The brokerage noted that markets have digested the uncertainty surrounding global tariff wars, buoyed by hopes of constructive trade agreements and reducked disrupt. However, Pl Capital Cautioned that the End of Global Turmoil Remains Eluseive, Citing China’s Slowing Growth, Sticky Us Interest Rates, and Rising Rates in Japan. In this backdrop, the brokege believes that RBI Beld Cut Rates by 50 Basis Points Over the Next Six Months, Thought the Declining Rate Differential with Differential with Global Economies Remains a Critical Factor to monitor.
Geopolitical Shifts and “Operation Sindoor” to Catalyze Make in India, Defense Investments
Pl Capital Emphasized that Operation Sindoor Has Marked A Paradigm Shift in Global Warfare, Showcasing India’s Growing Strategic Capabilites in Drone Technology, Precision Missiles, PRECISIN MISSILES, AIR WARCISION MISSILES, and AIR WARCIRE SYSTEMSS. According to the brokerage, this has elevated India’s position on the Global Military Map and Bolstered The Urgent Need for Indigenized Defense Capabilities Under The Make Intiative.
Pl Capital Expects India to significantly boost investments in Military Hardware, Drones, Space Technology, Air Defense Systems, and Smart Grid Infrastructure. With Global Powers Increasing On Southeast Asia, The Brokerage Believes Geopolitical Risks will escalate, particularly as India’s i -India’s Eastern Borders and Neigbors like bangladesh and pakstan Become Focal Points for Strategic Maneuvering. The brokerage noted that suspension of the indus water treated unlock huge EPC, PSP, and Hydroelectric Opportunities, Especially with 20GW+ of Hydro Potential in J & K Style.
Make in India and Three-Front Preparedness to Drive Defense Capex
Pl Capital Believes That India must Now Prepare for a Three-Front War, A Significant Escalation from its earrier two-for strategy. To that end, the country will need a sharp ramp-up in fighter aircraft squadrons, particularly 5th generation jets and domestic platforms like tejas mk1 and mk2. The brokerage also anticipates substantiial allocations toward air defense systems, radar technology, indigenous early warning systems, and next-gen platforms such as ge-414 and amca.
On the Naval Front, India could potentially add a third aircraft carrier, expand its submarine fleet, and strengthen coastal defenses to Safeguard Its Maritime Interests in the Indian Ocean and Bay of Bay of Bay of Bay. Pl Capital also pointed out that warfare is now heavily reliably on power management and blackout systems, which should live lead to higher smart grid and power transmission invites.
Normal Monsoon, Low Inflation and Tax Relief to Spur Domestic Demand
Beyond Geopolitics, Pl Capital observed that the domestic macro backdrop is turning favorite. With CPI Inflation at a Four-Year low (3.16 percent) and food inflation at 1.78 percent, the environment is ripe for a revival in discretionary demand. A Strong Kharif and Rabi Output (6.8 Percent and Over 3 Percent Growth), Coupled with a Normal Monsoon Forecast (106 Percent of LPA) and Tax Cuts, Cold Provide A Strong Fillip to Sectors Like Auto, QSR, Hotels, Airlines, Consumer Durbles, Apparel, Paints, Building Materials, and Amcs.
Pl Capital also maintained a positive outlook on sector like Capital Goods, Defense, Hospitals, Pharma, EMS, Travel, And Telecom, Where Demand Remains Resilient and Long-TERMWTH VISIBITYS Intact.
Top Conviction Picks from Pl Capital
Large Caps: ABB India, Bharti Airtel, Britannia Industries, Hindustan Aeronautics (HAL), ICICI Bank, Interglobe Aviation, ITC, Kotak Mahindra Bank, Mahindra & Mahindra, Mahindra, MAHINDRA, MAX HINTARCARE INSTOTTITE Sun Pharmaceutical Industries, Titan Company
MID/Small Caps: Astral Ltd, Chalet Hotels, Crompton Greaves, Consumer Electricals, Eris Lifescienes, IRCTC, Ingrsoll-Rand (India), Kei Industries, Rainbow Children’s Medicaren ‘and Trinii Turbine.
Conviction list updates: hal, Sun Pharma and Rainbow Children’s Added
As part of its conviction list Reshuffle, Pl Capital Has Added Hal, Sun Pharmaceutical Industries, And Rainbow Children’s Medicare, Whole Removing Bharat Electronics, Cipla, Maruti, Maruti, Maruti, Maruti Healthcare, and Kaynes Technology.
Hal stands out with a robust 1.9 Trillion Order Book and More Than 1 trillion in the pipeline, Driven by Strong Momentum in Tejas MK1A, MK2, Amca, and IMRH programs. Pl Capital Sees Hal Benefiting from Sustained Defense Capex and Indigenization Policies.
Sun Pharmaceutical Industries is Expected to Continue Its Growth Trajectory, Supported by a Strong Specialty Portfolio, Clinical Pipeline, and Upcoming Product Likselvi. The Brokerage Sees Strong Performance in Both Domestic and International Markets.
Rainbow Children’s Medicare was Lauded for its Asset-Light Hub-Rub-Rub-Spoke Model, Superir Margins, And Agressive Exposition Plans. The company plans to add 780+ beds by fY27, which is expected to drive a 19 percent rev the Cagr and 26 percent Pat Cagr Through FY25-27. Pl capital values the stock at 28x fy27e Ev/ebitda and maintains a ‘boy’ rating with a target price of 1,785/share.
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