The brokerage firm Motilal Oswal has identified its preferred sectors and stocks across capital goods, defence and electronics manufacturing services (EMS).

The brokerage continues to prefer Larsen & Toubro, Cummins India and GE Vernova T&D India among large caps, Kalpataru Projects International in the mid-cap space, Bharat Electronics in defence and Dixon Technologies in EMS.

Let’s take a look at the brokerage preferred bets and the rationale behind it –

According to Motilal Oswal report, enquiries and execution linked to data centres remained healthy during the June quarter.

Companies including ABB India, Siemens Energy India, KEC International, CG Power and Industrial Solutions and Techno Electric & Engineering reported improving activity.

The brokerage said, “Data centers remain the strongest near-term demand driver.”

Transmission ordering was relatively weak in the Q1FY27. However, Motilal Oswal sees signs of improvement in the tender pipeline.

The Transmission System Strengthening through Tariff Based Competitive Bidding (TBCB) pipeline has started improving from June-July 2026, according to the brokerage.

It expects these tenders to begin converting into orders from the second quarter.

Defence is also expected to strengthen later in the year.

Motilal Oswal said, “Defence ordering is also expected to pick up, with significant number of approvals coming through and project finalizations expected H2FY27 onwards.”

Another change is coming from private-sector spending.

Motilal Oswal noted that private-sector ordering improved across industrials, transmission, power generation and data centres.

Larsen & Toubro said private-sector projects formed 40% of its overall order book and 45% of its prospective pipeline.

The brokerage said, “Private sector ordering also saw a broad-based pick up.”

Revenue growth was stronger than expected across the brokerage’s coverage universe in Q1FY27. Execution grew 11% year-on-year compared with its estimate of 5%.

Motilal Oswal expects the benefit of lower raw material costs and price hikes to become more visible from the third quarter of FY27.

The brokerage is choosing stocks where earnings growth can justify relatively high valuations.

In the large-cap segment, its preferred names are Larsen & Toubro, Cummins India and GE Vernova T&D India.

In the mid-cap space, it prefers Kalpataru Projects International. For defence, Bharat Electronics remains its preferred pick.

In EMS, the brokerage continues to favour Dixon Technologies. It expects Dixon to maintain FY27 volume guidance of around 30-33 million units, excluding Vivo, despite an expected contraction in the broader mobile industry.

Motilal Oswal said, “We continue to like Dixon in the EMS space.”

The brokerage’s broader view is centred on transmission, data centres and defence-led capital expenditure. These themes have stronger order pipelines and could support execution over the next two years.

It said, “We maintain our positive thesis on transmission, data center, and defence-led capex beneficiaries.”