Union Budget 2026: Motilal Oswal's Top Stock Recommendations for Investors
Finance Minister Nirmala Sitharaman presented her ninth consecutive Union Budget on February 1, 2026, marking a continuation of the government's fiscal policies over the past five years. While the budget did not deliver any high-impact near-term stimulus, it reinforced a stable economic framework with a strong emphasis on public capital expenditure.
Post-budget, investors are keenly evaluating which stocks to bet on for potential growth. Motilal Oswal Financial Services has identified ten key stock picks that align with the budget's strategic focus areas. The brokerage firm highlights that the policy thrust remains firmly tilted toward public capex, with capital expenditure budgeted to rise 11.5% year-on-year to Rs 12.2 trillion in FY27E.
Key Budget Highlights and Sectoral Impacts
The Union Budget 2026 underscores continuity in the government's fiscal approach, supporting sectors leveraged to the investment cycle. A significant highlight is the government's intent to attract global investment into data centres, which could drive incremental opportunities across digital infrastructure and utilities.
Strategic sectors such as semiconductors, electronics manufacturing services, defence, chemicals, and select industrial manufacturing stand out as potential beneficiaries. These sectors are aided by targeted incentives, production-linked schemes, and the development of dedicated industrial parks, reinforcing a constructive medium-term investment outlook.
Detailed Analysis of Top 10 Stock Picks
Motilal Oswal's recommendations span various industries, each poised to benefit from specific budget provisions. Here is a closer look at the selected stocks and their potential upside:
- Apollo Hospitals (CMP: Rs 6,923, TP: Rs 9,015, Upside: 30%): The budget provides financial assistance and highlights efforts to prepare Indian companies for global healthcare platforms. Measures to market India for medical tourism and support for establishing five regional medical hubs with private sector partnership are expected to benefit large hospital operators.
- ACME Solar (CMP: Rs 220, TP: Rs 384, Upside: 75%): The budget reinforces the commitment to clean energy technologies. A tenfold increase in viability gap funding for battery energy storage systems to Rs 10 billion is positive for independent power producers like ACME Solar undertaking BESS projects.
- Bharat Electronics (CMP: Rs 441, TP: Rs 520, Upside: 18%): Defence capital outlay was hiked to Rs 2.2 trillion for FY27, an 18% year-on-year increase. This benefits indigenized defence electronics, with Bharat Electronics well-positioned for orders including QRSAM, Akash-NG, and next-generation corvettes.
- Larsen & Toubro (CMP: Rs 3,914, TP: Rs 4,600, Upside: 18%): Central government capex rises to Rs 12.2 trillion in FY27, supporting L&T's prospect pipeline of Rs 5.9 trillion. Focus on urban development, renewables, gas, AI, and data centres enhances opportunity visibility.
- Lemon Tree (CMP: Rs 128, TP: Rs 200, Upside: 56%): Optimism for domestic tourism, with demand exceeding pre-Covid levels. Expansion into tier-II cities aligns with the government's tourism push, driving resilient performance and double-digit RevPAR growth.
- Samvardhana Motherson (CMP: Rs 114, TP: Rs 140, Upside: 23%): The infrastructure push indirectly benefits auto and auto ancillaries. Increased PLI allocation and focus on EV transition, including 4,000 e-buses for East Tourism, support sustained momentum.
- Polycab (CMP: Rs 7,056, TP: Rs 9,600, Upside: 36%): Substantial manufacturing push in electronics and infrastructure supports demand for cables and wires. Long-term tax holidays for data centre investments drive growth, positioning Polycab well for India's electrification upcycle.
- Syrma SSG (CMP: Rs 776, TP: Rs 950, Upside: 22%): Initiatives like ISM 2.0 and SPECS boost domestic manufacturing in the EMS sector. These steps position India as a growing hub for electronics production, offering significant growth opportunities for EMS companies.
- TATA Steel (CMP: Rs 189, TP: Rs 220, Upside: 16%): Higher capex and GST rate cuts on auto and consumer durables improve domestic steel demand. Tata Steel benefits from improving realizations, operating efficiencies, and robust demand, with infrastructure accounting for 60% of steel consumption.
- UltraTech (CMP: Rs 12,543, TP: Rs 14,200, Upside: 13%): Cement demand has improved, with industry volume growing 7-8% YoY in 3QFY26. Increased capex allocation indirectly benefits cement demand, with UltraTech leveraging its scale and brand equity for strong growth.
Investment Outlook and Disclaimer
The Union Budget 2026 provides a stable foundation for economic growth, with targeted support for key sectors. Motilal Oswal's stock picks reflect a strategic alignment with these budget themes, offering investors diversified opportunities across healthcare, energy, defence, infrastructure, tourism, automotive, manufacturing, and materials.
Disclaimer: Recommendations and views on the stock market, other asset classes, or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.
