In its latest Indian strategy report, Motilal Oswal Financial Services revealed that the aggregate earnings of companies under its coverage grew by 16% year-on-year, surpassing its estimate of 8% growth for the January-March quarter of FY26. This robust performance was primarily driven by the BFSI sector, which saw an 18% profit increase, and was further bolstered by significant gains in metals and OMCs.
The report highlighted that while sectors like technology, telecom, and automobiles also contributed positively to earnings, the oil & gas sector, excluding OMCs, experienced a 10% dip in profits. Despite this, Nifty 50 companies achieved a 4% year-on-year growth in net profit, exceeding Motilal's 2% growth estimate.
Motilal Oswal noted that the Nifty Universe, excluding Reliance Industries and Interglobe Aviation, posted a 9% year-on-year earnings growth. Five companies—Bharti Airtel, JSW Steel, HDFC Bank, Infosys, and TCS—were responsible for 75% of the incremental earnings growth. However, several companies, including Reliance Industries and Interglobe Aviation, negatively impacted overall earnings.
Among the companies under Motilal's coverage, largecaps posted a 12% earnings growth, while midcaps showed a remarkable 36% increase, surpassing the brokerage's 25% estimate. Smallcaps delivered in-line performance with a 19% earnings rise. The Nifty EPS for FY26 stood at Rs 1,065 per share, marking a second consecutive year of single-digit growth.
Motilal Oswal concluded that the Q4 earnings season exceeded expectations, but forward earnings revisions remain weak. The brokerage expressed concerns over potential market volatility due to geopolitical tensions and commodity price fluctuations, while maintaining a preference for growth sectors such as Autos and PSU Banks.
Background
The Indian stock market has been navigating a challenging environment with geopolitical tensions and fluctuating commodity prices impacting investor sentiment. The consistent single-digit growth in Nifty EPS reflects the broader economic challenges, while sector-specific performances highlight areas of resilience and opportunity.
Looking ahead, Motilal Oswal emphasized the importance of monitoring commodity prices and geopolitical developments, which could impact India's macroeconomic parameters and monetary policy. The brokerage remains optimistic about growth sectors, despite potential market challenges.
