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Motilal Oswal has reaffirmed its 'Buy' ratings on five Indian companies: HCL Technologies, Persistent Systems, 360 One WAM, PNB Housing Finance, and Cyient DLM. The brokerage highlights strong earnings visibility and business momentum as key reasons for its conviction, despite near-term challenges in the technology sector, including the impact of AI on pricing.
For the IT sector, represented by HCL Technologies and Persistent Systems, the firm acknowledges moderating growth and the early effects of artificial intelligence on pricing power. HCL Technologies' guidance for FY27 projects 1-4% constant currency revenue growth, signaling a cautious start, but its diverse portfolio and deal pipeline are seen as key strengths. The brokerage has set a target price of ₹1,650 for HCL Technologies, implying about 15% upside from its approximate ₹1,435 trading level. Persistent Systems, trading at a premium P/E of around 45x, is valued higher than peers like TCS (35x) and Infosys (28x), justified by its investments in AI and digital services. Motilal Oswal has set a ₹6,200 target for Persistent Systems, anticipating significant gains from AI and consulting. However, risks remain for Persistent, including five consecutive quarters of revenue moderation (excluding software licenses) and intense competition for AI talent in the broader IT industry.
In financial services, 360 One WAM is noted for its structural growth within India's expanding wealth management market, reporting 28% year-on-year revenue growth in 4QFY26. Motilal Oswal has a target of ₹1,300 for 360 One WAM, suggesting a 17% rise, driven by strong inflows and asset growth. PNB Housing Finance, trading at a P/E of approximately 15x, is positioned to benefit from demand in the affordable housing segment and stable margins derived from a shift to higher-yield products and improved funding costs. Its target of ₹1,260 indicates a 29% potential upside, supported by steady loan growth. However, PNB Housing's focus on affordable housing could lead to higher interest rate sensitivity, potentially impacting loan demand and asset quality, which requires constant monitoring in a dynamic credit environment.
Cyient DLM operates in the defense manufacturing sector, a key government priority. Despite a recent revenue dip in 4QFY26, its strong order book expansion is a significant factor, mirroring how peers like Bharat Electronics Ltd (BEL) and Hindustan Aeronautics Ltd (HAL) often achieve premium valuations based on defense sector tailwinds. Motilal Oswal's target of ₹470 for Cyient DLM suggests a 31% rise, predicated on recovery fueled by its robust defense order backlog, overriding a recent 14% revenue dip. The primary risks involve the execution and timely conversion of these complex, project-based defense contracts, as delays could significantly impact revenue realization and challenge its high earnings multiple.
Motilal Oswal's reiteration of 'Buy' ratings signals an expectation of sustained earnings visibility and an improving growth trajectory for these companies. The brokerage anticipates continued deal closures and robust order pipelines for IT firms as they adapt to the AI transition. For 360 One WAM and PNB Housing Finance, consistent demand within their financial services niches is projected to support ongoing profitability and loan expansion. Cyient DLM's future performance is tied to its capacity to convert its strong defense order backlog into revenue and leverage new client additions. While risks such as AI-driven margin pressure, slower client spending recovery, interest rate sensitivity for housing finance, and defense order execution challenges exist, Motilal Oswal's conviction suggests confidence in the long-term prospects and market positions of these selected companies.