark historic yearly gaining streak. It clocked 8.8% gain in 2024. However, it was much less than 20.03% return the benchmark index gave in 2023.

After a relentless rise, valuations have moderated from Nifty 50's recent highs. The 12-month forward price-to-earnings ratio of Nifty 50 traded at 19.9 times in December 2024 compared to 22.5 times in September 2024.

"Notably, Nifty-50’s EPS CAGR of 17% over FY20-25E (at INR1,061 in FY25E) has been higher with the index CAGR of 14% during the last five years (ending Dec’24)," Motilal Oswal said.

Further, Nifty 50’s earnings are expected to rise at 11% compound annual growth rate between fiscal 2024 and fiscal 2026, it added.

There was a slowdown in earnings and consumption in 2024. Rise in global interest rates, and geopolitical uncertainties, along with high valuations in some mid and small-cap sectors also added to the concern in 2024, Motilal Oswal said in the note.

The calendar year 2025 is expected to alleviate some concerns, with gradual recovery in corporate earnings and consumption expected due to increased government spending in the first half, and improved rural incomes after a successful kharif season, it said.

Nevertheless, volatility in global trade and currencies after the new US administration takes charge, and persistent inflation could push back the anticipated interest rate cuts, the note added.

Despite recent corrections, mid-cap and small-cap indices trade at premiums of 56% and 17% over the Nifty 50, respectively, according to Motilal Oswal.