Leading brokerage firm Motilal Oswal Financial Services Ltd has identified two key stocks as its top investment recommendations for the trading week commencing January 5, 2026. The firm has highlighted Max Financial Services Ltd and Kotak Mahindra Bank Ltd, providing detailed analysis and price targets for each.
Detailed Analysis of the Top Stock Picks
The brokerage's weekly recommendations come with specific price targets and a breakdown of the fundamental strengths driving each company. According to the report, Max Financials presents a significant upside potential, while Kotak Mahindra Bank offers stable growth prospects.
For Max Financials, the current market price (CMP) is noted at Rs 1,674, with a target price set at Rs 2,100. This implies a potential upside of approximately 25%. Conversely, Kotak Mahindra Bank, with a CMP of Rs 2,190, has a target of Rs 2,500, indicating a 14% upside from current levels.
Why Max Financials is a Preferred Choice
Motilal Oswal's bullish stance on Max Financials is backed by several positive indicators. The company is witnessing early signs of sustained demand in its protection and credit life segments following GST exemption benefits.
The firm delivered a robust performance in the second quarter of the fiscal year 2026 (2QFY26). Its Annual Premium Equivalent (APE) and Value of New Business (VNB) saw impressive year-on-year growth of 16% and 25%, respectively. This strong growth propelled the VNB margin expansion by 150 basis points YoY to a healthy 25.5%.
This improvement was primarily fueled by a favorable shift in product mix. There were higher contributions from the protection segment, which accounted for 18%, and the non-participating savings segment, contributing 35%. The company's financial stability is further underscored by a solvency ratio that improved to 208%, while its Assets Under Management (AUM) grew by 9% YoY to INR 1.85 trillion.
Management has reaffirmed its VNB margin guidance for FY26 at 24–25%, supported by operating efficiency and steady growth across both proprietary and bancassurance channels. The brokerage estimates VNB margins to reach 25%, 26%, and 26.5% in FY26, FY27, and FY28, respectively, as persistence trends strengthen across long-term policy cohorts.
Kotak Mahindra Bank's Steady Performance
Kotak Mahindra Bank reported a performance in line with expectations for 2QFY26. Key metrics such as Net Interest Income (NII), Pre-Provision Operating Profit (PPoP), and Profit After Tax (PAT) broadly met analyst forecasts.
The bank's PAT stood at approximately INR 32.5 billion. NII saw growth of 4.1% year-on-year and 0.7% quarter-on-quarter to INR 73.1 billion. A major growth driver was the bank's advances, which rose by 15.8% YoY and 4% QoQ to INR 4.63 trillion. This expansion was supported by strong growth in business banking, SME lending, home loans, and the corporate segment.
On the liabilities side, deposits grew by 14.6% YoY and 3.1% QoQ. A highlight was the healthy growth in Current Account Savings Account (CASA) deposits, which increased by 6.7% sequentially and 11.2% year-on-year. This improvement boosted the CASA ratio to 42.3%. The impact of lower treasury income was effectively offset by stringent cost control measures and reduced provisions.
The bank's asset quality remained stable, with declining slippages and a Provision Coverage Ratio (PCR) of 77%. Net Interest Margins (NIMs) held steady and are anticipated to improve further due to benefits from deposit repricing and the Cash Reserve Ratio (CRR). The brokerage also expects a recovery in the unsecured loan book as overall lending conditions improve. It estimates the Return on Assets (RoA) and Return on Equity (RoE) to reach 2% and 12.7% by FY27.
Investment Outlook and Final Takeaway
Motilal Oswal's analysis presents a dual opportunity for investors: high-growth potential in the life insurance sector through Max Financials and stable, quality banking growth via Kotak Mahindra Bank. The recommendations are based on concrete quarterly performances, management guidance, and sectoral tailwinds.
While Max Financials rides on structural demand growth and margin expansion, Kotak Mahindra Bank showcases resilience with strong deposit accretion, controlled costs, and stable asset quality. Investors are advised to consider these fundamentals alongside their individual risk profiles when evaluating these recommendations for the week ahead.
