Leading brokerage firm Axis Securities has unveiled a comprehensive list of 35 high-conviction stock recommendations spanning multiple sectors following the conclusion of the second quarter FY26 earnings season. The portfolio represents the brokerage's strongest investment ideas for the next 12-18 months, focusing on sectors offering the most attractive risk-reward balance.
Financial Sector Leads The Pack
Axis Securities maintains its most significant overweight position in the financial services sector, where it believes growth is stabilizing and margins are poised for recovery. The brokerage's seven high-conviction financial picks include HDFC Bank, Kotak Mahindra Bank, SBI, Federal Bank, Ujjivan Small Finance Bank, Bajaj Finance and Shriram Finance.
According to their analysis, banks and small finance institutions delivered approximately 11% year-on-year credit growth during Q2 FY26, broadly aligning with system-wide growth patterns. Interestingly, public sector banks even outperformed their private sector counterparts during this period. Axis Securities anticipates that stronger credit growth, improving net interest margins, and reduced credit costs will drive mid-teens earnings CAGR for their coverage banks between FY26 and FY28.
Sector-Wise Investment Opportunities
In the IT services domain, Axis Securities is turning increasingly optimistic as deal pipelines stabilize and clients gradually increase technology spending. Their preferred selections in this space are LTIMindtree, Persistent Systems and Coforge - all mid-to-large cap companies with significant expertise in digital transformation, cloud services, and banking and financial services verticals. The brokerage expects profitability improvements driven by better resource utilization, pyramid optimization, and declining attrition rates.
The real estate sector continues to draw positive attention, supported by record pre-sales figures, healthier balance sheets, and sustained demand in premium and luxury housing segments. Prestige Estates Projects and Signature Global emerge as top picks, with both companies demonstrating rapid scaling capabilities in key urban markets. Axis believes sector consolidation, formalization trends, and improving affordability will maintain volume resilience even if interest rates remain elevated.
Manufacturing and Infrastructure Momentum
The automotive sector shows strong demand across passenger vehicles, two-wheelers, and commercial vehicles, complemented by margin recovery as commodity prices soften. Among auto ancillary companies, those with export diversification and premium product portfolios stand out, with Motherson and EV-linked suppliers receiving special mention.
Government infrastructure initiatives continue to benefit companies operating in roads, engineering, procurement, construction and capital goods. Axis Securities' conviction picks in this segment include PNC Infratech and KEC International, both supported by robust order books and consistent execution capabilities.
In the building materials space, the brokerage highlights companies with pricing power and volume growth potential. Cera Sanitaryware earns recognition for its strong brand presence in premium bathroom and faucet products, while Greenply Industries benefits from the ongoing shift from unorganized to branded plywood and MDF markets.
Commodities and Consumption Plays
The metals and mining sector features APL Apollo Tubes and Hindalco as top recommendations. Steady demand visibility from infrastructure, automotive, and construction sectors supports this outlook, bolstered by government capital expenditure and private project activity. APL Apollo represents a structural play on the transition toward pre-engineered buildings and lighter structural solutions, while Hindalco gains from global aluminum market recovery and Novelis capacity expansion.
Cement companies are expected to continue their volume expansion and margin recovery trajectory after a strong Q2 performance. UltraTech Cement, Ambuja Cements, Dalmia Bharat and JK Lakshmi Cement constitute the high-conviction picks in this sector, with all companies expanding capacity to meet infrastructure and housing demand.
Fast-moving consumer goods companies focusing on resilience and premiumization strategies capture attention, with Nestlé India, Britannia Industries and DOMS Industries highlighted as beneficiaries of urban demand growth, rising per-capita incomes, and deeper distribution networks. The brokerage expects steady volume growth combined with product mix upgrades and moderating input costs to support margin expansion in FY26.
Power, Retail and Telecom Outlook
Organized retail continues to show promise, with Axis Securities remaining optimistic about sustained improvements in store productivity and normalizing customer footfalls. V-Mart Retail and Avenue Supermarts (D-Mart) represent their preferred picks, positioned to capitalize on consumption growth and formalization trends through measured network expansion and strong balance sheets.
In power and utilities, the brokerage favors companies with clear capital expenditure visibility and regulated or long-term contracted revenue streams. Their conviction list includes NTPC, JSW Energy and Skipper. NTPC is accelerating renewable energy capacity development alongside its core thermal portfolio, while JSW Energy scales up storage and green energy projects. Skipper, a key transmission towers and structures supplier, entered Q2 FY26 with a record order book worth ₹8,820 crore.
The telecommunications sector features a single high-conviction idea: Bharti Airtel. Axis Securities expects the company to benefit from potential tariff increases, growing 5G adoption, premium ARPU growth, and expanding enterprise business. With sector consolidation largely complete and capital expenditure moderating over time, the brokerage anticipates improving free cash flows and stronger balance sheets supporting shareholder returns.
The comprehensive stock selection builds upon Axis Securities' Q2FY26 "Top Conviction Ideas" report and presents sector-by-sector analysis of preferred stocks alongside broader interpretations from latest quarterly results. The portfolio spans multiple structural themes including formalization of the economy, rising consumption patterns, credit growth, manufacturing revival, and energy transition initiatives.
