Synopsis : Motilal Oswal Financial Services has refreshed its BFSI model portfolio with six new additions and multiple exits, reflecting changing opportunities across the financial sector. Despite the reshuffle, the brokerage remains strongly bullish on banks, select NBFCs, insurers, and wealth-management companies, backed by improving credit growth, stable asset quality, and attractive valuations.
India’s financial sector continues to remain one of the brokerage community’s preferred investment themes, and Motilal Oswal Financial Services (MOFSL) is doubling down on that view.
In its latest BFSI Picks 4.0 portfolio update, the brokerage has introduced six new stocks while removing several earlier positions, reflecting evolving growth opportunities across banking, lending, insurance, capital markets, and wealth management.
While the portfolio has undergone significant changes, MOFSL’s broader investment thesis remains intact: banks continue to be the strongest long-term opportunity within the BFSI space.
Major Portfolio Refresh Signals Changing Opportunities
The latest portfolio update marks one of the most extensive reshuffles undertaken by the brokerage in recent years.
According to MOFSL, the changes are driven by shifting earnings trajectories, valuation comfort, improving business momentum, and a disciplined bottom-up stock selection process.
The brokerage noted that previous portfolio versions generated substantial returns from names such as AU Small Finance Bank, L&T Finance, Federal Bank, Angel One, and Shriram Finance. However, it believes the current market environment offers more attractive opportunities elsewhere within the sector.
Banks Continue to Dominate the Strategy
Despite the portfolio refresh, banking stocks remain the largest allocation within MOFSL’s preferred ideas.
The brokerage highlighted that banking system credit growth remains healthy, supported by strong demand across corporate, retail, and MSME segments. It expects credit growth to sustain momentum over the next few years while sector earnings continue to expand at a healthy pace.
MOFSL expects private-sector banks to outperform their public-sector counterparts over FY26-FY28, driven by stronger earnings growth, better profitability, and superior balance-sheet quality.
Among large-cap banking names, the brokerage continues to prefer:
- ICICI Bank
- HDFC Bank
- State Bank of India
In the mid-sized banking segment, AU Small Finance Bank remains a key conviction idea.
According to the brokerage, these institutions offer a combination of strong balance sheets, healthy provision coverage, robust growth visibility, and reasonable valuations.
Why MOFSL Is Positive on the Banking Sector
Several factors are supporting the brokerage’s constructive stance on banks.
Net interest margins appear to be stabilizing after a prolonged period of pressure, while asset-quality concerns in unsecured retail and MSME lending have started easing.
The brokerage also believes that any potential rate hike cycle during the second half of FY27 could provide additional support to margins, particularly for large private-sector banks.
For PSU banks, improving provision coverage ratios, stable slippages, and healthy growth in retail and agriculture lending continue to support earnings visibility.
NBFCs Remain a High-Conviction Theme
Non-banking financial companies continue to occupy a prominent place in MOFSL’s portfolio.
The brokerage highlighted strong loan growth across housing finance, vehicle finance, SME lending, gold loans, and unsecured credit segments.
Among NBFCs, Shriram Finance remains the preferred vehicle-finance play, while PNB Housing Finance continues to stand out within the housing-finance space due to its improving loan mix and margin profile.
The brokerage has also added Piramal Finance to its preferred list, citing improving asset quality, steady margin expansion, and consistent growth execution.
Within the microfinance segment, CreditAccess Grameen remains MOFSL’s top pick as collection efficiency and portfolio quality continue to improve.
Insurance Sector Still Offers Long-Term Potential
MOFSL remains selective within insurance but continues to favor companies with strong profitability and protection-led growth strategies.
In life insurance, SBI Life Insurance and Canara HSBC Life Insurance remain preferred choices.
The brokerage believes increasing demand for protection products, improving product mix, and stable profitability metrics will continue supporting growth in the sector.
Among general insurers, ICICI Lombard remains the standout pick due to its underwriting discipline, healthy reserve position, and growing retail health insurance business.
Capital Markets and Wealth Management Remain Structural Winners
Despite recent market volatility, MOFSL continues to see long-term growth opportunities in capital-market-linked businesses.
The brokerage remains positive on Groww (Billionbrains Garage), citing rising retail participation and multiple monetization opportunities.
In asset management, HDFC AMC remains a preferred choice following the recent correction in valuations.
Meanwhile, Nuvama Wealth Management continues to be a favored wealth-management play due to its diversified revenue streams, growing annuity income, and improving profitability metrics.
The brokerage expects rising wealth creation among high-net-worth investors and increasing adoption of managed investment products to continue driving industry growth.
The Core Investment Thesis Remains Unchanged
Despite the portfolio overhaul, MOFSL believes the broader BFSI sector remains positioned for sustained growth.
Healthy credit demand, improving macroeconomic conditions, stabilizing margins, and easing asset-quality concerns continue to provide a favorable backdrop for banks and financial companies.
The brokerage believes the combination of earnings growth, improving business momentum, and attractive valuations could allow select BFSI stocks to deliver strong shareholder returns over the coming years.
Conclusion
Motilal Oswal’s latest BFSI portfolio refresh highlights evolving opportunities across the financial sector, but one message remains clear: banks continue to be the brokerage’s highest-conviction theme.
Alongside selected NBFCs, insurers, and wealth-management businesses, large private-sector banks remain at the center of MOFSL’s investment strategy as the sector enters its next phase of growth.
Disclaimer : This article is for informational purposes only and should not be considered investment advice. The views, recommendations, and forecasts mentioned are based on brokerage research and publicly available information. Investors should conduct their own due diligence and consult a SEBI-registered financial advisor before making investment decisions. Investments in financial markets are subject to market risks, including potential loss of capital.
