ICICI Bank, Airtel, L&T, Dixon Tech, Coforge Among Motilal Oswal's Large, Mid & Small Caps; Q1 Results Preview

Top stock picks - Motilal Oswal lists Dixon Tech, UTI AMC, Suzlon Energy, SRF, Jindal Stainless, Coforge among others in mid and small cap stocks

The overall modest earnings growth is expected to be anchored by O&G, Telecom, Technology, NBFC-Lending, PSU Banks, and Healthcare, which are likely to contribute 89% of the incremental YoY accretion in earnings.

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In Q1 FY26, Motilal Oswal's large-cap/mid-cap universe is likely to register a PAT growth of 8%/21%, while the small-cap universe earnings during the quarter are projected to remain flat YoY. Moreover, sales for large-/mid-/small-caps are likely to grow 4%/ 3%/3% YoY, and their Ebitda would clock 9%/19%/6% YoY growth for the quarter.

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Motilal Oswal Report

We expect our universe's earnings to grow 10% YoY, while those of Nifty would also grow by a modest 5% YoY in Q1 FY26. Excluding financials, the earnings are expected to grow 14% YoY and 6% YoY, whereas, excluding global commodities (i.e., metals and oil and gas), our Universe and Nifty are likely to report 6% and 4% YoY earnings growth, respectively, for the quarter.

The overall modest earnings growth is expected to be anchored by O&G (+42% YoY), Telecom (loss-to-profit), Technology (+7%), NBFC-Lending (+8%), PSU Banks (+5%), and Healthcare (+11%), which are likely to contribute 89% of the incremental YoY accretion in earnings. Conversely, Automobiles (-10%), Metals (- 4%), and Private Banks (-3%) are likely to contribute adversely to earnings.

Sales and Ebitda of our universe are likely to grow 4% and 10% YoY, while for the Nifty, we expect sales and Ebitda to improve 7% YoY and 6% YoY, respectively. Ex-Commodities, Ebitda of our Universe/Nifty is likely to grow 7%/6% YoY

Our financial Universe is expected to post a muted 3% YoY earnings growth, primarily due to weak performance by Private Banks and subdued growth from PSU Banks. The private banks sector is projected to report a second quarter of earnings decline (of 3% YoY) since Mar’20, while the PSU Banks Universe is likely to clock moderate earnings growth of 5%, the lowest in 20 quarters.

The earnings of Insurance Universe are expected to moderate to 4% YoY. NBFC-lending is likely to post modest 8% YoY growth (sequentially higher), and NBFC non-lending is set to record modest earnings growth of 11% YoY, the lowest in 10 quarters.

The O&G Universe earnings are expected to grow 42% YoY, fueled by OMCs.

The Telecom universe is likely to post the third quarter of profit of Rs 10 billion in Q1 FY26 (vs a loss of Rs 17 billion in Q1 FY25 and a profit of Rs 5 billion in Q4 FY25), mainly led by continued improvement in margins in Bharti Airtel.

The Capital Goods sector is projected to report a healthy earnings growth of 12% YoY, moderating from a high base of 28% YoY growth in Q1 FY25, marking the second consecutive quarter of posting less than 15%+ earnings growth after seven consecutive quarters.

The Healthcare universe is likely to report 11% YoY earnings growth, moderating after posting eight quarters of 15%+ earnings growth.

The Cement universe is expected to report strong earnings growth of 35% YoY in Q1 FY26. The sector is likely to clock the first quarter of earnings growth after four consecutive quarters of significant earnings decline

After a modest performance in Q4 FY25, the Real Estate universe is likely to deliver a strong quarter with earnings surging 40% YoY.

The Chemicals sector is likely to report a 10% YoY earnings growth, the second quarter of earnings growth after declining for seven consecutive quarters.

The Technology sector is likely to deliver modest earnings growth of 7% YoY in Q1, the lowest in five quarters, and marking the eighth quarter of single-digit growth

The Consumer sector is expected to post weak earnings growth of 3% YoY, following three consecutive quarters of earnings decline.

The Auto sector is likely to report a weak quarter with a 10% YoY earnings dip.

The Metals universe is projected to report a 4% YoY decline in profits after reporting four quarters of earnings growth.

We expect the Ebitda margin (ex-Financials) to expand 140 bp for the our Universe to 18.2%. Conversely, for the Nifty-50, the margin is likely to remain flat at 21.1% (ex-Financials) during the quarter.

In Q1 FY26, our large-cap/mid-cap universe is likely to register a PAT growth of 8%/21%, while the small-cap universe earnings during the quarter are projected to remain flat YoY. Moreover, sales for large-/mid-/small-caps are likely to grow 4%/ 3%/3% YoY, and their Ebitda would clock 9%/19%/6% YoY growth for the quarter.

Sales/Ebitda/PAT of our universe are likely to report a two-year CAGR of 6%/7%/6% over June 23-Jun’25.

FY26E earnings highlights: Our Universe is likely to deliver sales/Ebitda/ PAT growth of 5%/12%/14% YoY. The Financials, O&G, and Metals sectors are anticipated to be the key earnings drivers with 8%, 19%, and 11% YoY growth in FY26E, respectively. These three sectors are projected to contribute 52% of the incremental earnings for our Universe in FY26.

Nifty EPS cut for FY26E/27E: We reduce our FY26E/FY27E Nifty EPS by 1.2%/ 0.4% and expect it to grow 11%/17% YoY to Rs 1,122/Rs 1,308. The BFSI, Auto, Consumer, Healthcare, Metals, and Retail sectors have led to the majority of the earnings cut

Motilal Oswal Top Ideas:

Large-caps – ICICI Bank, Bharti Airtel, L&T, Kotak Mahindra Bank, M&M, Titan, Bharat Electronics, Ultratech, Macrotech Indian Hotels, and Tech Mahindra.

Mid-caps and Small-caps – Dixon Tech, UTI AMC, Suzlon Energy, SRF, Jindal Stainless, Coforge, Page Industries, Kaynes Tech, Niva Bupa, and Supreme Industries.

Click on the attachment to read the full report:

Motilal Oswal INDIA_STRATEGY-1QFY26-.pdf
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Also Read: TCS, Infosys, HCLTech, Coforge — Top Stock Picks By Motilal Oswal; IT Q1 Results Preview

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