Stocks to buy in May 2026: Motilal Oswal recommendations
Large-cap stocks to buy
Tata Steel | Share price target: ₹240
India's steel demand is projected to grow 8-10 per cent over FY26-30, supported by policy tailwinds and improving industry fundamentals. Tata Steel is scaling domestic capacity from 26.5mtpa in FY25 to 40mtpa by FY31, including expansion at Kalinganagar and NINL, positioning it to capture volume-led earnings growth during the upcycle. Safeguard duty-led protection, rising HRC prices (₹47,500/tonne to ₹53,500/tonne), lower imports, and China's production curbs are stabilising domestic spreads.
In Europe, Carbon Border Adjustment Mechanism (CBAM) implementation and tighter quotas are expected to improve pricing discipline and support realisations. European losses have narrowed sharply, with UK breakeven targeted in the coming quarters. We are constructive on Tata Steel, given strong domestic demand, safeguard duty-led price support, ongoing capacity expansions and a gradual turnaround in the EU business.
GE Vernova T&D | Target price: ₹4,750
GE Vernova T&D India Ltd (GVTD) is a key player offering full-stack solutions across transformers, GIS, switchgears, substation automation, HVDC, and FACTS solutions across the entire T&D value chain. The company’s strong parentage provides a technological edge across both LCC- and VSC-based technologies for upcoming HVDC projects. Recent HVDC wins, ongoing capacity expansion, and its ability to capitalise on the growing exports market—both through the parent and independently -- bode well for healthy revenue growth going forward.
With an order book of ₹14,400 crore as on December 2025, and expected order inflow growth CAGR of 29 per cen over FY25-28, we expect 34 per cent/49 per cent/50 per cent CAGR in revenue/Ebitda/PAT over FY25-28. The company is well hedged against rising RM prices through variable pricing contracts, and an improving share of exports in the order book will help sustain higher margins in the coming years.
Mid-cap stocks to buy
AU Small Finance Bank | Share price target: ₹1,250
AU Bank's transition from a SFB to a universal bank expands its addressable market across retail, MSME, and mid-corporate lending, while lower priority sector requirements and broader product capabilities improve portfolio flexibility, cross-selling opportunities, & long-term return potential. A granular deposit base, improving CASA mix, and expanding network of over 2,700 touchpoints support liability growth and operating leverage.
The secured-heavy loan portfolio and disciplined underwriting are expected to keep credit costs contained, supporting sustainable long-term profitability. Loans are expected to grow at ~24 per cent CAGR over FY26-28, driven by a strong branch-led distribution network and expansion across secured lending segments. This, along with moderating funding costs and stable asset quality, is likely to drive ~36 per cent earnings CAGR over FY26-28.
Bharat Electronics | Target price: ₹520
Supported by a robust ₹73,000-crore order book and sustained inflows, Bharat Electronics remains well placed to benefit from large platform programs across the Army, Navy, and Air Force. A strong addressable market underpins expectations of sustained revenue growth exceeding 15 per cent over coming years. Strong execution during Q3FY26 drove revenues and margins above expectations, aided by disciplined cost control and operating leverage. Effective supply-chain management has insulated the company from semiconductor shortages and commodity volatility, while higher indigenization levels continue to support better-than-expected profitability.
Looking ahead, Bharat Electronics is positioned to capitalise on sizable orders including QRSAM, Akash-NG, next-generation corvettes, and base programs. Improved margins and healthy execution underpin management's guidance, with revenue and PAT expected to grow at 18 per cent and 16 per cnt CAGR over FY25-28.
Small-cap stocks to buy
Radico Khaitan | Target price: ₹3,850
Karnataka new excise policy is likely to drive MRP reduction of 10-20 per cent for P&A (premium and above) portfolio while lower priced brands could see price increase of around 10-15 per cent due to slab rationalisation further boosting premiumisation in the state. Radico's derives 8-10 per cent volumes from Karnataka market. Radico has seen a sharp shift toward P&A, with volumes rising from ~4 million cases in FY15 to ~17 million in FY26E, strengthening earnings. P&A now contributes ~70 per cent of IMFL revenues (vs ~48 per cent in FY19) and is expected to rise further, driven by premiumisation and efficiencies. Radico's debt is declining steadily, supported by a healthy free cash flow generation.
Radico is currently trading at 56x/46x FY27E/FY28E P/E, with RoE/RoIC of 18 per cent -20 per cent. We believe that ~25 per cent EPS CAGR over FY26-28E provides adequate support for sustaining rich valuations.
Cyient DLM | Target price: ₹470
Cyient DLM's Q4FY26 consolidated revenue/Ebitda declined, owing to a higher base of BEL orders & geopolitical disruptions in West Asia. However, Q4FY26 is expected to be the last quarter of earnings decline. Cyient DLM closed with a 10-quarter high order book of ₹2,420 crore and a healthy book-to-bill ratio of 2x, providing strong revenue visibility and supporting expectations of broad-based growth across FY27. The company is expanding beyond aerospace and defense into automotive, semiconductor equipment, AI infrastructure, and domestic defense opportunities, creating multiple long-term growth drivers and reducing dependence on any single segment.
With an improving product mix, rising contribution from higher-value box-build and build-to-spec programs, and better operating leverage, the company is well-positioned for margin expansion going ahead. We estimate a CAGR of 24 per cent/36 per cent/61 per cent in revenue/Ebitda/ adjusted PAT over FY26-28.
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Disclaimer: This article is by Motilal Oswal Wealth Management Research Desk. Views expressed are their own.