As preparations for Union Budget 2026-27 gather pace, Motilal Oswal Financial Services (MOFSL) anticipates clear policy intent to accelerate domestic demand, revive private investment, and generate employment. The brokerage has identified five stocks across auto, agriculture, defence, financials, and infrastructure themes that could deliver strong gains for investors.

Budget Focus Areas and Policy Direction

The budget is expected to focus on income-tax, GST, and customs simplification to enhance ease of doing business and support fiscal consolidation. Research Analysts Sneha Poddar and Rekha Jaat noted targeted support for agriculture, MSMEs, manufacturing, infrastructure, higher defence capex, EVs, and renewables through credit and incentives.

A strong capital expenditure thrust is anticipated across highways, logistics, defence, rail freight corridors, and connectivity. The budget will also emphasize skilling, rural prosperity, women empowerment, AI adoption, climate action, and digital finance to anchor India's next phase of economic expansion.

Market Context and Challenges

The finance ministry started work on Union Budget 2026-27 from October 9 as per a Department of Economic Affairs circular. These preparations come against the backdrop of an additional 50% US tariff on most Indian goods and other external headwinds, raising risks to India's growth and jobs outlook and prompting calls for stronger export sector support.

Five Stock Recommendations

MOFSL has assigned equal 20% weight to each recommended stock across diverse sectors:

TVS Motor Company

TVS Motors continues to outperform peers and is well-positioned to benefit from the budget's push to boost domestic consumption and rural demand through higher allocations, income support, and infrastructure spending. Key triggers include improving rural sentiment, strong entry-level recovery, and sustained two-wheeler demand. The Apache and Ntorq maker's market share gains, easing discounts, and margin expansion provide strong earnings visibility, making it MOFSL's top pick in OEMs.

UPL

The diversified agrochemical leader is positioned to benefit from union budget push on rural prosperity via higher agri credit, MSME support, and value-chain strengthening, lifting farmer incomes and crop-protection demand. The company's strengths include stronger volumes, export tailwinds, improved working-capital discipline, and post-bond-repayment balance-sheet strength. Rising focus on speciality chemicals supports solid 2HFY26 growth.

Bharat Dynamics (BDL)

Bharat Dynamics has a robust ₹50,000.00 crore order pipeline over five years, with ₹20,000.00 crore targeted in 2-3 years, aligning with expected defence capex surge and infrastructure push. Recent ₹2.50 lakh crore DAC approvals for missiles, undersea warfare, and naval arms leverage BDL's tactical and strategic expertise, propelling FY31 turnover to ₹100.00 billion via indigenisation and lower provisions.

M&M Financial Services

M&M Financial is positioned for Union Budget 2026-27 benefits via rural prosperity, MSME credit, and employment focus, driving PV and tractor loan growth amid surging volumes from festive demand, GST cuts, and restocking. The company targets ₹3.00 lakh crore in assets under management by 2030 at 18-20% CAGR, bolstered by AI underwriting, lower credit costs, controlled opex, and margin stability for strong earnings visibility in retail portfolios.

Dalmia Bharat

The cement company benefits from the budget's infrastructure capex surge, PMAY rural housing, and urban projects, driving cement volume growth. Dalmia Bharat is a low-cost cement producer with high blending ratios, green power, and low freight costs. The company is targeting 62 mtpa capacity by FY28, with cost optimisation endeavours likely to lift EBITDA margins amid sector consolidation.

Motilal Oswal Financial Services Limited has successfully completed the allotment of Non-Convertible Debentures (NCDs) worth Rs 300.00 crore on December 12, 2025. The Finance Committee of the Board of Directors approved the allotment of 30,000 fully paid, secured, rated, redeemable, listed senior bonds in the nature of NCDs.

NCD Allotment Details

The company has provided comprehensive details of the completed NCD issuance:

Coupon Rate and Payment Schedule

The NCDs carry an attractive annual coupon rate of 8.15%, with interest payments scheduled annually. The payment structure demonstrates the company's commitment to regular returns:

Security Structure and Risk Management

The NCDs are secured by a first ranking pari passu charge on the company's present and future receivables. This security structure ensures comprehensive protection for investors:

Financial Position Context

Motilal Oswal Financial Services maintains a strong financial foundation that supports this debt issuance:

The company's balance sheet shows healthy growth in total assets and equity, with a significant increase in investments portfolio, indicating active capital deployment strategies.

Market Implications

The successful completion of this NCD allotment represents Motilal Oswal Financial Services' continued access to debt capital markets. The 8.15% coupon rate reflects current market conditions and the company's credit profile. With no delays in payment history and strong security coverage, these NCDs offer investors a structured investment opportunity in the financial services sector.