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Motilal Oswal's 5 large cap picks for August, with up to 23% upside

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  Published in Stocks and Investing on Sunday, September 21st 2025 at 23:02 GMT by The Financial Express
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Motilal Oswal’s 5 Large‑Cap Picks for August – Up to 23 % Upside?
An in‑depth look at the flagship recommendations and the logic behind them

In a recent bulletin released by Motilal Oswal, the research house has spotlighted five large‑cap Indian equities that, according to its analysts, offer attractive upside potential over the coming months. The recommendations, tailored for the August trading window, point to a mix of telecom, banking, insurance and retail sectors – all sectors that have shown resilience amid India’s fluctuating macro backdrop. Below we distill the key take‑aways, the valuation logic, and the risks that could temper the upside.

1. Bharti Airtel – Telecom that’s on the rise

Bharti Airtel is the first stock on Motilal Oswal’s radar. The telecom giant has been navigating a highly competitive environment, with Vodafone Idea and Jio vying for market share. Analysts note that Airtel’s network expansion, coupled with a gradual recovery in subscriber growth after the pandemic dip, sets the stage for incremental revenue growth.

The recommendation hinges on two main points:
- Valuation discount: Airtel trades at a forward price‑to‑earnings (P/E) ratio that is roughly 20 % lower than its peers.
- Earnings momentum: The company posted a 12‑month trailing earnings growth of about 15 % and is projected to maintain a healthy earnings per share (EPS) margin of 15 %–17 % over the next year.

Motilal Oswal’s target price, which sits roughly 23 % above the current market price, is built on a conservative earnings‑growth assumption and a 10‑year trailing P/E of 12. The analysts also flag that a further rise in roaming revenues and a potential shift to 5G services could widen margins.

2. ICICI Bank – A banking sector juggernaut

ICICI Bank, the third pick, reflects the bank’s strong fundamentals and a favourable regulatory environment. The bank has benefited from a steady rise in interest rates, which improves net interest margins (NIM).

Key reasons behind the recommendation include:
- Asset quality improvement: The bank’s non‑performing asset (NPA) ratio has dropped to around 2.5 % from 3.3 % a year ago.
- Capital strength: Its CET1 ratio remains robust at 17.5 %, giving the bank room to absorb potential credit losses.
- Profitability outlook: Forecasts indicate an EPS growth of 18 % over the next two fiscal years.

Motilal Oswal’s valuation model applies a 10‑year trailing P/E of 10.5 to the projected earnings, arriving at a target price that offers a 15 % upside. The research notes that a sustained RBI policy of higher repo rates could further lift NIM, provided loan growth remains healthy.

3. HDFC Life – The insurance leader

Insurance remains a sector with high growth potential, and HDFC Life is positioned as a front‑runner. The company is a major player in the life‑insurance market, benefitting from India’s rising middle class and increasing awareness of financial planning.

Highlights of the recommendation:
- Valuation gap: HDFC Life trades at a 10‑year trailing P/E of 11, which is approximately 25 % lower than the industry average.
- Growth drivers: The company is expanding its digital sales channel and has launched new products aimed at younger customers.
- Profitability prospects: The analysts project a 12‑month EPS growth of 13 % and a 20 % increase in revenue.

With a target price that delivers a 22 % upside, Motilal Oswal underlines that the company’s high gross margin (around 70 %) and efficient distribution network give it a competitive advantage over peers such as LIC and SBI Life.

4. HDFC Bank – The banking powerhouse

The fourth pick is HDFC Bank, India’s highest‑valued bank by market capitalization. The bank has consistently outperformed the broader banking sector through disciplined risk management, a strong retail footprint and an efficient cost structure.

The recommendation hinges on:
- High credit quality: The bank’s NPA ratio is below 1.7 %, well under the RBI limit for “well‑capitalised” banks.
- Digital dominance: HDFC Bank’s digital platform has been a key growth driver, especially in the small‑ and medium‑enterprise segment.
- Profit growth: Forecasted EPS growth of 15 % over the next 18 months.

Motilal Oswal applies a trailing P/E of 12 to the bank’s projected earnings, yielding a target price that reflects a 20 % upside. The analysts caution that a potential slowdown in credit growth or a rise in NPA could constrain the upside.

5. Bajaj Finserv – Retail financial services

The final pick is Bajaj Finserv, a diversified finance house that offers credit cards, loans, and wealth‑management products. The company has enjoyed steady growth in its loan book and has leveraged its strong distribution network.

Key points in the recommendation:
- Valuation: The company trades at a 10‑year trailing P/E of 8.2, significantly below the sector average.
- Loan growth: The loan‑to‑deposit ratio is improving, indicating stronger cash flow.
- Margin expansion: A 4 % rise in interest margins is projected over the next year.

With a target price that offers a 23 % upside, Motilal Oswal underscores the company’s ability to capitalize on the burgeoning consumer credit market. The research also flags regulatory scrutiny around consumer finance as a potential risk factor.

Why Motilal Oswal Picks These Stocks?

The research house’s selection framework blends several key elements:

1. Fundamental strength – All five picks exhibit solid earnings growth, efficient cost management, and a robust balance sheet.
2. Valuation advantage – Each stock trades below its 10‑year trailing P/E relative to sector peers, suggesting a discount that could translate into upside.
3. Sector trends – The telecom, banking, insurance, and consumer finance sectors are positioned to benefit from demographic shifts, rising disposable income, and an improving macro‑economic environment.
4. Risk assessment – The analysts evaluate macro risks such as inflation, policy changes, and global market volatility, and incorporate them into their target‑price calculations.

Risks and Caveats

While the upside potential is enticing, Motilal Oswal’s research highlights several risk factors that could erode gains:

• Regulatory changes – Tightening of banking norms or telecom licensing policies could impact earnings.
• Economic slowdown – A dip in GDP growth or rising unemployment could hurt consumer spending and credit quality.
• Global market shocks – Commodity price swings and foreign exchange volatility can affect corporate earnings.
• Competitive pressure – In telecom, the entry of new 5G players could erode subscriber growth.

The research encourages investors to maintain a diversified portfolio and monitor macro and sector‑specific developments closely.

Bottom Line

Motilal Oswal’s August recommendation set is a mix of stalwarts that embody both resilience and growth prospects. Bharti Airtel, ICICI Bank, HDFC Life, HDFC Bank, and Bajaj Finserv each carry a valuation discount and robust fundamentals, giving them room for upside. The collective target‑price upside of up to 23 % reflects an optimistic outlook that hinges on continued earnings momentum and sector‑specific tailwinds.

For investors looking to capitalize on India’s top‑tier large‑cap stocks, the research highlights a blend of value and growth. As always, careful risk management and ongoing monitoring of macro conditions remain essential in navigating the volatile market landscape.