Synopsis : Motilal Oswal remains bullish on India's next capex cycle, identifying six key stocks poised to benefit from booming investments in data centres, defence, transmission infrastructure and electronics manufacturing. The brokerage believes these long-term themes could drive strong earnings growth over the coming years.
India's industrial and infrastructure sectors are gearing up for another major investment cycle, and brokerage firm Motilal Oswal believes several companies are ideally positioned to ride this wave.
Despite concerns around rising crude oil prices, geopolitical uncertainties and commodity inflation, the brokerage remains optimistic about long-term opportunities emerging from transmission infrastructure, defence manufacturing, data centres and electronics manufacturing services (EMS).
Motilal Oswal's Top 6 Stock Picks
According to the brokerage, the following companies are best positioned to benefit from India's evolving capex landscape:
- Larsen & Toubro (L&T)
- Cummins India
- GE Vernova T&D India
- Kalpataru Projects International
- Bharat Electronics (BEL)
- Dixon Technologies (India)
Motilal Oswal stated, "We remain positive on transmission, data centre and defence-led capex beneficiaries."
Why Capex Beneficiaries Are Back in Focus
The brokerage highlighted that commentary from nearly 30 industrial, railway and defence companies suggests that the long-term growth outlook remains intact despite near-term economic headwinds.
India's rising power demand, renewable energy investments, transmission network expansion and increasing defence spending are expected to create significant opportunities for capital goods and engineering companies.
Additionally, private sector capital expenditure is gradually improving across sectors such as:
- Thermal Power
- Steel
- Cement
- Pharmaceuticals
- FMCG
- Buildings & Factories
This broad-based investment cycle is expected to support healthy order inflows across industrial companies.
Data Centres Emerging as a Multi-Year Growth Theme
One of the strongest investment themes identified by Motilal Oswal is the rapid growth of India's data centre industry.
Driven by Artificial Intelligence (AI), cloud computing, digitalisation and rising data consumption, India is expected to build between 8GW and 10GW of data centre capacity by 2030.
The brokerage noted that companies such as ABB, Siemens, Hitachi Energy India and GE Vernova T&D are already witnessing increasing demand linked to data centre projects.
For some industrial companies, data centre-related business already contributes nearly 10-15% of total revenue, highlighting the sector's growing importance.
Transmission Infrastructure Offers Massive Opportunity
Transmission remains another major long-term growth driver.
According to Motilal Oswal, India is expected to invest nearly Rs 8 lakh crore in transmission infrastructure by 2030.
The expansion is being driven by renewable energy integration, grid modernization and rising electricity demand.
Companies involved in power equipment, transmission lines and grid infrastructure are expected to be among the biggest beneficiaries.
Defence Manufacturing Pipeline Remains Strong
India's defence sector continues to offer substantial growth opportunities.
Motilal Oswal highlighted that Acceptance of Necessity (AoN) approvals worth approximately Rs 6-7 trillion were granted during FY26.
The brokerage expects a significant portion of these approvals to convert into actual defence orders over the next two to three years, supporting revenue visibility for defence manufacturers.
Among listed companies, Bharat Electronics remains Motilal Oswal's preferred defence play.
Exports Could Become the Surprise Growth Trigger
Beyond domestic demand, export opportunities could provide an additional earnings boost.
The brokerage believes growing industrial activity in the United States, AI-driven infrastructure investments and future reconstruction demand in West Asia could create meaningful export opportunities for Indian engineering and capital goods companies.
According to the report, "Exports can be a joker in the pack, particularly from the US and Middle East."
Dixon Technologies Remains Favourite EMS Bet
In the electronics manufacturing services segment, Dixon Technologies continues to be Motilal Oswal's preferred pick.
The brokerage expects healthy demand for smartphones and room air conditioners to continue into FY27.
Conclusion
Motilal Oswal believes India's next investment cycle will be driven by a combination of transmission infrastructure, data centre expansion, defence spending and electronics manufacturing growth. With strong order pipelines and favourable structural trends, companies such as Larsen & Toubro, Cummins India, GE Vernova T&D, Kalpataru Projects, Bharat Electronics and Dixon Technologies remain among its highest-conviction ideas for the coming years.
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